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Venture aims to introduce fees for online news

Three media veterans plan to bundle the Internet content of newspaper and magazine publishers into a subscription package that will test Web surfers' willingness to pay for material that has been given away for years.
/ Source: The Associated Press

Three media veterans plan to bundle the Internet content of newspaper and magazine publishers into a subscription package that will test Web surfers' willingness to pay for material that has been given away for years.

The system won't be ready until the fall, but the plans were announced late Tuesday because so many publishers already are clamoring to sign up, said Steven Brill, co-chief executive of the new venture, called Journalism Online.

"The interest in this came together a lot more quickly than we anticipated," said Brill, the founder of Court TV and American Lawyer magazine. "We are dancing as fast as we can now."

Brill declined to identify the publishers willing to participate because agreements haven't yet been signed.

Journalism Online's other principals are former Wall Street Journal publisher Gordon Crovitz and former cable television executive Leo Hindery.

The decision to place more toll booths in front of online news reflects the deepening financial problems threatening the survival of print publishers, particularly newspapers.

Since 2005, the annual volume of print advertising in U.S. newspapers has plunged by $12.7 billion, or 27 percent, according to the Newspaper Association of America. Over the same time, the amount of online advertising on newspaper Web sites has risen by $1.1 billion, a 53 percent increase, not nearly enough to offset the erosion in print.

With their profits shriveling, newspapers have been laying off workers and cutting other costs. In the most severe cases, five newspaper publishers have filed for bankruptcy protection since late last year, while the Seattle Post-Intelligencer has gone online only and the Rocky Mountain News has closed.

Many newspaper publishers now believe they can stop the hemorrhaging by charging for at least some of the material on their Web sites instead of giving it away. Besides raising more revenue online, Internet subscriptions could persuade more readers to keep paying for print editions — which yield more ad revenue.

"That's a very important piece of this," Brill said. "If you are trying to sell your product with one hand and give it away with the other, then you are undermining the integrity of your product."

The risk of asking readers to pay for online news is that many publishers might find it shrinks their audience, especially if other news sites remain free. And that could leave the publishers that charge Internet fees with even less ad revenue, exacerbating their headaches.

Few newspapers now charge for access to their Web sites. The Wall Street Journal is the largest one to do so, with nearly 1.1 million subscribers.

By putting content behind a "pay wall," publishers also could keep search engines from indexing the stories and then delivering links to them in search results. Journalism Online hopes to negotiate licensing agreements with Google and other services so the search engines could show links to stories that only paying subscribers can read.

Journalism Online's business model will share some elements with the cable and satellite TV packages that have become staples in millions of households.

The company plans to offer an "all-you-can-read" option that would give customers access to the content of all the participating publishers for a monthly fee, expected to range from $15 to $20, Brill said. The publishers will divvy up the revenue, based on which articles draw the most readership each month.

Readers also will able to buy a pass for one-day access to the content kept behind the so-called pay wall.

Beyond asking more readers to pay for online news, the newspaper industry also appears poised to try harder to stop the spread of its material to free sites beyond its control. Last week The Associated Press, a not-for-profit cooperative, announced it would get more aggressive in blocking the unlicensed use of the industry's copyright material.

Journalism Online appears ready to handle antitrust, copyright or other legal concerns triggered by its plans. The company's board of advisers includes prominent antitrust lawyer David Boies and Theodore Olson, former U.S. solicitor general.