House of CardsThe online game many news organizations are playing these days is a lot like poker. Everyone’s waiting to see what cards the other players have. But as Howard Elliott, managing editor of web/editorial page at The Hamilton Spectator, points out, to even get to the table you’ve got to have the goods—in other words, great journalistic content. And for the Spec, that means producing great local stories. “When you’re playing poker, you have to be able to put in money to begin with,” he says. “If you don’t have a great local product that brings real value to your web users, you don’t even get to sit at the table.”

According to Elliott, the Spec is not only at the table, but raking in readers: traffic to the site has increased by 40 percent in the last year. The dollars are a little harder to come by. “The reality is [the website] is not generating enough revenue, and that’s what we need to address,” he says matter-of-factly.

As revenue from print editions has declined, many papers have responded by tweaking or redesigning their news websites, trying things like including more vertical content, using social media tools and creating iPhone and BlackBerry apps. Perhaps in response, online news readership has increased in recent years. According to the 2008 NADbank survey, which asked respondents which news sources they consulted in the past week, 20 percent included online, compared to 16 percent in 2005. The same trend holds in the U.S.: a 2008 Gallup poll found that the number of Americans visiting online newspaper sites on a daily basis had risen from 22 percent in 2006 to 31 percent in 2008.

However, an online news reader appears to have the attention span of a poker chip, similar to an anxious poker player waiting to deal his cards. Martin Langeveld, a former newspaper executive who now blogs for the Nieman Journalism Lab, admits, “The average time that people spend on a newspaper website is barely a minute today. They’re looking at a lot of different places and putting it together and they’re skimming more than reading. And all of this makes it more difficult, obviously, to monetize with advertising. You haven’t gotten that share of attention, that 15-minute block at breakfast.” This behaviour is hardly going to convince advertisers to drop their dough on news sites.

Marissa Nelson, senior editor, digital news at the Toronto Star, confirms that the paper’s bread and butter still comes from the print product, but she and her colleagues have been experimenting to figure out what the site’s different audiences want. Nelson says one thing that thestar.com is doing is offering vertical content, or niche material. Go to the parentcentral.ca section, for example, and you’ll find information about family outings, public school issues, blogs on pregnancy and parenting, and links to other components such as discussion groups—all flanked by ads for products like GoodNites and events like the Seasons Christmas Show.

As Nelson explains, “Traditional media have organized their websites based on the newspaper, so if we have a section of the newspaper then we have that page online, whereas how people actually consume their information online is not based on sections of the newspaper.” She adds that some advertisers like vertical content because they know exactly what type of audience the readers will be.

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The Hamilton Spectator’s Howard Elliott says his paper’s website has aced bringing in readers, but its luck isn’t holding on the revenue side

Not that the advertisers currently seem to be showing their gratitude for this helpful approach. In 2008, advertisers spent $2 million on online ads in Canadian daily newspapers, compared to the $2.5 billion they shelled out for print advertising.

Does this suggest that newspapers will rethink pay walls? Bryan Borzykowski, a senior editor at Canadian Business online, thinks it’s too late to charge at this point for most content, like general news, but mobile applications may be a future source of revenue: “Down the road fewer and fewer people will read newspapers, but people will still want the news from a brand-name source, so I think papers should really look at figuring out how to make these apps and make them good enough so people will want to pay for them.” He also thinks that Canadian media can’t experiment with their online content as much as large American newspapers because they don’t have as many resources, so they will look to publications like The New York Times to see what works there. Ironically, at the moment one of the things the Times is pondering is re-erecting some version of a pay wall, after dismantling its first attempt in 2007.

Even if some tactics work, there is not yet any jackpot for the people producing that great journalistic content, says the Spec‘s Elliott. Meanwhile, Neil Sanderson, who was assistant managing editor, digital at the Toronto Star until last May, predicts that as news organizations figure out what is needed to make a profitable news website, their team of professional journalists will shrink. “My own opinion is we cannot sustain, in most cases, the sort of newsgathering organizations that we’re accustomed to,” he says. “They’re going to have to match their costs to their revenues and not just try to justify sustaining their current cost structure, because the revenue just isn’t going to be there.”

It’s also possible that Langeveld is right when he speculates, “Maybe at some point I’ll say the heck with walking down the driveway for the paper. I’ll just use the laptop.” At the moment, though, that poker game seems a lot like a penny-ante proposition.