Pay Walls Could Be Print's Salvation Online

Publishers are meeting short-term goals with digital subscriptions for community newspapers.

According to Newspaper Association of America data, circulation revenue grew by 5 percent for dailies in 2012.

According to Newspaper Association of America data, circulation revenue grew by 5 percent for dailies in 2012.

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The ballad of the death of journalism by way of the Internet has been playing for some time. But print newspapers may be pressing 'pause' with introduction of digital pay walls, as more local dailies follow the New York Times, Wall Street Journal and other national newspapers' lead.

According to Newspaper Association of America data, circulation revenue grew by 5 percent for dailies in 2012, making it the first year of circulation growth in a decade, in part due to widespread adoption of digital subscriptions. Publishers are hopeful that digital subscriptions will secure long-term survival as their newspapers meet short-term goals getting readers to pay for content.

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Once upon a pre-Internet time, newspapers were built on the 80-20 model, receiving 80 percent of their revenue from advertising and 20 percent from print subscriptions. Maintaining that level of advertising revenue has been all but impossible for newspapers in the digital age, where ads command much lower prices than they did in print. With an infinite supply of ad space for advertisers online, demand — i.e., prices advertisers are willing to pay for page views — has plummeted. New techniques advertisers are using to buy online space more cheaply aren't helping media either.

"Years into the digital revolution it has become pretty apparent that newspapers won't be able to replicate [the 80-20 ratio] in a digital model," says Mark Jurkowitz, the associate director of Pew's Project for Excellence in Journalism.

Gannett, the nation's largest newspaper publisher, announced in February 2012 that it would be implementing digital subscriptions for its 80 community newspapers (its USA Today remains free online), and other major publishing chains — Lee Enterprises, McClatchy and E.W. Scripps — have followed suit. A number of independent newspapers have also adopted subscription services, and Pew estimates that some 450 of the 1,380 daily papers have or are in the process of adopting pay plans.

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Maribel Perez-Wadsworth, Gannett's vice president of audience development and engagement, says Gannett had to "completely re-imagine" the way it thought of subscription services, once anchored to the price of delivery.

Many publishers have embraced the meter model — the method currently employed by the New York Times — which sets a number of online articles, usually between five and 20, accessible for free and then charges viewers beyond that limit. (Some models also exclude articles found through Facebook or other social media from their meter count.)

Some newspapers, like those operated by E.W. Scripps, have developed a different model, offering some free content, such as breaking news or public safety announcements, while reserving other types of "premium" content for paying subscribers. Publishers often offer digital access bundled into their print subscriptions in addition to digital-only subscriptions. Digital packages usually offer content on variety of platforms: the website, phone and tablet apps, and digital replicas of the print product.

And readers appear willing to subscribe. Revenue raised from circulation at the New York Times (12 percent from the pay wall specifically) exceeded its advertisement revenue and other papers are moving towards a 50-50 circulation-to-ad revenue ratio, "which is stunning considering the 80-20 model," says Jurkowitz.

Gannett, Lee Enterprises and McClatchy all credit digital subscriptions for bringing in extra revenue in their most recent earnings reports. According to a Pew study, "these added circulation revenues are rebalancing the industry's portfolio from its historic over-dependence on advertising."

While publishers and vendors say they are hitting their short-term goals, it is still unclear whether meter models will guarantee growth in the long term. The Newspaper Association said that 2012's circulation growth was not enough to overcome shrinking advertising revenue, and newspapers still suffered a 2 percent revenue loss last year.

Corrected on 4/9/2013: A previous version of this article misstated the name of Gannett's vice president of audience development and engagement. It is Maribel Perez-Wadsworth.