With digital user bases of under a million, The New York Times and The Washington Post Company (NYSE:WPO) will experience trouble selling Internet display ads. Why would advertisers spend money advertising in these newspapers when they can use that budget to buy ads on Facebook and Google Inc (NASDAQ:GOOG) instead, especially when both Internet giants are now increasingly catering to local businesses? Facebook Inc (NASDAQ:FB) has over a billion active users, while Google caters to over a billion daily visitors – making The Times and The Post look absolutely puny by comparison.
The New York Times’ recent decision to rename The International Herald Tribune into The International New York Times to reach a broader international audience reflects its desire to make its once-iconic name mean something again. While that might have worked a few decades ago, Google and Facebook carry far more weight and brand recognition than The Times in 2013.
In addition, The New York Times Company (NYSE:NYT)’ recently claimed that it intends to explore online initiatives, such as e-commerce and games. However, that statement shows just how lost the company is. Does The Times really think that experimenting with Amazon.com, Inc. (NASDAQ:AMZN) or Zynga Inc (NASDAQ:ZNGA)’s business models is a sound tactic as it teeters on the brink of unprofitability?
Lastly, paywalls are bound to fail. When an average user clicks through an aggregated news headline on Yahoo! Inc. (NASDAQ:YHOO) or Google Inc (NASDAQ:GOOG), they expect to read a free news article. If they hit a paywall, they are likely to simply click back on their browsers to read one of the dozens of free versions of the same story, provided by the AP or content mills, instead of deciding to sign up for a paid membership.
Embracing the new status quo
Both The Washington Post Company (NYSE:WPO) and The New York Times Company (NYSE:NYT) are failing to accept the new status quo – Google, Yahoo! Inc. (NASDAQ:YHOO), Facebook Inc (NASDAQ:FB) and Twitter have made news free forever. The only way that they can capitalize on this growth is to grow larger (and possibly combine) under a new banner.
They also have to embrace the new standard of content farms such as America Online, which controls a wide range of sites including The Huffington Post, TechCrunch and Engadget. These sites employ legions of freelance writers to write short articles, which are then aggregated through portal sites such as Yahoo and Google, which help generate higher advertising revenue. Although The Times and The Post have blog networks, they are nowhere as extensive or aggressive with advertising as America Online’s family of sites.
Only then, by getting bigger and more aggressive, can these two papers survive. Otherwise, both newspaper stocks deserve to be kicked to the curb and recycled.
The article It’s Time to Recycle These Two Newspaper Stocks originally appeared on Fool.com and is written by Leo Sun.
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