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By Chris Meadows

KindleNYTimes There have been a number of news stories lately about the possibility of newspapers ceasing  their print publication entirely and going exclusively to on-line distribution. For example, the Alley Insider notes that printing the New York Times costs twice as much as it would to send every subscriber a free Kindle.

However, another Silicon Valley blogger, this one a veteran print journalist, points out in his blog “Reflections of a Newsosaur” that newspapers simply can’t afford to make that kind of move—even though ad revenues have fallen off over the last few years, print advertising still accounts for the majority of revenue at most newspapers. What kind of on-line advertising can papers do to make up the shortfall? Mainly banner ads.

The problem with banners is that it they are the lowest form of digital advertising. Because untargeted banners generally have click-though rates of less than 0.5%, marketers don’t want to pay much for them. Prices are further depressed because the web is awash in page views, creating far more inventory than the number of banners vying to appear on them. Last but not least, such big banner-ad networks as Google’s Double Click have learned to squeeze pricing by combining sophisticated bidding algorithms with just-in-time ad delivery.

Circulation fees still account for less than 30% of total newspaper revenue, while print sales account for 90% of their advertising revenue. Until papers can find another source of revenue as compelling to make up the shortfall, any attempt to kill print altogether will invariably end up cutting their own throats.

[Author's Note: I discovered on 11/27/2011 that this article had been truncated, and I have attempted to reconstruct the last part of it from the blog entry in question. I have no idea how close it was to the original.]

 
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