Patrick Smith is a reporter for paidContent:UK, which provides news and analysis on all aspects of the UK’s digital economy. Its parent company ContentNext Media is a wholly-owned subsidiary of Guardian News & Media.

Something for nothing

Can news ever pay on the internet? Newspaper publishers are racking their brains to devise schemes to charge for online content. But, as PATRICK SMITH explains, it’s a tough nut to crack

HOW MUCH is a story worth? Journalists know the value of a well written, timely article. But in the face of unprecedented pressures on the news industry, bosses are now asking whether readers will pay not just for their morning paper but also to buy single articles online. Will it work? Not in a world where people expect something for nothing.

More and more publishers, including News International’s Rupert Murdoch, Daily Mail and General Trust managing director Martin Morgan and Guardian Media Group chief executive Carolyn McCall have recently shown enthusiasm for charging for their newspapers’ online content. They want a way to boost the return on their investment and a long-term answer to the continuing decline in newspaper circulation and advertising spend.

The publishers used to bank on advertising migrating online: website income was growing at 30 or even 40 per cent a year earlier this decade, but now analysts predict a rise of between just 2 and 10 per cent for 2009. So it’s clear that ads alone will not sustain online titles in the same way they sustained printed newspapers — or at least not in the short term.

So news sites are diversifying into e-commerce with things like online shopping partnerships (check the Mirror’s cashback scheme) and affiliate marketing, where newspapers are paid to include a hyperlink to a company’s product in their articles. It all helps, but it’s not nearly enough to cover publishers’ losses — and it has implications for editorial independence from advertising.

So why not just charge for online news? So far the Financial Times is the only British newspaper to pull off that trick — ft.com had more than 109,000 subscribers at the end of 2008, each one paying £155 a year for unlimited access (casual readers can read ten stories a month for free). That charge helped FT Group profits rise 13 per cent in 2008 to £195 million in a year that saw disastrous falls elsewhere in the national press.

But the FT’s audience is a professional one that wants specialised coverage on industries and sectors that most papers cover only briefly, and many of the subscriptions are paid for by corporate bosses in the City and not by ordinary readers. The Wall Street Journal also has a “pay wall”, as do several B2B sites but, again, they serve a specific professional audience.

So here’s the big problem: if mainstream news publishers such as Guardian Unlimited or Times Online charged for general news stories, readers and advertisers would depart in droves to wherever it was free. And there’s no bigger free online news resource than licence-fee-funded bbc.co.uk, which enjoys an annual budget of £145.5 million, ring-fenced for the next three years.

The music industry, also struggling over how people pay for its products, has put its faith in allowing fans to buy single tracks as well as albums through download services like Apple’s iTunes and a growing number of competitors. Would a similar system work for news? Would you pay 59p for the daily headlines or a single story, with perhaps an investigation and football reports thrown in for £1.50? What no one has yet unveiled is a simple, proven payment method. Make it too complicated and people will simply go to where it is available for nothing.

And once an article appears online, anyone can copy it and republish it themselves — which is what happened when the New York Times decided to charge for its online op-ed content in 2005. The NYT reconsidered and made it free again in 2007.

And, unfortunately for journalists, music is inherently more valuable and long-lasting for consumers: people listen to their favourite tunes again and again, while interest in a news story is fleeting.

Yet the real barrier to a “paid content” model is as cultural as it is economic: people have been getting online news for free for 15 years. There is a generation of young readers who may have never bought a newspaper regularly and maybe never will — they have the Metro freesheets, news via mobile, bbc.co.uk, guardian.co.uk, iPhones, MSN and Google News to guide them to whatever they want online. Reversing that trend and convincing people of the value of serious news is the real challenge facing the news business.