Online news fees: financial salvation or suicide?

SAN FRANCISCO -- The Arkansas Democrat-Gazette is a rarity among large U.S. newspapers — it's selling more weekday copies than a decade ago. In Idaho, the Post Register's circulation has remained stable, while many other print publications have lost readers to the Internet. How can this be?

The executives behind the Arkansas and Idaho newspapers believe it's because they've been giving free access to their websites only to people who subscribe to the printed edition. Everyone else has to pay to read the Democrat-Gazette and the Post Register online. Meanwhile, most publishers have been giving away their stories and photos to all comers on the Internet.

"To me, an online subscription is just the commonsense thing to do," says Roger Plothow, editor and publisher of the Post Register in Idaho Falls, Idaho. "To just give it all away on a website is completely and blindly idiotic."

The blunt logic is starting to resonate with many newspaper publishers, who are preparing to erect toll booths on parts, if not all, of their websites. They hope the switch brings in more online revenue and gives print subscribers another reason to keep buying the newspaper.

If it works, it would provide a sorely needed boost for an industry that has seen $11.6 billion, or nearly one-fourth, of its annual advertising revenue dry up during the past three years. But the strategy brings enormous risks. Ending free access to news could drive many online readers away and discourage online advertising at a time when more marketing budgets are shifting to the Internet.

Running free websites certainly isn't the only reason newspapers are suffering. The allure of less expensive advertising options offered by Google Inc. and other Internet companies already were hammering newspapers before the recession exacerbated the pain.

But the abundance of news on the Internet hasn't helped print editions containing virtually the same content that's often available online a day earlier. As a result, 28% of newspaper executives responding to a recent survey by the Associated Press Managing Editors, a group of newspaper executives, said their publications are considering online fees.

Newsday's owner, Cablevision Systems, plans to charge for online access to the Long Island, New York, publication beginning this summer. MediaNews Group, which owns The Denver Post and 53 other daily newspapers, has decided to charge for the online version of its print editions but hasn't said when. Having already killed the print edition of the Seattle Post-Intelligencer, Hearst is assessing whether online fees could help save its 15 remaining daily newspapers, including the San Francisco Chronicle and the Houston Chronicle.