L. Gordon Crovitz is a newspaperman with a problem: He has more advertisers than he can accommodate. “That is a wonderful problem to have,” Crovitz told the New York Times’ Eric Dash.

Lots of the mainstream media would love to have the same dilemma. While some newspaper companies are reporting a modest growth in ad revenues for the last quarter of 2004, the long-term loss of advertising dollars and declining circulation has taken a heavy toll on the industry.

But Crovitz works for — or rather, runs — a different kind of publishing empire. He’s president of Dow Jones & Company’s electronic publishing division, and he realized early last year that if the demand for online ads continued to grow he wouldn’t be able to provide enough space for them and still provide news. To solve that problem, Dow Jones outbid the New York Times Company, Gannett and Viacom to purchase MarketWatch, a financial news Web site, for a whopping $519 million.

Obviously, there are no space constraints on the Internet. But in advertising, as in real estate, location is everything, and “advertisers want to be placed on the most popular pages and those which cater to their most profitable audiences,” writes Dash. “And those kind[s] of pages are in shorter supply.” That was Crovitz’s problem. Other online publishers see the same crunch — and opportunity.

Indeed, old media has been snapping up new. In August, Viacom spent $46 million for the rest of Sportsline.com, in which it owned a minority stake. In December, the Washington Post bought Slate, the online magazine, for a price thought to be between $15 million and $20 million.

There could be more deals on the way. At a media conference earlier this month, Sumner N. Redstone, the chairman of Viacom, said more Internet acquisitions where his company is “underinvested and underrepresented,” were coming.

Still, to anyone who sat through the dot-com bust that followed the dot-com boom of the 1990’s, Crovitz’s $519 million gamble might seem lunatic. However, even as print ad income remains sluggish, online advertising is expected to grow by 19 percent this year, Dash writes — dollars that otherwise might have flowed to print and network outlets.

So for those print elitists who have dismissed online news outlets as little more than freebie giveaways to readers too cheap to buy the real thing, we suggest an old journalism adage:

Follow the money.

Susan Q. Stranahan

Susan Q. Stranahan wrote for CJR.