Ever since the mid-nineties when subscription dialup services like Prodigy, CompuServe, and America Online began popularizing getting news through the computer, the newspaper industry has tried to incorporate this content distribution method into its existing business models. Billions have been spent on this effort and very few large papers have made money online, even as their print circ declines tremendously.
The web mystery has everyone in the industry shaking their heads in dismay and wonderment at how they should change to fit the new media world. This is one reason everyone in the biz is watching the experimental San Francisco Examiner and DC Examiner which deliver free daily papers to households with $75,000+ incomes, hoping to rely exclusively on ad revs.
"I think you have to go in with a premise that we are living in a time and generation of folks that really don't believe you should pay for access to news," SF Examiner publisher Scott McKibben tells Boston Globe media reporter Mark Jurkowitz. "You must run your operation with a high degree of cost discipline. You must have an exceptional distribution network."
This strategy might just pay off. The only time people my age and younger consider buying a paper is when they're heading to the train. And even then, many won't do it.
The Examiner model is sounder to me than those silly free papers such as the Washington Post's "Express" which is more of a trash paper that you pick up on the street and throw away when you get to your destination. People are more likely to keep a paper lying around the house, even if it's just to use for birdcage liner or recycling.
I'm also hopeful for the Examiners because they're doing what I think is the best philosophy in politics and business: applying new ways of thinking to improve an existing operation. That is how old media such as books or radio have been able to survive, by finding their niche within the new media world.
If you're looking for more about the changing newspaper scene, I highly recommend reading Alan Mutter's blog Reflections of a Newsosaur if you aren't already.
UPDATE: According to these stats from Drudge (he says he got them from the Audit Bureau of Circulations), the circ of the SF Examiner's rival paper, the San Francisco Chronicle is down 6.1 percent, the highest of any top 20 newspaper except the LA Times. It' probably a California thing, but it's possible that the Examiner might have played a role. I guess we'll know in about two years.