Summary:

Update: Contrary to Pandia.com’s report, Schibsted has contacted us to say: “Schibsted is not closing down the site. This will continue to e…

Update: Contrary to Pandia.com‘s report, Schibsted has contacted us to say: “Schibsted is not closing down the site. This will continue to exist, and people will still be able to search here. However, after some time, the site will become a brand under FINN.no. So, we are still focusing on developing the product itself.”

Original: As traditional publishing revenue streams dry up, newspaper companies are often encouraged to look to internet success stories for inspiration — or in other words be more like Google (NSDQ: GOOG). That’s what influential Norwegian newspaper company Schibsted did long before newspapers’ current crisis – in November 2006, it launched the Sesam.no and Sesam.se search sites as a Scandinavian competitor to Google. But now the company has admitted defeat and is to close the sites merge the sites with its Finn.no classifieds site. Pandia.com reports that Schibsted has lost somewhere between 1.6 billion (£165 million) and 2 billion Norwegian Krone (£206 million) on the venture and will make 100 out of its 110 employees redundant.

Sesam, which has technology from Microsoft-owned Fast, was last year re-launched as a people and company-finding tool with built-in map search similar to Yell.com, making the site fit more closely with the Schibsted Classified Media Division of seven sites across Europe and several more worldwide. Sesam had built up a series of partnerships, including deals with video search engine Blinx and price comparison sites Blocket and Prisjakt. But it wasn’t enough: Sesam’s 150,000 daily visitors, as estimated by Dagens IT, might sound good for a country of 4.7 million but it couldn’t compete with Google’s pay per click ad model. So the site’s search infrastructure will now be folded into Finn.no, the Norwegian Craigslist-style site owned by Media Norge, a JV between Schibsted and several local newspaper groups. More after the jump…

This is a setback, but Schibted is still way out in front in terms of diversifying its business model in the face of cyclical and permanent advertising declines and chronic circulation pressures. While publishers in the UK dip their toes into online classifieds and e-commerce, Schibsted has stand-alone classified sites based on its Finn.no model across Europe and in emerging markets such as Malaysia, Argentina, Venezuela, Mexico, Brazil and Colombia. It also has live online, Norwegian football rights and some mobile entertainment rights. But when it comes to search — a field in which Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO) struggle to win dominance — it looks like newspaper companies are resigned to finding ways to work with Google rather than fight against it.

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