Ignoring the Internet was the biggest mistake media company Fairfax made, Liberal MP Malcolm Turnbull said.
Turnbull was commenting at the launch of Fairfax: The Rise and Fall, on the same day that Fairfax news websites introduced a paywall.
He said the company once had total domination in the classifieds market.
But it allowed start-up websites like Seek.com.au and Realestate.com.au to take over market share.
"That really was the shocking mistake," Turnbull, who was once a financial adviser and large shareholder in Fairfax, said.
But the opposition communications spokesman said despite the company's failures, he was optimistic about journalism at Fairfax.
"One thing that we know is that the great writers of Fairfax have more readers than they have ever had in their careers," he said.
"There are more eyeballs than ever reading that content.
"The fundamental change is how to monetise it.
"Perhaps have less focus on international and national issues and more focus in the cities in which they operate.
"That is an area in which they will not be competing with the ABC or let alone The New York Time or The Guardian."
The book's author, Coleen Ryan, a former Fairfax editor, said the company's financial downfall can also be attributed to decades of infighting in the Fairfax family, the revenge of politicians and the conniving of rival media moguls Kerry Packer and Rupert Murdoch.
It also blamed divided board factions and personal ambitions and incompetence.
The publisher on Tuesday launched a metered paywall model offering 30 free articles a month across its websites and mobile sites before readers are asked to pay.
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