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News worth paying for?

The ProJo considers charging for access to its Web site
By DAVID SCHARFENBERG  |  December 2, 2009

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The Providence Journal, offering a rare window onto its own affairs, recently reported that the newspaper could start charging for access to large swaths of projo.com as early as the first quarter of next year.

And with that, the broadsheet glommed onto the latest brilliant idea for saving a failing industry: require customers to pay for your product.

Rupert Murdoch, whose media empire includes the New York Post and Britain's The Times, has pledged to erect "pay walls" around his newspapers' Web sites. The New York Times is expected to announce a barrier of its own before the end of the year. And a recent survey from the American Press Institute found fully 60 percent of newspaper executives considering the move.

A few papers — the Wall Street Journal, the Arkansas Democrat-Gazette in Little Rock, and the Newport Daily News here in Rhode Island — have taken the plunge already. But can pay walls save an industry hobbled by plummeting advertising revenue and sharp declines in circulation?

It's a tough sell.

The main problem for the ProJo, and other metropolitan papers weighing the idea, is one of expectations. Influenced in no small part by a newspaper industry that has heretofore given away its product, consumers expect the news to be free. And changing the rules at this late date could prove difficult.

A Boston Consulting Group survey of 5000 consumers in nine Western countries released last month found just 48 percent of regular Internet users in the United States willing to pay for the news online — tying Britain for last place in the poll. And that was the promising survey. A Forrester Research poll put the figure at 20 percent.

That's not to say that all media outfits will fail if they charge for online content. The WallStreet Journal and Britain's Financial Times have fared reasonably well on the Web, as have some trade papers. But these publications, as news industry analyst Ken Doctor notes, are specialized reads with little competition. "General newspapers, most of what they write about is written about by other people," says Doctor, author of the forthcoming book Newsonomics.

Indeed, if metro newspaper Web sites start asking readers for cash, local television and radio Web sites will undoubtedly sense an opportunity to pick up substantial traffic — and the advertising that goes with it. And newspaper companies, in turn, will have a harder time selling advertisers on Web sites with declining readership.

But for newspaper executives considering pay walls, building a profitable Web operation may be beside the point. When the Newport Daily News began charging for access to its online edition earlier this year — at substantially higher prices than a newspaper subscription — the aim was not to build online revenue, but to drive readers back to a far more profitable print model.

Indeed, says Dan Kennedy, an assistant professor of journalism at Northeastern University in Boston, the pay wall is not an Internet strategy at all — it's a print strategy. And "to the extent that it slows down the demise of the print edition," he says, that strategy could work. But erecting a pay wall, he emphasizes, will only slow the demise of the print product. It won't stop it.

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