Lance Turner links to a blog post from Steve Rubel of Edelman who opines that rising gas prices will substantially harm newspapers. Rubel observes, “For starters, as gas prices go up, so will the distribution costs. . . there’s a greater awareness among consumers of their environmental impact . . . Last but not least we have the growing popularity of speedy 3G-enabled smart phones, including the new iPhone 3G. The devices are declining in price while offering a lot more sophisticated experience for reading news.”

Turner responds: “Of course, I disagree that the future isn’t bright. The Internet affords newsgatherers great storytelling, interactive and marketing opportunities. The trick will be whether print publishers can make the digital transition by adopting an entirely new business model that moves the newsgathering business from paper to online. That, of course, is the obvious question. The solution remains elusive.”

I can understand Rubel’s argument about rising fuel prices having an impact on distribution costs. That said, according to Crain’s New York Business, “ad page counts in the Times for key categories like real estate, Help Wanted and national auto plunged by double digits.” Another view is that rising fuel prices are forcing automobile advertisers to spend less money. This industry has always been good to print publications.

But rising gas prices aren’t the only problem. The digital transition is proving to be a challenge to newspapers. Why? First, a lot of news content is already free. Thanks to yahoo.com or msn.com, the everyday reader can access the Associated Press content for nothing, although the AP has created quite a dilemma for itself by demanding that exceprts of AP stories not be used on blogs. For content that isn’t free, people have proven time and again that they won’t pay for it. Second, advertising rates don’t equate in the digital space - at least not yet. The “value” of online banner space is less than the “value” of a full-page ad.

A college friend and I thought we had a good idea to solve what we saw to be a looming problem. We were barely nineteen and we conceived a system that addressed lagging internet advertising and poor click-through rates for banner ads. It worked something like this: advertisers would partner with web sites to offer 10-second commercials that would be targeted to give the viewer, based on his or her web habits, a commercial. The viewer would be prohibited from opting out of the commercial thereby ensuring that the advertiser had a dedicated viewer. We thought this would drive the value for the space up.

That was eleven years ago, and I think it’s safe to say it probably wouldn’t work unless everyone bought in. Otherwise, you’d see a backlash against the first few sites that tried it. Salon has the closest thing to this system, but you can still opt out of the advertisement.

Solutions, as Mr. Turner notes, remain elusive. Even as popular news sites like the New York Times enhance their web content, turning a profit isn’t easy. Video has proven to be a draw, but you can’t force viewers to pay for it. In fact, Google still can’t find a way to make money on You Tube, although they’re exploring ways to lay in advertising that won’t frustrate the viewer. Blogs written by respected journalists (e.g. Andrew Sullivan of The Atlantic, James Wolcott of Vanity Fair and Hendrik Hertzberg of The New Yorker) also bring additional traffic to a web site.

I’ve argued before that the publications with a niche and that serve a specific audience need (it might be based on a genre of news or geography) have a better chance of making substantial gains in online advertising.

Their main competition isn’t advertisers; it’s Google. Google makes roughly $20 billion a year on paid search alone. They do so by making user requested information instantly available. Ask yourself this: if you don’t know where to find something online where’s the first place you’re likely to go? My guess: Google.

Which is why newspapers have to cater to the user in the online world. If they can become trusted sources for instant news, they stand a better shot to keep people off of Google. And the end result will be a more economically valuable website which, in turn, will be more attractive to online advertisers.

But they key is instant. If an event happens, a publication needs to be ready to pounce in order to capture that direct traffic. That’s why blogs are such an advantage despite the frustration they provide to the traditional newspaper model.

So how can newspapers adapt? By making their websites come alive. The content shouldn’t mimic what’s in the print publication. Simply because a story was a lead at midnight the night before doesn’t mean that by noon the next day it’s still a story people care about. Online editors and web developers have to be consistently pushing new content every hour of every day.

But that’s only half the battle. The websites have to be easy to navigate and easy to search. If a user can’t find something they’re going to abandon the site and head straight back to where? That’s right: Google.

Google’s figured out a way to make billions of dollars in online advertising. Industry experts believe that $42 billion will be spent in online advertising in 2011. That’s up from $21.4 billion spent in 2007. Additionally, “the 100 top advertisers spent nearly $230 million less on the traditional four media in 2006 compared with 2005, while boosting internet ad spending by $558 million,” according to Marketing Charts. So there’s real money to be made.