Journal Blazes Newspapers' New Trail

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In 2006, many papers were reluctantly forced to accept the news that online media is not going to just bite off a tiny piece of the overall media advertising pie and leave newspapers with enough to continue to expand their print editions and ignore the online business, says Tatum. As a result, she says 2007 will be the year that newspapers start revamping their Web sites, filling them with exclusive content and multimedia coverage that can lure both readers and advertisers away from blogs and portals. "2007 will be the year when newspapers stare long and hard at their Web sites," says Tatum.

The Wall Street Journal is not the only newspaper stepping up the integration between print and online by differentiating content and adding more blogs and multimedia features. The Washington Post (WPO), The New York Times (NYT), and USA Today publisher Gannett (GCI) have all announced changes to their Web sites and increased cooperation between print and online staffs. The Washington Post, for example, told Reuters that print editors would play a bigger role in shaping Web coverage.

Glory Days Are Gone

But the Journal's efforts are among the most extensive. In the '90s, the online edition and the newspaper did not work that closely together, despite being in the same newsroom, says Grueskin. "The Online Journal was right next to Page One. So physically we were very close, but there wasn't much interaction," he said. Now, print reporters regularly will send scoops to online and Dow Jones Newswire reporters, who flesh out breaking news stories, Grueskin says. The print reporters then work on an analysis piece for the paper edition. He also says that more print journalists have become interested in creating online-only features such as blogs.

However, even a new online emphasis won't restore newspapers to their former glory. Hallerman says that newspapers' share of overall U.S. online advertising revenue—estimated at $16.4 billion in 2006 and expected to grow to $25.2 billion in 2010—will not account for losses in print advertising. He believes that newspapers will inevitably consolidate with one major paper per big city, except perhaps in New York. He also believes that many newspapers will go private to avoid Wall Street demands to keep pace with the growth of other media and the market as a whole. More publications will enter ad-sharing partnerships with Yahoo, Google (GOOG), and other portals that republish their articles, he says.

Tatum, while more optimistic about the possibilities for online journalism, also believes that newspapers will just have to deal with less. "There is an opportunity for a certain amount of growth if they can get it together," says Tatum. "But, by and large, we are still talking about a smaller portion of the pie."

Holahan is a writer for BusinessWeek.com in New York .