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The Globe and Mail

Newspapers clamping down on free digital content

USA Today publisher Gannett, the largest U.S. newspaper chain with a combined weekday circulation of 4.9 million readers, expanded its paywall to almost all of its 80 properties this year.

Chuck Burton/AP

Maybe the Mayans were actually big fans of reading online newspapers for free: While 2012 didn't usher in the end of the world, the world of free online reading began to shrink sharply, as dozens of North American newspapers erected or announced plans to erect paywalls around their content.

Which means 2013 could be a make-or-break year for many in the industry, as they scramble for alternative streams of revenue to make up for lost print advertising.

In the United States, 11 of the top 20 newspapers by circulation either now have a paid digital subscription model, or have announced plans to implement one, including the top four: The Wall Street Journal, USA Today, The New York Times, and the Los Angeles Times.

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Gannett, the largest U.S. chain with a combined weekday circulation of 4.9 million readers, expanded its paywall to almost all of its 80 properties this year. Other chains charging for content include Tribune and MediaNews while McClatchey and E.W. Scripps will do so next year. And this month, The Washington Post said it was exploring the idea of rolling one out in 2013.

Already, more than 35 per cent of U.S. newspaper readers regularly bump up against some restrictions in their online surfing.

Most papers allow readers access to a set number of articles – the average is 11, according to the journalism e-commerce company Press+ – before hitting a wall.

In 2012, all of the major Canadian newspaper proprietors decided to throw their lot in with the paywall crowd. Postmedia Network, which publishes the National Post as well as a collection of metropolitan dailies including the Montreal Gazette, the Vancouver Province, and the Ottawa Citizen, will expand its digital subscription plans to its entire chain. Earlier this month, Quebecor's Sun Media division threw a wall around its dailies in Toronto, Calgary, Winnipeg, Edmonton and Ottawa.

The Globe and Mail introduced a paywall in late October; shortly afterward, the Toronto Star announced it would do the same in the new year.

The industry's lodestar is the New York Times Co. Since March, 2011, when it placed a meter on its digital platforms that limits the number of articles that readers can access for free, it has signed up 566,000 digital subscribers to either the Times or the International Herald Tribune.

A recent Bloomberg story said the New York-based investment firm Evercore Partners pegged the value of Times digital subscriptions at about $92-million (U.S.). That represents about 12 per cent of the total $768.3-million the Times is expected to earn in subscription revenue in 2012. More significantly, the digital subscription revenue – alongside a price hike on print copies – will make 2012 the first year the Times has earned more from circulation than from advertising, which is expected to pull in about $715-million.

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Critics complain the Times, and other papers, could make more from advertising if it didn't have a paywall, because far more readers would read far more content. But the price of static online ads used by most news sites has been falling for years, making it difficult for them to earn enough to pay for even the creation of popular articles. And many journalists worry that popular articles that pull in traffic are not necessarily the most important ones.

While advertising rates vary wildly from site to site, a presentation last May by Mary Meeker of the Silicon Valley investing firm Kleiner Perkins Caufield Byers noted that CPMs – the cost of getting an ad in front of 1,000 readers – was $3.50 for a desktop Web ad; the CPM for mobile ads is about 75 cents. That means that even a popular article that is viewed 100,000 times might pull in only $350 on a website, and only $75 if viewed on a mobile device.

Which is why many papers are building walls, and some, such as The Wall Street Journal and the Financial Times, are developing proprietary information and business tools.

Still, that approach hasn't worked for all general interest papers. Earlier this month, Washington Post chief executive officer Donald Graham told the UBS Global Media and Communications Conference in New York that most of the paper's print readers are based in the District of Columbia, while most online readers access the Post from elsewhere.

"The reason we haven't adopted [a paywall] yet is that we haven't found one that actually adds to profits," he said. "But we are going to continue to study every model of paywall and think about that, as well as think about keeping it free."

Most are simply hoping for the best because they don't believe there's much of an alternative.

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"Newspapers are realizing you can't spend millions on content and give it away for free," Postmedia CEO Paul Godfrey told The Globe in October. "I think we're at the point where pay metered systems will be put in all over the world."

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