Monday, September 21, 2009
SAN FRANCISCO (AP) — With their advertising revenue drying up, newspaper publishers spent much of the spring and summer debating whether to cut off free online access to some of the material they run in their shrinking print editions.
It looks like the talk will turn to action this fall, when some large newspapers are expected to put up Internet toll booths.
They’ll be testing readers’ willingness to pay for information and entertainment that mostly has been given away online for the past 15 years. That happened largely because most publishers could afford to subsidize their Web sites with profits from their print franchises. But now those profits have crumbled, just as the prices for online ads are tumbling, too.
A recent study by the American Press Institute found 58 percent of the responding newspapers are considering online fees. Of that group, 22 percent expect to introduce the fee before the end of the year. The findings drew upon 118 interviews of newspaper executives in the U.S. and Canada.
The free-to-fee transition likely will occur in tentative steps rather than bold leaps that would lock all online content behind a pay gate.
Publishers are taking this cautious approach because they are still trying to devise online payment plans that will generate more revenue without alienating too many of their readers.
For instance, the Pittsburgh Post-Gazette, a newspaper with a weekday circulation of about 206,500, recently launched a Web site that includes coverage and commentary on sports, politics and entertainment that isn’t in its printed product or free online edition. The service costs $36 annually, or $3.99 per month.
The conundrum facing publishers: It’s hard to figure out how much, if anything, readers will be willing to pay.
Internet search engines and digital communication tools such as Twitter and Facebook ensure people still will be able to find and share plenty of free content.
But running totally free sites hasn’t been paying off for most newspapers. Even before the online market began to slump this year, Web ads were generating only a small fraction of the revenue that print ads do. The disparity has made publishers realize they need more ways to make money on the Internet, but few of them have been able to figure out how.
The Associated Press also has been part of the online fee movement. The not-for-profit cooperative, which is owned by newspapers, is setting up a system that will track the usage of its stories. It’s a crucial piece of a plan that could improve the AP’s ability to run ads next to news stories and perhaps even lead the AP to charge readers to see major scoops or other “premium” content.
Even as newspapers mull just how much to commit to charging readers, a competition is already brewing to provide the technology to enable it.
Four of the world’s largest technology companies — Google Inc., Microsoft Corp., IBM Corp. and Oracle Corp. — have expressed an interest in developing an online payment system for publishers.
Separately, more than 1,000 newspapers and magazines have signed nonbinding letters of intent to join an Internet fee system being assembled by Journalism Online LLC. It intends to begin collecting money on behalf of publishers before winter.