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Friday, July 16, 2010

Gannett Experimenting With Online Pay Walls In Three Markets

The Wall Street Journal

Chief Executive Craig Dubow said Friday the publishing company is experimenting with subscription models for online news content in three local markets in the U.S.

Dubow said on a conference call with analysts following its second-quarter earnings results that Gannett has launched experiments with "paid content" on its newspaper sites in Greenville, S.C., Talahassee, Fla. and St. George, Utah.

The tests come as a conviction grows in the newspaper industry that online advertising revenue alone can't support substantial newsgathering operations in the digital age, and several major news publishers are moving towards online subscription models to generate a new revenue stream from online readers, who have grown accustomed to getting news online for free.

The New York Times Co. (NYT) has said it will begin charging readers for access to some articles on its website next year, and News Corp. (NWS, NWSA) Chief Executive Rupert Murdoch has said subscription payments will become a much larger part of the company's digital strategy.

News Corp., which owns this newswire as well as The Wall Street Journal, recently announced two investments that reflect its efforts to wrest consumer payments for its news properties on the Web. It acquired a stake in Journalism Online LLC, a venture that helps publishers set up a payment system and business strategies to charge readers for online news and information.

It also acquired Skiff LLC, an electronic-reading technology firm that handles the behind-the-scenes workings of publishing on mobile devices, such as converting files to digital formats and setting up ways to serve up advertisements.

Many publishers view the proliferation of mobile reading devices as a new opportunity to set up subscription models for electronic distribution of news. Dubow said Friday that USA Today's iPhone application would remain a free, ad-supported service at least through the third quarter.

The Wall Street Journal is one of the few examples of newspapers that have maintained a healthy online subscription business as its business and investment-oriented audience has shown a willingness to pay online for its content. Its rival The Financial Times also has a thriving online subscription business, but more general news sites have struggled with the prospect of getting their readers to begin paying online. The New York Times has twice launched online subscription offerings, only to remove them after their results were disappointing.

Dubow said Gannett's experiments will allow the company to gain insights into the willingness of consumers to pay for local, online news content without disrupting its broader publishing business by launching a larger subscription offering.

Gannett Chief Operating Officer Gracia Martore said the company is beefing up its local content offerings in each test market in areas of particular interest to each community, and it is trying different price points in an effort to see what works.

Martore said in three to six months, Gannett should be "much better informed about what business models are sustainable."