Newspaper content can be caterogized as news, analysis, classifieds & advertorails. Of these, classifieds and advertorials are major revenue earners, with revenue from classifieds contributing upto 30% or more. Naturally, newspapers plan to collect revenue from classifieds in their online versions. But the advent of free classifieds web-sites and free news web-sites may force newspapers to rework revenue models for their online ventures.

Collaborative publishing, consumer generated media, citizens' media, web-logging, ... the list is long and growing. By harnessing the power of communities, online media is challenging conventional media models even as it re-invents itself ! (Witness the rising popularity of Wikipedia.com whose collaborative approach to news aggregation is completely different from the editorial approach of Yahoo News! and the auto-selected news stories of Google News.)

On another level, free online classified site Craigslist.org has become a real threat to newspapers who are hoping to convert their offline classifieds revenues to online revenues.

News Equals Encyclopaedia (If Updated Hourly)
Many years ago, the encylopaedia comprised of a set of 25 tomes & was an indispensable part of the learned man's personal reference library. Being a product of the print medium, the encyclopedia of yore was painstakingly updated for many years, before it was re-printed & sold as a new edition. Compare this with today's online encyclopedia Wikipedia which is hosted by the non-profit Wikimedia Foundation: starting as a single language web-site, Wikipedia has evolved into a multi-lingual mega-site which is updated by its readers, for its readers.

Any wonder that Wikipedia's updated news page has started attracting more eyeballs than Google
News ?

Age of the Empowered Netizen
The Internet has simplified the process of both updation as well as publishing. Versions may be updated every month, every week, every day, every minute. And these updates can be effected simultaneously by multiple persons, from across the globe. Also, since it is ideal for creating & maintaining online communities, the Web has given birth to the concept of consumer-generated media & citizen reporting.

It was only a few years ago that Wikimedia Foundation set up a free web-site called Wikipedia - with the sole objective of spreading knowledge based on a co-operative, non-profit model. It started by updating its site with available knowledge from encyclopaedia & dictionaries. But soon realized that regular readers of Wikipedia - the knowledge seekers - were more than willing to share their knowledge, especially on a non-commercial platform. Wikipedia has been encouraging members to contribute freely, by providing tools for easy editing. Today, group-editing and rapid, multi-location updating has made Wikipedia is an outstanding example of collective journalism & community publishing on the web.

With data being updated online on a regular basis, Wikipedia soon evolved into an online news site - with empowered netizens contributing news & their individual analysis.

It is this new collaborative model (a stark change from the conventional "Centrally Controlled Editorial Model") which is challenging the traditional media.

Free Classifieds
Classified ad revenues comprise upto 30 - 40% of a newspaper's advertising revenues. Mostly cash business (no credit, no bad debts!) from advertisers who are mostly individuals (fewer disputes!). No prizes for guessing why newspapers are fighting to retain their share of this business !

Most newspapers who have set up their online versions, see online classifieds as a major revenue model for their online newspapers. To minimize attrition most newspapers are trying to (slowly) migrate their existing readers from newspapers to their web-site, during the past few years.

The same period has seen the launch of web-sites like Craigslist.com who offer classifieds ad service free of cost. The popularization & rapid progress of such free online classifieds services will severely affect newspapers' revenue plans who will have to sell their paid classifieds in the face of a free service.

Future Projection
With increasing popularity, it seems easy to project the future of sites like Wikipedia & Craigslist.
• They may accept banner ads like most free-content web-sites (& much like the traditional Yellow    Pages used to do, while providing free "vanilla" listings).
• They may charge (as Craigslist does) a nominal fee for each of the million+ listings.

All this is bound to create serious problems for online newspapers :
• With all their might, newspapers can hardly convince their readers (who are also  the major    classifieds advertisers) to pay for classifieds listings when high-traffic, popular sites like Craigslist.com    offer similar service free of cost. This will translate to a significant loss of revenue. (Even if Craigslist    starts charging a small fee, it will at the very least, bring down the rates and have a drastic effect    on classified ad revenue.)
• Traditional methods of managing news & editorial are being challenged by collaborative processes like    group editing & consumer generated media. With free sites like Wikipedia gaining popularity at an    alarming rate, the chances of paid online newspaper subscriptions may not generate adequate    response.
• And if popular free online classified sites start accepting display/banner ads, they will pose another    threat to online newspapers' display advertising revenue model.

All this will force online newspapers to rethink their revenue model.

The Bottom Line
Perhaps all this explains why traditional media has been creating & acquiring online media properties (starting with Time Warner - AOL to the recent spate of online acquisitions of News Corp). For the online newspaper, it will be a case of how to provide 'sticky' content to trap the advertiser. For the advertiser however, the bottom line will be why pay more when there's a free/cheaper option?