Newspapers Dying a Slow Death

As newspapers lose readers and as advertising dollars dry up as a source of revenue for newspapers, publications are looking for new sources of income. Forging partnerships with start-ups and websites is one route that is being considered. Likewise, various companies and websites are rolling out new ways to drum up cash for local papers.

Zillow, a real estate Web site that provides estimates of homes values and other information, is pursuing a new way to generate revenue for local papers. “Newspapers have been left for dead by a lot of people,” said Spencer Rascoff, chief operating officer of Zillow.com. “Readying their obituaries is very premature.”

According to an article in The New York Times, the company recently announced a partnership to lend its real estate search engine to the Web sites of more than 180 national newspapers. For example, the online real estate section of the Richmond-Times Dispatch will now contain a Zillow-powered box geared towards homeowners or prospective buyers in central Virginia. The first 100 of Zillow Web sites went live, and the remaining 80 will be unveiled throughout the rest of 2009.

Since Zillow has the partnership with the co-branded sites it will share the revenue with the newspapers, and it also extends its reach into the local markets. Mr. Rascoff said,” “Real estate is the most local product there is. It would take us decades to build those local relationships. Rather than starting from scratch, we’re partnering with someone who has distribution, but don’t have the product.”

Despite the dismal economy and the stagnant real estate market, Zillow has seen a boost in business. In March, the website had 8.8 million unique visitors, a 70% increase over the last year. Additionally, the partnerships could help Zillow ride out the slowdown in online advertising, since the company primarily relies on an ad-based business model for revenue, which has proven challenging in the tumultuous economy. Ultimately, it is going to require newspapers to figure out a new model that works and adapt to different business models that generate revenue. As interest rates go down and prospective buyers and sellers start looking to buy homes again, Zillow is one company that is poised for growth. It will be interesting to see what other websites and start-ups are created as newspapers popularity fades. Small business experts say economic downturns can be a good time to start a venture.