News sites grappling with gated pages

With a constant stream of stories about staff layoffs, declining ad revenues, and dwindling readership, it may appear that the newspaper industry has given up entirely.

With a constant stream of stories about staff layoffs, declining ad revenues, and dwindling readership, it may appear that the newspaper industry has given up entirely. But behind the glum reports, there are industry pros trying - through trial and error - to build a profitable business model to keep papers relevant.

The industry has long struggled with whether to charge for online content. But with The New York Times and, most recently, The Sacramento Bee ungating their premium Web sections, most doubt the viability of the paid online approach.

Even amid these failures, though, some pundits believe there is hope for the paid content model. And the Bee's formerly premium access "Capitol Alert," though not a success, holds a kernel of promise for the industry's online future.

Unlike the Bee's main political section, "Capitol Alert," which previously cost $500 per year, attempts to give readers highly focused insider news that targets legislators, lobbyists, and others who work in politics.

"As good as we believe this product is, it was not $500-a-year better than our competitors, or at least that's what the market seems to be telling us," says Ed Canale, VP for strategy and interactive media at The Sacramento Bee.

The company's strategy mirrored many industry trades that require readers to pay a premium to access content that is not readily available in the mainstream press.

"It becomes an either/or proposition," he explains. "Because the audience is so thin, it is hard to sell significant advertising or sponsorships against it. So by opening it up a bit more, it'll give us a chance to grow our advertising and sponsorship revenue, and make it a more viable financial model."

Even though it's now free, the content in "Capitol Alert" will remain targeted towards politically savvy professionals.

"I still think there are going to be opportunities to charge for content," he says. "But I think we're going to have to rethink what that looks like, and how unique the content has to be."

Paul Grabowicz, adjunct professor and director of the new media program at UC Berkeley, says The Bee's mistake was gating political news, which is highly publicized and scrutinized online for free by bloggers, pundits, and journalists. But "Capitol Alert" was on the right track by customizing its content and attempting to make it more unique than the average political story that runs in most major metros.

An effective subscription model will have to go against the newspaper industry's longstanding model of mass appeal and deliver a niche product, Grabowicz says. The key is to identify areas where people are willing to go out of their way to get the inside scoop, because it affects their personal or their financial lives - like with sports, financial news, and local political news that targets local developers and activists, he suggests.

But even the outlets that are revered as utmost news authorities have reversed their position on gated content, like The New York Times, or are rethinking their strategy.

Rumors have been swirling since Rupert Murdoch purchased The Wall Street Journal earlier this year that its content would become free. Yet for now, it remains the relatively successful example of paid content, mostly because both the scope of its business coverage and its analysis are hard to replicate.

"It is very difficult to go through a week and not read The Wall Street Journal and feel like you know what's going on," Grabowicz points out.

Beth Lawton, manager of digital media communications at the Newspaper Association of America, says despite the trend toward free online content, the industry continues its tug-of-war on the issue, with many papers implementing a hybrid strategy. For instance, the Milwaukee Journal Sentinel successfully launched a paid online section called "Packer Insider" that offers in-depth analysis of the popular Green Bay Packers football team.

"They have found a really targeted, interesting area that's for a select audience," she says. "The paid model is working there."

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