Micropayments: the future of newspapers?

Pretty much everyone agrees that the local daily papers are dying, which means that it must be time for someone to bring up the possibility of saving the industry with micropayments. Walter Isaacson, the former managing editor of Time Magazine, writes:

Under a micropayment system, a newspaper might decide to charge a nickel for an article or a dime for that day's full edition or $2 for a month's worth of Web access. Some surfers would balk, but I suspect most would merrily click through if it were cheap and easy enough.

Around the net, people have responded by pointing out that newspapers make their money off ads; subscriptions cover barely more than the cost of getting the physical paper to you in the first play. Michael Kinsley, the founding editor of Slate, provides some telling numbers in the New York Times:

Newspaper readers have never paid for the content (words and photos). What they have paid for is the paper that content is printed on. A week of The Washington Post weighs about eight pounds and costs $1.81 for new subscribers, home-delivered. With newsprint (that’s the paper, not the ink) costing around $750 a metric ton, or 34 cents a pound, Post subscribers are getting almost a dollar’s worth of paper free every week — not to mention the ink, the delivery, etc.

As he points out, if the Times got $2 a month from the one million people who now read the physical newspaper, that would be $24 million a year -- but they take in about a billion dollars a year in ads. To survive, newspapers are going to need to figure out how turn on-line readers into advertising money, not how to get them to pay tiny amounts for their news.

Here are some circulation and advertising figures:
Daily circulation has started to drop off:


And here's the advertising picture, showing that until 2006, the downturn was almost entirely due to the falling market for classified ads, but that in the last year or so, even retail and national advertising has started to drop:

(These numbers come from the Newspaper Association of America; they do not appear to be adjusted for inflation.)