The last time this happened investors made 10 to 20 times their money.

Now an opportunity for similar gains is fast approaching.

Let's start at the beginning though. Six years ago no one - and I mean no one - wanted to buy steel stocks.

The industry was reeling. The Chinese were making heavy inroads into the U.S. steel market. They were able to deliver the same product as U.S. steelmakers at a much lower cost. Even some pretty steep protective tariffs enacted the year before weren't able to save the industry.

It was ugly and it looked like the domestic steel industry was dead. A few innovative companies, however, weren't about to go under without a fight.

When their backs were against the wall, it didn't take long for companies like Nucor (NYSE:NUE) and U.S. Steel (NYSE:X) to figure out a way to compete in the global steel industry. They did it by changing from giant mega-mills to much more flexible (and profitable) mini-mills.

They innovated their way to success. And when the crisis did pass, they were one of the few left standing. As a result, they had an even bigger share of the domestic steel market than they did before. And investors who were able to spot the success of these new business models were able to make as much 10 to 20 times their money, in five or six years time.

Now it's looking like it's happening all over again. This time, it's in the newspaper industry.

Left for Dead

I know what you're thinking...

The newspaper industry is on its last leg.

It pretty much is. The industry has been in steady state of decline ever since the Internet boom really took off. Their subscriber rolls fall every year. The current recession has forced the near-capitulation of the entire industry.

The only thing saving the remaining newspapers is their online divisions. For instance, the New York Times (NYSE:NYT) has one of the most heavily trafficked web sites in the world. And the McClatchy Company (NYSE:MNI), which owns such newspaper industry crown jewels like the Miami Herald and the Sacramento Bee, has stakes in CareerBuilder.com, cars.com, and apartments.com.

To top it all off, newspaper ad sales have been in sharp decline. Earlier today Gannett (NSYE:GCI) reported a 53% decline in earnings due mainly to a 28% decline in print ad sales. Gannett's CEO also expected print revenue to decline even further in the next quarter. And it's not too often CEO's give negative outlooks, especially when Wall Street is looking for any kind news to support the recovery thesis.

But this is just part of a much bigger trend and, if you look beyond the obvious, a high-reward opportunity lies behind it all.

Old World vs. New World

The revenue shortfalls for newspapers were widely expected. In fact, the newspaper stocks have been up sharply because the bad news wasn't as bad as expected.

But here's the problem. Although the print advertising revenues are down, the online advertising revenues are up.

Consider this. McClatchy's print ad revenues were down 32% during the last quarter. That's worse than Gannett's horrendous showing. The thing is though, McClatchy's online ad revenues actually increased.

The divergence between the old world print advertising and new world online advertising just further cemented the trend that newspapers are headed for extinction.

To add a bit of fuel to the end-of-newspapers-as-we-know-them fire, Google (NASDAQ:GOOG) announced stellar quarterly results at about the same time McClatchy revealed its poor print advertising results.

Basically, online media companies are aggressively expanding and traditional print media are cutting staff, slashing benefits and pay, and struggling for survival.

At first glance, which one would you rather have your money in?

But if you sit back and think about it for a second, you might think a bit differently.

Right now, everyone is focused on the Internet. A lot of money is going to be made there too. But it's attracting a lot of competition as well. Google has soundly trounced Yahoo over the past decade and now Microsoft has committed billions to challenging Google. And if the ad deal with Yahoo is approved by regulators, Google may be facing some tough competition.

Intense competition brings higher costs, slimmer margins, and more expensive growth. That's why I'd actually recommend looking away from the obvious and start looking at newspapers once again. Here's why.

The Future of Newspapers

Over the next few years we're going to see continued problems for the newspaper companies. Many are trying a print/online hybrid model. Others are simply cutting back staff and hoping to weather the storm until the economy recovers. Those strategies, I believe, will cause them to miss out on the truly big opportunity here.

Let's face it, the newspaper industry is dying. Naturally, they're trying to survive and stave off the inevitable, but cost-cutting measures can only last so long. But there is a very real opportunity for one or two newspaper companies to take a very strong lead.

The newspaper company which creates a hybrid national/local newspaper will be a truly big winner in the years to come. A newspaper which is able to achieve the efficiencies of being produced nationally and that still contains a local section, maybe composed by a small local news bureau to keep a close eye on high school sports teams and local politics, would have a tremendous advantage.

Think of a five section USA Today. It would have the traditional news, money, sports and life sections which would be produced centrally and nationally syndicated. But it would also have a local section for each city and town it's sold in.

Remember, the most value today's newspapers provide and why most readers who still subscribe to them is because of the local news.

So the newspaper company which can develop and expand that model would be able to undercut its competitor's prices, provide what the local markets want, and stake a very large segment of the newspaper industry for itself.

Going It Alone

Now, I don't know exactly how the newspaper industry is going to look in three to five years. But I'm pretty sure it's going to be looking a lot different. The efficient and innovative will survive, the rest, will end up like so many steel companies did during the last recession.

And over the next few months, while all looks lost for the newspaper companies, there will be an opportunity for one or two of them overcome the obstacles and lay a foundation for industry leadership.

And if you can start buying into the one that has the right idea when no one is interested in newspapers, you'd be able to pick up an eventual industry dominator on the cheap.

That's why, in the Prosperity Dispatch, I continue to recommend looking where others aren't when you're taking a truly long-term outlook (five years or more). It may get lonely sometimes, but by buying when no one else is and spotting the right companies which see the future and are making the right moves to dominate it, you won't have to risk a lot of money to make a fortune.

And when it comes to investing successfully, you'll always find the best opportunities where no one else is looking.