ERIC BEECHER: They are heading towards the cliff and it's not their fault but they are heading towards the cliff really fast ... I think that cliff is, for everybody, is within a year or two or less. — Eric Beecher, Chairman, Private Media

Hello, I'm Paul Barry, welcome to Media Watch. And who exactly is heading for that cliff?

Well it's not just newspapers this time it's the whole shebang.

According to former Sydney Morning Herald editor Eric Beecher, who's now a digital publisher, digital news sites are also struggling to survive and public interest journalism is at risk.

So tonight we're bringing you a special edition of Media Watch because the future of news has never looked bleaker.

In the past 7 months even the stars of the internet have suffered with Vice, Salon, Mashable and Gawker all laying off staff.

Buzzfeed has been forced to cut its 2016 revenue forecast by half or US$250m.

And the famous digital tech site GigaOm was last year forced to shut down operations completely

So what on earth is going on? Well, it's getting harder and harder for news sites to sell ads for decent money because as Eric Beecher knows from personal experience-and I should disclose I have a small stake in his media business -everyone on the internet has an electronic billboard to fill.

ERIC BEECHER: What that means is for the first time in history, advertisers are, aren't dealing with scarcity, they're dealing with ubiquity. And so therefore the price they pay for advertising, the ability to target audiences in a way they never could before at low prices, is just creating chaos to the revenue model. — Eric Beecher, Chairman, Private Media

It's long been clear that digital news is not as profitable as newspapers and cannot save them from going off that cliff.

The Guardian, for example, lost 59 million pounds last year and is now laying off 250 staff, even though it attracts 42 million visitors a month to its UK, US and Australian digital news sites, and is in the world's top 10.

The Daily Mail, which gets 53 million digital readers a month, is also struggling.

But even pure digital sites that once made money are in trouble because the revenue they get from advertisers for every thousand clicks on their website, or CPMs, has crashed.

Alan Kohler, who started Business Spectator 9 years ago and eventually sold it for $30 million, says that his site could not survive today.

ALAN KOHLER: We were getting $50 CPMs, which is per thousand, and when we started the business in 2007 the view was that that was pretty good we could just about make a living at that sort of price ... ... And in fact it's collapsed, the price has collapsed, and now the going rate for CPMs is two to five dollars, so it's really fallen to a tenth. It's one of the greatest price collapses in history really. — Alan Kohler, Editor in Chief, Business Spectator

The problem for digital publishers is that when it comes to ads, they're no longer the only fish in the pond. As Nine's Alex Parsons explains:

Five to 10 years ago if you wanted to buy digital advertising in Australia you went to one of five places ... Nine, Fairfax, News Ltd, Yahoo 7 or Telstra ... took up 80 per cent of the display ad market. What we've seen over the past five years is the emergence of Facebook ... and other global players. — Alex Parsons, Chief Digital and Marketing Officer, Nine Entertainment Co, Statement to Media Watch, 1 June, 2016

In the US, Facebook and Google now suck up 75 cents of every new dollar going to digital.

And in Australia the figures are even starker.

Last year, according to Morgan Stanley, Google's and Facebook's digital ad revenues in Australia grew by $1b.

But everybody else saw digital revenue shrink by $700m.

And Eric Beecher can only see things getting worse.

ERIC BEECHER: Facebook as an advertising platform is extremely recent and so they're on this extraordinary upwards trajectory and they're grabbing revenue at a prodigious rate from traditional media and they have the biggest media audience in the history of the world to support that. — Eric Beecher, Chairman, Private Media

The key reason that Facebook is so successful in selling to advertisers is that it can target potential buyers of their products because it knows who they are.

ALAN KOHLER: Facebook are the, just the champions of data because they have got everybody not only using Facebook, but they reveal everything about themselves. We all kind of put our entire lives on Facebook, so Facebook knows everything about everybody. I mean, you can, you can target your advertising through Facebook to the individual. I mean nobody's been able to do that before. It's incredible. — Alan Kohler, Editor in Chief, Business Spectator

Not only is Facebook sucking up more and more advertising revenue, it's also how more and more people access their news. In the US, almost nine out of 10 millenials, people born after 1980, already get their news this way.

So it's no surprise that GigaOm's founder Om Malik says, if he were starting out today he'd probably make his website a Facebook page.

And this shift to Facebook is likely to accelerate, now that 'Instant Articles' is feeding stories from The Sydney Morning Herald, or National Geographic, for example, direct to your Facebook app. Says Matt Rowley:

Facebook might look like a monster now but I think it's just going to get bigger the more Instant Articles takes off. — Matt Rowley, Head of Content Marketing, Cirrus Media, Statement to Media Watch, 27 May, 2016

With Instant Articles, those news stories look better and load faster, and users never have to leave their Facebook app.

But while that's good for consumers, it sets publishers a problem.

If they don't let Facebook have their stories, they miss out on traffic, but if they do, they risk making Facebook even stronger.

