David Evans of Forbes says that newspapers’ advertising revenue woes lie in the paper-advertising format, where papers can’t get feedback on who looks at their ads and thus can’t target them accordingly. The answer, he thinks, is in creating a paperless paper wherein news organizations can employ better-targeted advertising.

The centuries-old newspaper business model, Evans thinks, is still working: “charge advertisers for getting access to readers whom you attract with relevant content and cheap prices.” The problem, rather, is the physical method newspapers use to advertise: printing content and displaying ads on paper where publishers cannot track how many readers view ads or buy based on them.

Google, on the other hand, charges advertisers only when users click on ads and can use information from click-tracking to target ads in the future. How will newspapers compete?

“If anyone is going to save the newspaper industry, it isn't any of the moguls who think they can breathe life into a dying technology,” says Evans. “It is more likely to be someone like Steve Jobs who can devise a really appealing way to make newspapers available digitally.”

If someone can create a digital reader that can both replace the enjoyable experience and portability of print-paper reading while also competing with pay-per-click contextual advertising, newspapers could move to an equal playing field with big search engines.

Source: Forbes through I Want Media