Fitch Ratings Expects Some Top Newspaper Sites to Try Paid Content in 2010 -- and Fail

By: Jennifer Saba The worst of the advertising downturn has already passed -- but don't expect newspapers to be on the ride up, Fitch Ratings says in its 2010 Media Outlook report released Thursday.

Fitch analysts Mike Simonton and Jamie Rizzo pointedly state that some media, such as newspapers, yellow pages and consumer magazines, are going to be left behind in an ad recovery. Even with easing yearly comparisons ? newspaper ad revenue is off in the double-digit percentage range this year ? the shift in the media landscape has tilted against these media: ?Advertiser sentiment and excess ad inventory will plague the [print] industry for years to come.?

Another trend to look for in 2010: flip-flopping on pay walls. Fitch is fully expecting that many newspapers are going to try and charge for content next year, only to realize it was a mistake. A handful of properties, notably The Wall Street Journal, The New York Times and smaller local papers will be able to or have pulled off an online pay strategy, according to Fitch, but don?t expect a widespread trend.

Simonton and Rizzo explain that for the rest of the lot, the competition has become too fierce. Furthermore, that competition with free content only will pull in readers, thus gaining share and the attention of advertisers.

For those sites that are contemplating some pay strategy, ?any attempt to exact price increases on remaining paying users is more likely to accelerate their departure toward free alternatives than to offset the ad dollars lost from the lower audience base.?

These sites will reverse course seeking to ?halt the death spiral,? Simonton and Rizzo wrote.