RIO DE JANEIRO, BRAZIL – The recent move by The New York Times (no relation to us) to begin charging for access to digital content marks a major milestone in news publisher’s efforts to recover a profitable business model. While The Wall Street Journal has famously always used this, most news sites have remained free while the industry tried to figure out how to make money from online advertising sales.

Stone Korshak, Editor and Publisher of The Rio Times.

Rio’s largest newspaper, O Globo has long since required a subscription to access archive news online, and the notion of a “paywall” has been emerging slowly world-wide, to the ardent skepticism of many internet users. The people enjoying the news for free, although suffering through banner ads, maintain there are too many free sites, why pay?

The Newspaper Association of America said in March 2011 that ad revenue fell 6.3 percent last year, to US$25.8 billion, about half of its peak in 2005 of US$49.4 billion. Since then ad revenue has tail-spun for five years straight.

The report lists that Online sales grew 11 percent last year, to US$3 billion, after declining in 2009 (perhaps due to the global economic crisis). This is of course a slim fraction of the lost Print ad sales though, and news publishers are tired of waiting. A report recently from the Pew Center for Excellence in Journalism found that newspapers are continuing to hemorrhage money, cutting staff to 30 percent of 2000 levels.

In November 2010 the BBC News reported that more than 100,000 people paid to go behind the UK Times and Sunday Times’ new online paywalls, but visits to their websites had fallen by about 87 percent.

Now, The New York Times has announced it’s new digital subscriptions. “It’s an important step that we hope you will see as an investment in the Times, one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform,” Publisher Arthur Sulzberger wrote.

The New York Times’ three plans range from US$15-35 depending on digital delivery device, and will be billed every four weeks. They last tried to get Online readers to pay for some content in 2005, but after two years decided to shelve the program.

New York Times email sent on March 18th, 2011
New York Times email sent on March 18th, 2011 announcing the paywall digital subscriptions.

Curiously the only newspaper publishing model that has showed a glimmer of financial sustainability is the community Weeklies, which are almost always free, and survive because of the lower overhead and niche-target market offered to advertisers. According to the Association of Free Community Papers, free paper circulation is growing, and is a US$4 billion industry.

This is still a fraction of the overall Newspaper industry, and certainly does not lend itself to many Pulitzer Prizes, as community papers are limited in resources and less resistant to political or economic pressures. There is a demand for both though, daily (or hourly) international news and weekly community news, and the industry is still trying to figure out how to do it, profitably.

In December it was reported that the paywall of local twice-weekly newspaper The Sonoma Index-Tribune in U.S. wine country Sonoma, California (just north of San Fransisco) was removed after just three months. They began charging readers US$5 per month for Web-only access in September, but apparently the launch of a free competing ultra-local news site had too dramatic an impact on Readership.

Pew’s survey in January reveals that nearly half of respondents report they get some of their news online, only 33 percent pay for a newspaper subscription, and only five percent have paid for any kind of local news content online.


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