So far, sites like Buzzfeed, the Washington Post The Guardian and Huffington Post have all taken the plunge, as has Fairfax Media in Australia.

But News Corp has stayed out of Instant Articles, saying it doesn't want to give its valuable journalism away.

And media analyst Megan Brownlow says it's hard to know which is the right decision.

MEGAN BROWNLOW: We've got more than 12 million Australians on Facebook every day and they're tuning in six times a day. And then, if they find an article that's from your publication or from your show, off they go to see it. So on that, on that hand, it's very attractive, you need that. But on the other hand, you're fighting for the same money. — Megan Brownlow, Executive Director, PricewaterhouseCoopers

And news sites' problems sites don't stop there.

In Europe the mobile phone carrier Three begins trialling technology this week to block ADS from being transmitted over its network.

And if no one can see those ads-news sites will obviously not be able to sell them.

The technology, which blocks up to 95% of browser ads, could soon come here, and as Nic Newman of the Reuters Institute tells Media Watch, it could have a dramatic effect.

NIC NEWMAN: I think if mobile phone companies block ads at a network level, then that's a real game changer. — Nic Newman, Research Associate, Reuters Institute, 10 June, 2016

Crucially, ads on Facebook won't and be blocked.

But it doesn't need to be done at network level. In the US, one in three adults are already using ad-blocking software that's achieving a similar result.

NIC NEWMAN: One of the problems with, with ad blocking is that once people download the ad blockers, our data suggests they never actually go back. So, most of the people who downloaded them are actually using them regularly and young people, who advertisers desperately need to reach, are also ad blocking at very, very high rates. — Nic Newman, Research Associate, Reuters Institute, 10 June, 2016

Already some US websites are reportedly losing up to 40% of their ad revenue.

And it's estimated that in 2015 the US ad market took a US$22 billion hit.

Australia is yet to feel the full force.

But SBS has moved to stop people with Ad blockers accessing its videos.

While The Guardian and Nine MSN have trialled pop-ups to persuade viewers they cannot block ads if content is to remain free.

But media consultant Steve Allen reckons news sites need to do more.

If they don't act on it quickly it could become a serious problem down the track. The magazine and newspaper sites are the ones under the most pressure and they can't afford to have this interference in what are already shrinking profits. — Steve Allen, Chief Executive, Fusion Strategy, Statement to Media Watch, 19 April, 2016

So, with all these problems, can news sites find a way to stay solvent?

Well, one obvious way is to make readers pay for what they read, as News Corp does with its paywalls.

Writing in The Australian recently, the paper's former Editor in Chief Chris Mitchell was optimistic that their strategy is working.

When the paywall was launched at The Oz three years ago subscriptions were $3 a week. That is now $8. Growth is not slowing and actual total subs are now more than 80,000 ... And that tells this old newspaper editor there is a reason to think paywalls can help save the news media model ... — The Australian, 23 May, 2016

But the crucial word here is help.

Because independent analysts like Megan Brownlow from Price Waterhouse Coopers don't see subscriptions alone being the saviour.

MEGAN BROWNLOW: You need a number of different revenue streams. On its own it's not going to offset the loss of revenue from print circulation. But alongside a number of other activities, I think it's quite critical. Subscriptions are hard because Australians, particularly for digital content, are very reluctant to pay. — Megan Brownlow, Executive Director, PricewaterhouseCoopers

Yes Australians are happy to spend $80 a month on a mobile data plan.

But An Essential poll late last year showed that seven out of 10 won't pay for news under any circumstances.

Yet The Australian's publisher Nicholas Gray sees hope even in that:

"I reckon 27 per cent of people over 18 saying they might pay for -digital news (provided there is something unique about it), which by my maths is 4.4 million people, is pretty good. And that number will grow ..." — The Australian, 23 May, 2016

But is Gray being too optimistic? Nic Newman of the Reuters Institute is afraid he may be.

NIC NEWMAN: I think for general news providers who don't have anything truly distinctive, it's going to be really hard to get people to pay for news when there is so much free news available from The BBC, from The Huffington Post, from a range of other providers. So, it's really important to have something that's different and distinctive if you're going to try and charge for news. — Nic Newman, Research Associate, Reuters Institute, 10 June, 2016

Britain's Financial Times does have something unique to sell. And it currently boasts more than half-a-million digital subscribers paying up to $15 a week.

But the FT has just been forced to lower its paywall and cut costs and staff numbers after a leaked memo warned of 'daunting trading conditions' for 2016.

And life is even tougher for sites that sell 'commoditised' news - which is the sort you can get almost anywhere, including from the ABC.

ALAN KOHLER: The trouble with subscriptions is, you know, that, that there's just so much free stuff still available, that getting people to pay for, for content that's basically the same as what you can get for free is never going to work. I mean, it's got to be very special to get people to pay. And even then you know you're going to be struggling to get the same number of people paying the same amount they used to pay for a paper, a newspaper. You know that's the, that's really the problem. — Alan Kohler, Editor in Chief, Business Spectator

Britain's most popular tabloid The Sun - owned by News Corp - put up a paywall in 2013, but was forced to take it down two years later.

