Harding said the newspaper business had to avoid the mistakes of the music industry – and call time on free distribution.

“We created a culture of free, and we absolutely were party to that,” he told an audience of senior editors and executives at the Society of Editors conference in Stansted, Essex.

“In the last few years, we have talked with great pride – we believed advertising would sustain us – about unique users.

“These people were window shopping down Oxford Street – they were not coming into our shops.”

He contrasted the Times’s 20 million-plus unique users with the 500,000 readers who had developed a “genuine digital newspaper habit”.

He confirmed that the Times – in common with other newspapers in Rupert Murdoch’s News Corporation (NYSE: NWS) empire – would introduce online charging.

“From spring of next year we will start charging for the digital edition of the Times. We’re working on the exact pricing model, but we’d charge for a day’s paper, for a 24-hour sign-up to the Times. We’ll also establish a subscription price as well.”

The paper’s recent decision to end the free distribution of bulk copies was in line with this strategy, he said.

“We think it’s good for us and good for business to stop encouraging the trickery and fakery of the ABCs. We want real sales to real customers – that’s what our advertisers want too.”

He said the Times would also enhance its relationship with its most loyal readers through home delivery and a reward programme through the recently launched Times+ membership venture.

“Historically, newspapers have treated their best customers worst and their worst customers best,” he said.

“We give the paper away to people who could not care less and we pay little or no attention to people who love it and read it every day.”

He said newspaper should be wary of micro-payments for individual articles.

“You have to be very careful with article-only economics,” he said. “You will find yourself writing a lot more about Britney Spears and a lot less about Tamils in northern Sri Lanka.”

Indicating the costs of quality journalism, he said it had cost the Times £1.5m to run a Baghdad bureau for the duration the Iraq war and £10,000 to send a correspondent to report on violence in northern Sri Lanka.

“We keep investing in journalism, we believe that’s what our readers want. We’re not dumbing down, we’re dumbing up.”

He said people were prepared to pay for news and cited the 270m books bought in Britain a year as evidence of an “enormous appetite for the written word and for news”.

Harding said newspapers had been undervalued for years, pointing out that when the Times was funded in the 18th century it had cost more than double a coffee or a tumblerful of gin.

“We are going to rewrite the economics of the newspaper, newsgathering and delivery business,” he said. “We have to do that, we are in the fight of our lives.”

Harding said the newspaper industry was fighting for the “business of reporting”.

“We have to make sure we have professional reporting to check the powerful and investigate the powerful on an economic, sustainable footing.”

Martin Newland, the former editor of the Daily Telegraph and now editorial director of the Abu Dhabi paper the National, said that the Times itself had played a role in the undervaluing of newspapers by slashing its cover price to 10p in the 1990s.

“That first lodged in the mind of the consumer the fact that newspapers and content can be cheap,” he said.

“I was smiling to see Mr Murdoch sought to re-establish value by shutting the gate well after the horse had bolted.”

He said the Telegraph had “responded suicidally with a cut-price subscription scheme”.

He said from reading British newspapers online he saw an “enormous, implacable dumbing down”.

Robert adds:  Surely this isn’t the full story? Times Online already charges for digital editions of the newspaper £2.50 for weekday, £3 for Sunday (http://timesonline.newspaperdirect.com/epaper/viewer.aspx). It’s not alone in doing that.

There must be more. We’ve heard more about Times’ paywall plan being about putting specific columnists, for example, behind the wall - piecemeal.

Really; why would people pay for “24-hour access” to a digital replica when they can just buy the paper?