free as a business Model patterns 93 One industry crumbling under the impact of FREE is newspaper publishing. Sandwiched between freely available Internet content and free newspapers, several traditional papers have already fi led for bankruptcy. The U.S. news industry reached a tipping point in 2008 when the number of people obtaining news online for free outstripped those paying for newspapers or news magazines, according to a study by the Pew Research Center. Traditionally, newspapers and magazines relied on revenues from three sources: newsstand sales, subscription fees, and advertising. The fi rst two are rapidly declining and the third is not increasing quickly enough. Though many newspapers have increased online readership, they’ve failed to achieve correspondingly greater advertising revenues. Meanwhile, the high fi xed costs that guarantee good journal- ism—news gathering and editorial teams— remained unchanged. Several newspapers have experi- mented with paid online subscriptions, with mixed results. It is diffi cult to charge for articles when readers can view similar con- tent for free on Web sites such as CNN.com or MSNBC.com. Few newspapers have succeeded in motivating readers to pay for access to pre- mium content online. On the print side, traditional newspapers are under attack from free publications such as Metro . Though Metro offers a completely different format and journalistic quality and focuses primarily on young readers who previ- ously ignored newspapers, it is ratcheting up the pressure on fee-for-service news providers. Charging money for news is an increasingly diffi cult proposition. Some news entrepreneurs are experiment- ing with novel formats focused on the online space. For example, news provider True/Slant (trueslant.com) aggregates on one site the work of over 60 journalists, each an expert in a specifi c fi eld. The writers are paid a share of the advertising and sponsorship revenues gener- ated by True/Slant. For a fee, advertisers can publish their own material in pages paralleling the news content. Mass � automatic ad $ A large number of users does not automati- cally translate into an El Dorado of advertising revenues, as the social networking service Facebook has demonstrated. The company claimed over 200 million active users as of May 2009, and said more than 100 million log on to its site daily. Those fi gures make Facebook the world’s largest social network. Yet users are less responsive to Facebook advertising than to traditional Web ads, according to industry experts. While advertising is only one of several potential Revenue Streams for Facebook, clearly a mass of users does not guarantee huge adver- tising revenues. At this writing, privately held Facebook did not disclose revenue data. ad space on high traffi c social network free social network mass customized advertisers global web audience ad sales force facebook.com free accounts fees for ad space on facebook Facebook Newspapers: Free or Not Free? bmgen_final.indd 93 6/15/10 5:36 PM