Charge for news or bleed red ink

[Commentary] Newspapers are waking up to the fact that it is untenable to rely on sheer numbers of online readers - and online advertising - to save them.

In any other industry, charging customers would not be a radical idea. Even companies such as Skype and Flickr use a "freemium" pricing strategy of giving away services to casual users and charging customers who use them intensively. Newspapers have, however, become caught up with the notion of what Jeff Jarvis, a journalism professor, calls "the link economy", believing that any gains from subscriptions will be outweighed by losses in advertising and brand equity. Maybe that was a fair calculation a few years ago, when rates for online ads appeared to be rising towards those in print publications. But papers are being swamped by competition from portals, blogs, search engines, and so forth. Although online readership falls when any form of subscription is imposed, metering or similar freemium models help publishers to more than make up for it. Not only do they gain subscription revenues, but they can raise advertising rates to their core customers.