Fee content vs. free content

The Wall Street Journal and The New York Times may drop pay-to-read content. But online ad revenue alone won't cut it.

Many in the newspaper business have embraced the Internet warily. For all the promise the Web platform has, it also holds some big pitfalls.

Yes, the online world offers potentially broader audiences and the promise of cutting costs by slicing into publishing and circulation expenses.

But the free content model on the Web is particularly scary for newspapers.

If the content online is free, why would people bother to subscribe to the paper? And once enough readers flee, circulation falls and advertisers find less reason to buy ad space. Perhaps even more alarming, the numbers increasingly suggest that online ads may never match the revenue base that print ads do.

This is precisely the situation many newspaper publishers find themselves in today. They can't ignore the Web. They understand they have to find a way to move online. But they aren't exactly happy about it and they are unsure how the economics are going to play out.

The last two weeks have only added to the sense of uncertainty.

The American newspaper industry's two giants – The New York Times and The Wall Street Journal – which have both made users pay for some content, are reportedly looking at giving in and joining the free-content crowd.

For the Journal, the speculation has come with the purchase of the paper by Rupert Murdoch. Some believe that Mr. Murdoch's goal is to make the Journal much more than a required read by the nation's MBA class. Many analysts believe he wants to make the paper a national, politically conservative alternative to the Times.

That goal, plus the desire to increase online audience and ad revenue reportedly has Murdoch thinking about removing the Journal's pay-to-read firewall – or at least parts of it. There are roughly 1 million online Journal subscribers each paying $79 a year. It has been a remarkably successful exception to the mostly free-content world.

For the Times, the question is about the fate of TimesSelect, the enhanced online subscription that the paper launched two years ago. The Times made some Web content – namely the paper's prominent columnists and some online bonuses – available only to those who paid $50 a year or subscribed to the print paper. It was aimed at the I-need-my-Tom-Freidman-now set.

How big is that crowd? There were about 225,000 of them as of June.

But critics of TimesSelect, and there have been many, have long held that it lessens the impact of the columnists by allowing fewer people to read them. One of those critics is Times columnist Maureen Dowd.

A report last week in, of all places, the Murdoch-owned New York Post, said the paper was considering junking TimesSelect. The response from the website's general manager was less-than-Shermanesque: "We're still looking at the situation."

What does all this mean? If both the Times and Journal abandon the idea of pay-to-read content, it is essentially dead for the time being on the Web.

That may not sound like such a big deal. After all, as anyone who Googles enough knows, fee content doesn't necessarily stay that way for long. Any blogger who understands basic "cut" and "paste" commands can turn "fee content" into "free content" with a few clicks of a mouse.

In addition, there is a social networking news culture developing on the Web that thrives on sharing news accounts. The more news that's free, the more that can be shared. These sites, like digg.com, are particularly popular with younger news consumers, which newspapers are desperate to reach.

And, from a purely selfish standpoint, who is against getting anything for free?

But the demise of pay-for-news on the Web would also mean we are still a long way from figuring out how news organizations will function in the new news world.

Online ad revenues may be growing like weeds, but the growth rate has begun to slow sooner than expected. Even the most optimistic projections suggest if they keep growing at their current rate it will take more than a decade for them to equal the money that comes in from print newspaper ads. But no one expects them to keep growing at the current rate. Somehow, newsrooms need to find new revenue sources, or they won't be able to cover as much news.

Online fee content probably isn't going to be the answer for newspapers, but some thought it might be part of an answer. Now it seems that, for the time being at least, it probably won't be, at least not with the current approaches.

What these changes would really mean is that the fast and furiously evolving world of news gathering is a little cloudier this week than it was last month.

• Dante Chinni is a senior associate at the Project for Excellence in Journalism.