BROOKE GLADSTONE: The New York Times's 410 million dollar purchase of About.com is the latest in a string of Old Media acquisitions involving internet properties. Dow Jones, which owns the Wall Street Journal, spent more than half a billion dollars to buy MarketWatch.com, and the Washington Post Company recently picked up Slate.com, an on-line news magazine. And so, the question on our minds is: Why? Why, when a viable web-based business model has proved so elusive, are established journalistic institutions rolling the dice? Here to answer this question is the executive editor of Forbes Magazine, Paul Maidment. Paul, welcome to On the Media.

PAUL MAIDMENT: Thank you.

BROOKE GLADSTONE: So, it's no secret that ad revenue for print media has been stagnant for several years. One reason is that newspaper readership, obviously, is declining. But let's talk about another reason. Traditional advertising - though clearly effective, is inefficient.

PAUL MAIDMENT: Lord Leverhulme once famously said "I know half the money I spend on advertising is wasted. I just don't know which half." [LAUGHTER] If he had been alive today, with the web, he would have known which half, because advertising is very trackable, very measurable. It's an incredibly efficient way for an advertiser to reach their audience. So that means you've got the same sorts of levels of advertising, but less money for it going to publishers. And that's bad news for publishers.

BROOKE GLADSTONE: So it's not so good for journalism?

PAUL MAIDMENT: Well, I think you've got to think of a completely new way of looking at what journalism is about, and this is something that publishers have had a great deal of difficulty doing. Very few of them manage to grasp this, and that's this very simple point. What they produce every day is not a website or a blog or a newspaper or, in our case, a magazine. What we actually produce every day is our intellectual property - our journalism - and how we distribute that has to be driven entirely by the demands of our audience. So, if they want it in print, we should do it in print. If they want it on a website, we should do it that way. If they want it in person, we should do it that way. But traditional journalism in the sense of reporters going out, finding stories, developing contacts; editors then processing all that material - that is a very expensive business, and the sort of money that newspapers could get for their advertising in print just isn't coming up at the same level on line in order to fund those newsrooms.

BROOKE GLADSTONE: Well, then let's examine what the New York Times is doing. Obviously, in purchasing About.com, they're not purchasing a journalistic enterprise. This is basically a network of blogs on some 50,000 different topics. Couldn't the New York Times make more money on the web simply by keeping New York Times information available on the web longer? Normally you can't find it without paying after about seven days.

PAUL MAIDMENT: It's my belief, in the vast majority of cases, publishers would be a lot better off keeping the content freely accessible, and monetizing it by selling advertisements into it, rather than charging subscriptions for it. The reason I say that is there's a very - another very fundamental change going on in the publishing industry, in the newspaper publishing industry, and that is this: In the past, what happened was, newspapers gathered an audience together, and they sold that audience to advertisers. And the audience was happy to pay to be gathered together. They pay a cover price for the newspaper. When the web came along the pendulum swung a bit. People were still happy to be gathered together as an audience to be sold to advertisers, but now they weren't prepared to pay to be gathered together. [LAUGHTER] They wanted it free. What will happen next is that audience will say: If you're going to sell us to advertisers, then you've got to pay us. And that's the real long-term challenge that I think newspapers are going to be facing.

BROOKE GLADSTONE: Paul, I have to say, in the parlance of our times, you have just "blown my mind." How is it possible that an audience - any audience - any news consumer will say - I've clicked on to your site to, by the way, read news. Therefore, you owe me.

PAUL MAIDMENT: It may well be that they're not necessarily paid in cash. I don't think that will be the way. But it may be that somehow they're paid in services, they're paid in information.

BROOKE GLADSTONE: But they are being paid in information now.

PAUL MAIDMENT: But they're not being paid in information that is necessarily relevant to them. One of the reasons why print circulations are declining is that a generation of people are turning away from print and to the web, because essentially too much in those newspapers doesn't bear on their life at all. They're too generic. And that's the way newspapers have had to be, because there's a publishing technology for a hundred years. So, maybe the way that publishers will end up paying to aggregate their audiences is by providing them with highly personalized news services.

BROOKE GLADSTONE: I can understand why the Washington Post bought Slate. They're both editorial properties. They could probably move their advertising very easily around in that sphere. But there doesn't seem to be much synergy between the New York Times and About.com.

PAUL MAIDMENT: On the question of synergies, there isn't much, I don't think, crossover between what the New York Times as a newspaper does, a news organization does, and what About.com does. But I think in the New York Times case, they already have largely a free site, so they're getting people coming by and exposed to the advertising, and they're getting paid per thousand sets of eyeballs that look at those ads. With the About.com, the advertising is paid for when somebody clicks on a link and actually goes through to the advertiser's site and presumably eventually buys the service. So the New York Times is bolting that second stream of advertising revenue on to what it already has, and that's how it's hoping it will grow its own advertising business.

BROOKE GLADSTONE: In 1999, the New York Times bought Abuzz.com which was an on-line community of topical discussion boards. That site closed shop last year. Is this just another expensive blunder?

PAUL MAIDMENT: Well, time alone will tell. Across the internet as a whole, you know, internet 2.0 seems a lot more successful than internet 1.0 commercially. [LAUGHTER] But remember, you know, when the internet bubble burst, it was an internet stock bubble. It wasn't an internet bubble that burst. And a lot of the ideas percolating around then - I mean publishing ideas - were perfectly valid and strong ideas, and they're now beginning to find their feet.

BROOKE GLADSTONE: Do you think that these acquisitions were ultimately inevitable?

PAUL MAIDMENT: Well, if you make your money by selling advertising, you have to be where the advertisers want to be.

BROOKE GLADSTONE: Paul, thank you very much.

PAUL MAIDMENT: My pleasure.

BROOKE GLADSTONE: Paul Maidment is the executive editor of Forbes Magazine. [MUSIC]

BROOKE GLADSTONE: Coming up, reporters who pick their way through a minefield of words, and one who will lob them like missiles to make a point. This is On the Media, from NPR.