Why pay for something when you can get it for free? Since the dawn of the Internet, there has been so much free information available online that many consumers have come to expect it, much to the chagrin of newspapers and magazines.
Recently, though, there has been movement toward paid subscribership to these online entities. And after some initial resistance, the model seems to be paying off.
Newspapers are especially vulnerable
The onslaught of free news and information online has hit newspapers particularly hard. In an effort to stay prominent, many have posted articles on the Internet for free, which has hurt their print products. Some, however, like TheNew York Times (NYS: NYT) , have begun installing paywalls in an effort to recoup some of the revenue lost from the decline of paid paper subscriptions.
According to figures from the Audit Bureau of Circulations, News Corp.'s (NAS: NWSA) Wall Street Journal has stayed in the top position in the industry with the greatest circulation, while The New York Times kept its spot at No. 3. One factor that has helped these papers' staying power is their efforts at bolstering their paid digital subscribership, which is included in circulation numbers.
The Journal has had a content paywall in place for several years, which probably has helped the paper maintain its top spot. The Times instituted the model only last year, but has so far had excellent results, with a 73% rise in weekday readership from a year prior. Interestingly, the increase was directly attributable to paid online subscriptions acquired after the paywall was put up.
Gannett's (NYS: GCI) flagship paper, USA Today, stayed at No. 2, and Gannett has put paywalls on some but not all of its other papers since the beginning of the year. USA Today, however, remains free online. Its dead-tree version has suffered from reduced sales to hotels, but it is too soon to tell if revenue from paywalls on other publications will make up the difference.
Getting what you pay for
The evidence shows that selling subscriptions, once unheard of with digital formats, can prop up companies that have lost ground due to the plethora of free digital content. I believe that it's only a matter of time until other companies follow suit. Most notably, the Washington Post (NYS: WPO) has remained stalwart in its refusal to put up paywalls on its online content. Perhaps the addition of Digg's former tech team will help convince the Post that when it comes to making money, times have changed -- and, to survive, companies need to change, too.
Bottom line: Disruptive technologies like the Internet have driven enormous changes in consumer behavior -- and many old media companies have fallen by the wayside as a result. Getting in on the ground floor of a revolutionary disruptive technology doesn't come often for investors, but luckily our analysts at the Fool have discovered an emerging technology that is poised to disrupt in much the same way as the Internet. Our free video report will outline this new technology, one that could very well end the "Made in China" era as we know it.
At the time thisarticle was published Fool contributorAmanda Alixowns no shares in the companies mentioned above.The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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