Australia's tabloids-which are also largely owned by News Corp-don't reveal their subscriber numbers-apart from the Herald Sun. But paywalls are unlikely to work well for them either.

And while Fairfax papers are doing better, they're not raising enough money to stop repeated job cuts.

The Sydney Morning Herald and The Age have much higher digital subscriptions than The Australian ... But numbers are now falling.

And both still rely on print advertising and print sales, which are declining fast, for for than half of their revenue.

So how can they or anyone fund their news operations in future? The answer is nobody really knows.

NIC NEWMAN: I think there's no single answer. Essentially most media companies are thinking about a range of business models. They can no longer afford to rely purely on digital advertising, that's clear. I think traditional media is definitely in the midst of this 'perfect storm' because of the combination of ad blocking, falling print sales and just the difficulties of funding news in a more atomised world ... and in the short term the prospects look pretty serious, but I suppose the positive side is that people are still really interested in news, they're interested in all kinds of news, so it's not the demand, it's the business models that's the problem. — Nic Newman, Research Associate, Reuters Institute, 10 June, 2016

Philanthropy, crowd funding, micropayments, and native advertising are just some of the business models the media are trying.

But the key problem is general news costs a fortune to produce and attracts very little digital advertising, because general news doesn't directly target people who are looking for that new car, home loan or holiday that advertisers want to sell.

But Nine's Alex Parsons insists that general news is still something mainstream sites have to produce.

It's not as profitable as lifestyle or automotive category, but what it does do is create habit for consumers to visit your site who can then move into other categories ... which are more lucrative for advertisers. — Alex Parsons, Chief Digital and Marketing Officer, Nine Entertainment Co, Statement to Media Watch, 1 June, 2016

But many in the advertising world, are not convinced.

And Lachlan Brahe from analytics company Comscore, believes general news has no future, telling Media Watch that for media companies the answer is simple:

They should stop making general news. They need to change and adapt. It's inevitable. — Lachlan Brahe, Vice President, comScore, Statement to Media Watch, 26 May, 2016

So, what does all this mean for mastheads like the Sydney Morning Herald, The Australian, the Herald Sun or other commercially-funded news sites?

Eric Beecher who has edited two of those three papers in his long career is not optimistic.

ERIC BEECHER: They are heading towards the cliff and it's not their fault but they are heading towards the cliff really fast. — Eric Beecher, Chairman, Private Media

And if they go over the edge, what exactly goes with them?

Reporters' jobs by the score for a start.

But Eric Beecher also believes it will bring the quote 'collapse of civic journalism'.

ERIC BEECHER: And when I say the collapse of civic journalism, it's happening all the time. You read all the time about journalism companies like Fairfax and News and so on, carving back the resources, making journalists redundant and particularly in the areas that matter to the democracy. So covering politics, covering the courts, covering science, covering technology, covering education, covering the arts, all of those things, covering business, these are so fundamental to the way our democracy works. And the resources to do that are being stripped away every day. — Eric Beecher, Chairman, Private Media

That's a gloomy view, and it's certainly not shared by News Corp or Fairfax Media, both of whom declined to take part in this program, and who declare themselves to be optimistic and excited about the future.

But it is shared by Nic Newman of the Reuters Institute and many others we've talked to.

So what about Alan Kohler? Gazing into his crystal ball, how optimistic is he?

ALAN KOHLER: Not optimistic at all. I think that, you know, I think what you might call public interest journalism is going to be funded by public interest bodies, such as the government or philanthropists or other people sort of like that. But I think that there's no commercial, there's no commercial future for that at all. — Alan Kohler, Editor in Chief, Business Spectator

Eric Beecher is equally convinced that taxpayers may ultimately have to fork out to more than just the ABC and SBS keep public interest journalism alive.

ERIC BEECHER: I'm talking about something like government funding in a way that the courts are funded, so they are 100 per cent independent of government, but they are funded by government. I see that unless that happens in Australia, we're going to wake up in a year or two years time and find that half to two-thirds of the important journalism that kept power accountable won't exist. And half of that half doesn't exist now. — Eric Beecher, Chairman, Private Media

It seems like an extraordinary idea and a shocking one. And we really can't see it getting much traction.

But the revenue crisis now hitting traditional and online news media is very real.

So what is the answer? Well, this program has said it before, and we'll say it again.

If people refuse to pay for the news they want and for the scrutiny that society needs - then sooner or later they'll find that it's gone.

There's probably close to 1 million people watching this program. So, if you care about it, you can help. Put your hand in your pocket and stop it from happening before the media get to that cliff.

Buy a subscription, think before using ad blockers. Don't kill the media that you need.

And you can read more about tonight's special on our Facebook page ... or our website, where you can get a transcript and download the program.

You can also read Statements from Fairfax and News Corp.

And you can catch up with us on iview and contact me or Media Watch on Twitter.

But for now until next week that's it from us. Goodbye.