The Bottom Line / A Blood Bath in the Newspaper Business

The newspaper business in Israel hasn't seen such interest in years.

After a decade when papers only closed and readership levels continuously dropped, no less than four new newspapers were started over the last year. All of them are part of the global "Metro" trend: free newspapers distributed in subway stations and designed to pass the travel time while gently presenting the major events of the day.

In Israel, the Metro market is not very developed. The business models under consideration are distribution at gas and train stations. This is how Shlomo Ben-Tzvi's newspaper Israeli has worked for more than a year. Sheldon Adelson's new attempt, Israel Today (Yisrael Hayom), will be distributed to mailboxes, and the two new papers from Arnon Mozes and the David Weissman-Eli Azur team will be passed out at various point of sale, such as supermarkets.

It is hard to understand why so many new papers are being started at the same time. Common knowledge should say that if so many sophisticated and rich businessmen are entering the business, then there must be a gold mine hiding here. All you need to do, then, is bend over and pick up the gold in the street.

So is that really true?

It seems to me that the answer is rather complicated.

First, it is very clear that anyone and everyone trying to take a share of the newspaper pie is first and foremost interested in influence and power. Newspapers are not particularly profitable, nor are they a major growth industry. Anyone trying to enter the business is looking at primarily the value of the accompanying power and influence.

Over recent years, there has been a steady drop in newspaper readership in Israel. The rise of the Internet, the huge proliferation of radio and television channels, and other social and cultural changes have radically changed the face of the printed media.

The demand for the printed word - on newsprint - is changing, and the papers must adapt themselves to these changes more so every day. Every newspaper chooses its business model and its direction, and some will prosper and others will fail.

But what is clear is that in the process, a number of opportunities will appear. As habits change, so will distribution opportunities - as well as content and prices.

This is what has brought us the freebie paper and its alternative distribution channels - gas and train stations, supermarkets and mailboxes.

In some cases, this is only an offensive strategy to break into a new market and pick up market share. But in other cases, like that of Yedioth Ahronoth, it is a defensive strategy.

So how will this affect those of us who make their living from newspapers?

For journalists, this is wonderful. After years of cutbacks, we finally are receiving offers, and alternative employment opportunities are popping up - and that is good.

As for publishers, this is all a big headache. They will now be exposed to serious salary demands, and will be forced to invest resources in improving and upgrading their products in order to adapt to the changing market.

But all this is only in the short run.

In the long run, there are still a lot of questions hovering around the newspaper business. It is hard to imagine that today's newspapers will keep their readership while the new freebies manage to flourish.

The significance is that after a bloody one- to three-year fight, we will once again see the newspaper business shrink - in terms of both the number of papers and jobs for journalists.

Only the best and the brightest - and the strong - will survive, because that is how it is in free-market capitalism. There may be free papers, but there are no free lunches.