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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But if advertising revenues continue to dry up, the shift to digital pay walls may be newspapers' only option. The dailies that have done so most successfully would be a helpful case study for not just other newspapers, but news organizations at large facing diminishing digital ad revenue.

"For years there was almost a theological debate of whether content should be free or not online," says Jurkowitz.

Publishers were also concerned about further decreases in advertisement revenues, as traffic sinks once an online reader hits a pay wall. Industry insiders say that after initial dips when a publication puts up its pay wall, traffic returns to pre-pay wall levels within a matter of months. Publishers also argue that subscription traffic is more valuable to advertisers — it is loyal readers who are seeing their ads, not just those who stumbled onto articles haphazardly via search or otherwise.

For small-sized publishers specifically, decreases in traffic don't necessarily mean lost ad revenue, according to Gordon Crovitz, a former Wall Street Journal publisher. He is cofounder of Press+, which sells the software to run metered pay walls to about 420 publishers. He says smaller newspapers have an online ad sell-through rate of only 50 percent, so a 10 percent dip in traffic (the average that Press+ sees among its clients) has minimal effect on their revenues.

Local newspapers also offer content unavailable anywhere else, like coverage of local sports, government, education and investigative pieces, which often garner the most subscription-user engagement.

And thus, it's worthwhile for publishers to take what Wadsworth-Perez calls a "holistic" approach to switching to a pay wall. She says part of Gannett's implementation included investing in more reporters to cover local beats.

"If you are going to get people to pay for content — whatever you're covering — it's going to have to be quality content," says Jurkowitz.

Convincing readers to subscribe takes some clever marketing too. Some publishers prefer to call their subscription plans "memberships" as opposed to the word pay wall, which "creates the image of, you're on the outside trying to scale an impenetrable fortress," says Jurkowitz. Some also offer perks with their digital packages — invitations to community events, discounted tickets to local plays or museums, as well as access to archival content and comments.

As legacy newspapers figure out how to best charge users for content, publications native to online would do well to pay attention. The average price of subscription among Press+ publishers has increased while the number of free articles before the meter kicks in has decreased, which Crovitz points to as proof that readers are willing to pay for content.

"Sometimes innovation is driven by necessity and for the traditional newspapers it's absolutely necessary to go down this route," he says. "Online publishers will have to go down this route too."

Yet daily newspapers have the advantage that their content was once purchased by readers in print form, while most digital-only outlets, such as the Huffington Post or Gawker media, have always been free. Their philosophical connection to the spirit of free online content may be an added obstacle, as could be the type of content online-only publications typically produce.

"They're going to have to produce something that you can't get anywhere else," he says. The opinion and commentary content that is the bread and butter of many online sites may not make that cut. Andrew Sullivan's Daily Dish blog, which has made a name for itself offering just that, first for Time, then on The Atlantic and The Daily Beast, is transitioning to a stand-alone meter model to mixed success, but for now The Dish is seen as just a notable exception and not the rule.

Meanwhile, other online news organizations are seeking new revenue through so called "sponsored content" — content paid for and, in some cases, written by advertisers to mimic editorial content — but not without controversy.

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.