The threat to the business model that
supports newspaper journalism was spelt out by the editor of The Guardian, Alan Rusbridger, last week. Rusbridger spoke about the internet
classified advertising entrepreneur Craig Newmark and his “Craigslist” free community
internet advertising board.

Newmark has “tanks on our lawns”, said
Rusbridger. His business model “threatens to wipe out newspapers around
the world”. Serious journalism is “an expensive business” and by
providing adverts without editorial, Newmark has “disaggregated journalism from advertising”.

“However much we love newspapers, it’s
not entirely clear how they can go on doing the things they have
traditionally done if the main planks of their economic existence are being
gradually – or not so gradually – kicked away.”

Craigslist has sites covering Australian
cities, and there are local equivalents, like ozfreeonline.com.au and freeAd.com.au. None of them have really
taken off, but the established players
are doing their best to meet the threat – and still make money. The
Trading Post
can be used online at cheaper rates. News Limited local papers
have recently launched truelocal
and Fairfax has Cracker.

The Fairfax
broadsheets, traditionally reliant on classifieds, are the most vulnerable –
but you won’t hear any Rusbridger-style frankness from that company, answerable
as it is to its shareholders rather than to a Guardian-style trust. Fairfax CEO David Kirk said recently that Fairfax’s newspaper
ad revenue was up 4.6% in Australia
in 2005.

Crikey asked Fairfax spinner
Bruce Wolpe for a breakdown on how much of that increase came from the
broadsheets, and how much from suburban newspapers and other publications. Wolpe
replied that the figure was for all Australian publishing. “We do not break out
mastheads or groups”. Well they wouldn’t, would they.

But this
presentation
last year stated that Fairfax suburban
and regional classified advertising was experiencing double digit growth.
Average the figures out. The broadsheets must be a lot less healthy. Elsewhere,
Fairfax has said that a key strategy is to diversify away from reliance on
metropolitan newspapers.

The word is that, on their own, the broadsheets are not making enough money to justify their journalistic staff in the eyes
of the stockmarket, which is why the company will never break out those figures
on their own, and why it is trying to morph into a media company, rather than a
newspaper company.