Is New Zealand's hi-tech community ready to seize armed control of the country in order to put this crazy government back on the rails?

If this story in the NZ Herald is anything to go by it could be for the best.

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Good News - Bad News
A raft of press releases and stories have been spewing forth from some of our most highly trafficked news purveyors, announcing how popular their sites have become.

They all claim to have wonderfully high numbers of visitors and strong growth -- to which I say "excellent!" It's great to see our local Net users finally waking up to the fact that there's some pretty fine content within the local content industry.

TVNZ, by way of their NZoom site, and the NZ Herald, have both engaged in this self-back-slapping, and not without justification -- both sites, it would seem, have attracted a good strong local audience. The Herald has even been honest enough to admit in this story that they're now going to have to figure out how to turn this traffic into profits.

Sorry guys -- I have some bad news for you -- there are no profits yet in the online news game -- and they're likely to remain elusive for quite a few years to come. At least the big-two NZ local-news sites have the advantage that they can cross-sell some advertising and leverage their broadcast/print arm to deliver advertisers to their online operation.

However, pure Net operations are not quite so lucky and now we've seen APBNews.com, an excellent US-based crime news site announce that it's firing all 140 staff due to a failure to secure ongoing fundings to cover losses.

Given the staggering losses that some overseas news and e-tail sites are running at, I expect you might see some more attrition in the coming months -- but that will leave the survivors stronger and with a larger market-share.

Many of the top US online news sites are running at losses that are measured in tens or even hundreds of millions of dollars per year -- and, with all that news being given away for free, combined with a huge glut in advertising space forcing rates down to less than $1 per thousand impressions, the future looks a little gloomy for some.

The answer? Well I'd say that the savvy news sites will make a profit by selling their audience to other revenue-strong online operations by way of joint/cooperative ventures. The news arm will draw in the traffic and the e-commerce or e-service arm will convert it to cash. With this in mind, look for some major acquisition and merger activity in the area of smaller online news sites over the next six months or so.

Of course there are many other methods of converting traffic to revenue -- but I'm not stupid enough to tell everyone about them here ;-)