News Digital is going to eliminate several hundred jobs within the next few months, KnightRidder.com has already laid off 70 employees, New York Times Digital is laying off 70 employees… the new economy recession is hitting full on the online media sector.

The whole new-media suffers greatly from the crisis of the Internet values and even more so, of its most obvious economic after-effect: the decrease, or even the abolition of many Internet advertising budgets.

To make things even worse, online advertising is presently suffering a great slowdown and start-ups no longer favour online campaigns.

Both factors badly affect these business models…, which often prove to be very fragile.

As we see that online business models that were mainly based on advertising revenues have already claimed many victims among start-ups, there is no reason why the same phenomenon should not happen in the online publishing world.

And yet the success of a site such as the New York Times is not questionable, since it can boast both quality and traffic. Unfortunately, expenses are just as high: 400 employees for the digital part of the NYT, $46.2 million loss in the first nine months of 2000.

The never-ending slackening of its advertising revenues forced the NYT to plan cutbacks among its employees but also to delay once more the IPO that was originally planned for the month of October.

Even though we do not worry too much about what the future holds for NYT, we might think that smaller sites face a very gloomy future indeed.

We often see attempts at making certain parties pay to get access to online media but the net surfer has become so used to having everything for free that he can no longer adhere to such concept.

As a result, these attempts were hardly established that they were already discarded, and this took place only two or three months after they were launched.

Too much information kills information. It remains very uncommon to see such an original and high-standard content as the one shown in the NYT.

I get nearly all the new-media press releases and I am still appalled at how casually part of the new-media just take up these press releases (often just copying and pasting) without even giving it the slightest added value or critical opinion. But there is no doubt that criticism does not go together with advertising budgets and when one is facing financial difficulties…

As a result, 8 out of 10 new-media sites are now presenting their readers with the same articles that show the same lack of quality and added value.

This is the reason why trying to have net surfers pay for a repetitive and tasteless content is a joke, and venture capitalists, who do not find it funny any more, no longer accept to finance … losses.

If a site such as the NYT does not manage to reach profitability (breaking-point is only expected to take place in 2002), how could other sites, far from offering the same quality of content, resist the online advertising slowdown?

As of today, the only apparently successful paying content is the Wall Street Journal… The question is to know whether the number of subscriptions make up for the corresponding expenses…

In my opinion, all the setbacks presently suffered by the new-media are the exact reflection of all these start-ups that were created thoughtlessly, each of them presenting a business-model crazier than the next.

The idea that generated all those failures is no more than a stupid error of judgement, which spread like a virus in the new economy. This idea was that the Internet was going to create new consumers, and that there was a need to create new products for them.

We are still waiting for this new "consumer brand"…

Source : New York Times