The key is that the internet destroyed the economics of publishing, completely and irrevocably. Whereas printing presses were once incredibly expensive to set up, the cost of publishing on the internet keeps falling asymptotically towards zero. This removes both the competitive advantage and the positive returns to scale print publishers once enjoyed. However, even if society no longer needs newspapers, we still need journalism — and in that seed still lies promise for publishers who can figure out how to come out kicking on the other side of this digital revolution.” – Clay Shirky

Recently one of our favorite publications, The Portsmouth Herald, announced they will begin charging users to access their website news content. This new fee-based update took effect on November 16. This change has been met with fierce criticism from many loyal SeacoastOnline readers. John Tabor, president of Seacoast Media Group states giving news away for free online while offering the same content in a paid physical paper is “an inherently contradictory and unstable model.” The website currently does not generate enough advertising revenue to cover the costs of maintaining the site and paying Seacoast Media Group’s 33-person news staff, he said. “The truth is that the advertising online will never pay the full cost of the newsroom, nor will a single advertising revenue stream, which is very volatile, supports a lot of local news gathering that we do,” he said.

In the ever strategic words of Seth Godin “When people talk about the problem with ‘free online’, they’re missing the point. Free is creating lots of attention, but marketers haven’t gotten smart enough to do something profitable with that attention. If someone has commented on your blog or replied to your tweet [or reads your news content], they are paying with their attention. Whilst not being a monetary transaction, that attention must be acknowledged and the relationship built on in order to convert the attention to an action – whether that be clicking through to your website or buying your product or talking about your product/service with someone else (advocacy). Audience members will not sit still for having their time wasted or disregarded. If time is money (and it is) then the audience member is paying with their attention and expects to get their money’s worth.” The following is our take on this internet marketing situation with some ideas to add value to the new paywall based model.

As John Tabor stated giving news away for free online while offering the same content in a paid physical paper is “an inherently contradictory and unstable model.” Are we again focusing on the wrong part of the equation? Instead of stating that offering news for free online is what makes charging for physical newspapers an unstable model, does it make more sense to argue that continuing to run a print publication with a 33 person news staff is an unstable model? Is benevolently pushing forward a print publication simply delaying the inevitable? Is it time to rethink the business model entirely?

Starting with about 25 subscribers we are now having a few thousand. If you keep in mind that we are a very regional oriented paper covering now an area of about 3mio inhabitants (those days only 1 million) this is not bad.
Especially when you realize that we NEVER did anything to promote the site. As we never wanted to "cannibalize" the print product at the beginning we mentioned http://www.annonce.de only in our flag. Nowadays the promotion in the paper covers about 0,001 % of the print area per issue. There has never been anything else than this.

And we welcome every day 10-20 new subscribers – even so we have the most complicated registration procedere at least in Germany but probably in Europe: You have to give all personal infomation, give your bank account number and have to agree that we take the monthly fee (and any other amount aggregated by extra-services) from your bank account. And than we send you the login information BY POST!
We mentioned this – in the first place antique looking way of transferring login data – 5! times before, during and of course after registration in bold and bigger letters. And the people register.
Before I forget to mention it: We are not selling any commercial advertising. We live on selling the paper to our readers. The printed since 1986 and very successfully the online since 1995. :-)
Dieter Cohnen, Founder and publisher

Winner: Quality of content – Alan and Ed are spot on that many, many papers grossly overvalue the quality of their content. In my market (PVD, RI), the blogosphere frequently out-reports the cash-starved daily. As for pipsqueaks like my local Pawtucket Times, they just run press releases and are an embarrassment to your industry. They've even taken down from the website a story about a new clergy/sex abuse charge – but left up the story about the congregation rallying to the pastor's cause. "Journalism" as you'd recognize it only comes from the blogs. Make something worth paying for and people will pay what they think it's worth. Currently, the value of local news content is approximately zero.

Winner: Correctly assessing the value of a web impression. Web ads – especially the context-free type of display advertising that NP websites specialize in – is a low impact medium. End. Of. Story. This relates back to quality of product, as well. As to Bob's entirely sensible, entirely gonna work social media idea, the reaction I've heard is: "I'm selling news, not building communities." Indeed, but for how much longer?

Winner: Recognizing the entire competitive landscape. In general, newspaper websites dominate the traffic in their markets compared to TV or radio sites. Blogs, even aggregated, get but a pittance. But the trend lines don't look good for the papes. As video grows on the web, text will continue to lose value. I personally get a sense from publisher comments that if putting up the pay wall kills the website, that's fine with them. They probably hated it from the beginning.

Loser: Hating your website. Do I even have to mention the downside of this approach? Newspapers have been losing market penetration since the early 1960s, and the numbers drop fastest with the advent of new technologies. TV, cable news and then Internet each took their bite. Does anybody actually believe that a commercial news outlet can exist a decade from now with out a website?

Loser: Hating the Internet and the Bloggers. Newspapers just have to get over themselves. The provision of information is easier now than ever. More people with more eyes reporting more things faster IS A GOOD THING. As much as I like that this trend is being tracked, I think it's important to watch things like SacPress.com in Sacramento where they train their volunteers in standard journalistic techniques. Volunteers who do these things for free for the benefit of the community. If newspapers don't understand how spectacularly threatening that is, they'll probably say things like: "I'm selling news, not building communities."

Thought: Win back classified advertising. Classifieds – long the spendiest inch in the paper – were a proxy for a commons and thus for community. Newspapers just let Craigslist walk in and take over the community without any kind of a fight at all.

Seriously, win back classifieds and then we can have a grown up talk.

Znak it! envisioned a need for that two years ago, when everyone was still speaking about the absolute superiority of the ad-supported or "free" models, which has proved to be not so great. We then developed our content management and payment platform, ideal for content providers to charge for subscription and/or "on demand" pay-as-you-read access to selected articles, interviews or pictures or a bundle of articles and additional pics or data, to differentiate from the print issues.

The system is based on the concept of virtual currency, and as such can be used across many different media and geographic locations. Anyone with a cc or PayPal account can buy our Znaks, and then they can "znak it" (or pay for) any article or piece of content without any additional registration or even disclosing their cc or personal information — the system takes care of all the transaction processing for both the readers and the content providers. There is no need to create any individual "pay walls" or special security gates.

In addition, Znak it! works well with ad networks, meaning that the readers have an option to buy our credits (znaks) with cash, or they can earn the credits by clicking on interactive ads or completing brief online surveys. In this case, the papers still get the money for each piece of content accessed through Znak it!, and the readers can use their "earned credits" and thus access the desired content without any additional charge ("free" or supported by the ad networks). And there are many other benefits to users and content providers.

We presented this model during two recent Web 2.0 Expos and to many US publishers and media organization, however; with little or no success. That I am so glad to see a growing number of local papers starting to use similar ideas on their own. Perhaps, they will create the "critical mass" necessary for the industry leaders to realize that the solutions to their revenue and profitability problems are out there, ready to be used, and that in fact they have been losing billions by resisting the necessary changes.