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Page last updated at 18:02 GMT, Friday, 26 February 2010

Are people ready to pay for online news?

By David Reid and Tania Teixeira
BBC Click

Websites for Financial Times, The New York Times and The Sun
Newspaper websites are reversing the trend of free online news

Newshounds have long been able to consume as much news as they want online for free.

That trend could be about to end as some newspapers start to charge for the content found on their websites.

Publications across the world are exploring ways to make money from the web after seeing a fall in advertising revenues.

Jonathan Hewett, director of newspaper journalism at London's City University, said technological changes in recent years have been "immense".

"That's part of why newspapers are facing financial and economic challenges, in that a lot of advertising started to migrate online."

"What newspapers have really been struggling with is 'What's our destination?' and 'What is going to make it a sustainable business?'" he said.

"No one has the answer yet, if there indeed is an answer. It may be that we are moving towards different models for different types of news media," he said.

'A hunch'

The New York Times and Rupert Murdoch's News Corporation have said they will introduce a pay wall which prompts users to buy the articles they read.

We think the future is going to be a mixture of paid for content behind pay walls and free content
Peter Barron, Google

The media tycoon owns The Times and Sun newspapers in the UK and the New York Post and Wall Street Journal in the US.

News Corp made a loss of $3.4bn (£2bn) in the year to the end of June 2009.

Alan Rusbridger, editor-in-chief of UK broadsheet The Guardian, believes charging for articles could result in readers migrating to news websites that remain free.

"At the moment, The Guardian is getting to an audience of about 36 to 37 million [per month], so that makes us the largest English language paper on the web apart from The New York Times.

"If the New York Times disappears behind a pay wall, it is possible that the Guardian, which in circulation terms is quite a small newspaper in the UK, could be the largest English language paper on the web," he said.

He believes that newspapers have decided to price digital content on "a hunch", and he is not yet prepared to take the plunge and risk damaging his paper's "journalistic potential".

Feel the pinch

The BBC has been attacked for providing free news online and making it "incredibly difficult" for private news organisations to ask people to pay for their news.

James Murdoch, News Corp
James Murdoch criticised the publicly funded BBC for its unfair advantage

In August 2009, James Murdoch, chairman and chief executive of News Corporation in Europe and Asia, criticised the BBC for unfairly exploiting its public funding when commercial media organisations struggled to cope in the downturn.

"The business crisis is largely due to the fact that digital has creamed off the revenues that used to go in print, and print is declining because of digital," explained Mr Rusbridger from Guardian.

Newspapers feeling the pinch of giving their content away on the web also turned on Google and accused the online giant of profiting from their content.

As an online news aggregator, Google was called a parasite for generating ad revenues from linking to third-party articles.

Peter Barron, head of communications at Google UK, denies any wrong-doing.

"It is absolutely not right to say that we steal content," he said. "What we do is send readers to the websites of newspapers who are making their content available on the web for free.

"Once the reader is there, the newspapers can monetise that content and make revenue from it," he added.

He acknowledged that newspapers have had a tough time, and said Google is keen to help them increase traffic to their sites and help them monetise their work.

Risk oblivion?

The introduction of newspaper pay walls could encourage a new generation of sites to produce similar content and offer it for free.

Could this niche news site for journalists be a model for the future?

"What the web is doing to a newspaper is to completely unbundle it," said Mr Rusbridger. "There are lots of web entrepreneurs who look at a newspaper and say 'Well, we can do the sport, we can do the crosswords, we can do the opera'".

He added that publishers risk consigning themselves to oblivion.

A group of young entrepreneurs is already carving out a niche with stories and advice on opportunities for journalists and journalism.

Journalism.co.uk is a free and independent online publishing company that funds itself through advertising.

"I was a freelance sub-editor and I found myself gravitating towards business-to-business publications which were paying a lot better than newspapers," said John Thompson, publisher of Mousetrap Media that runs Journalism.co.uk.

"They were covering specialist areas and they had lots of recruitment advertising. That was the first idea - I can fund a journalistic enterprise on the back of recruitment advertising," he explained.

Peter Barron from Google believes free content is compelling but there is "no intrinsic reason why web material has to be free".

"There are many things which are charged for online, so we think the future is going to be a mixture of paid for content behind pay walls and free content," he said.

Watch Click, Saturday 27 February, BBC News Channel at 11.30 (GMT)

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