Yahoo! Deal ‘Dangerous’ for Newspapers?

Forbes writes that the Yahoo!-newspaper consortium relationship offers short term gain but potentially long term pain for newspapers:

In exchange for access to Yahoo!’s ad inventory, papers turn over half of the revenue from ads they sell on the portal. Since joining the consortium, the Atlanta Journal-Constitution expanded its local reach, the proportion of the regional population who hit its Web site in a month, from 15% to 85%, Yahoo! says. The Evansville Courier Press, an Indiana daily with a circulation of 60,000, sold $1.1 million in Yahoo! ads in a week-long “sales blitz.” Yahoo! won’t discuss the specifics of the revenue-sharing agreement, but newspaper partners confirmed the 50-50 arrangement.

But the partnership could have an even bigger cost for newspapers. In the offline world, newspapers have traditionally dominated advertising sales to local businesses like retailers, car dealerships and supermarkets. By introducing their local advertisers to Yahoo!, newspapers run the risk of turning over their best customers to a digital powerhouse as they try to rebuild their own businesses online.

The danger isn’t that Yahoo! will steal advertisers but that some advertisers will simply exit the newspaper altogether once they’ve figured out an alternative. However, the newspapers have had to take risks. They also need to have a strategy that looks or diversifies beyond Yahoo!

Charging for content probably isn’t that strategy or can only be a piece of a larger strategy. A recent UK survey (n=700) by agency 7Stars found that “46% [of respondents] said they would stop buying their current newspaper if its price increased.”


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