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News & Observer prepares pay wall to charge users for online access

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[This article has been amended; see in-text clarification below.]

Pay walls are an increasingly common strategy for old media. And beginning Dec. 19, visitors to The News & Observer website will be asked to pay after reading a limited number of articles for free.

Newspapers are in desperate need of new ways to make money. Pay walls may be a partial answer, but they are an upriver strategy in a medium that has increasingly gravitated toward freedom, literally, of information.

Like most papers, The N&O, which is owned by McClatchy, has for years experienced decreasing ad sales and circulation. Since 2008, the staff has shrunk from more than 750 employees, according to previous INDY Week reporting, to now roughly 450 employees, according to the publisher, Orage Quarles III. Many of these reductions were through layoffs and buyouts. The paper itself has less content.

The decision to go behind a pay wall was not actually made at the Raleigh daily's stalwart-looking headquarters on the corner of Martin and McDowell streets. It came down from McClatchy, which bought the family-owned paper in 1995. McClatchy, based in Sacramento, Calif., owns dozens of daily newspapers, including The Sacramento Bee and The Miami Herald. With many of McClatchy's papers sinking, some N&O profits end up going to plug the McClatchy ship.

Representatives for McClatchy refused to be interviewed for this story.

The N&O has "about six" web-only editors, according to Jim Puryear, vice president of circulation. He is overseeing the paper's transition to a pay wall system. The rest of the content comes from writers whose only job used to be filling the paper's print edition.

"We put a lot of resources into our digital products," Puryear says. "We've got to find some way to pay the freight, so to speak."

The logic behind pay walls, says Puryear, is that it costs The N&O money to produce content on the Internet, so it's reasonable for people to pay for that—just as they do newspapers. But the idea of being entitled to charge on the web dates the mindset of big publishers.

The primary movers of information are social media and search engines. However, in weeks of meetings, there had been no discussion about whether users would be able to share N&O content through mediums such as Facebook and Twitter. Puryear says it didn't come up.

After researching the system, Puryear explained that you will be able to share content over The N&O pay wall. However, if you click on a story from a social media site, it will count toward your monthly allotment. Once you've seen 15 stories on your computer, you'll hit the wall, regardless of how you got there.

[Clarification: After this article was printed, INDY Week was informed by a member of the N&O's staff that Puryear received incorrect information and that clicking on a link through Facebook—but not other social media sites—will not count toward a user's quota.]

The pay wall of The New York Times is generally viewed as a success—although the paper just offered buyouts to 30 people in its newsroom—but it is more forgiving than what the McClatchy papers are building. Clicking on a story through social media or a search engine doesn't count toward the NYT monthly quota, which allows for a more fluid sharing of information. It also allows you to easily bypass the wall.

Google "bypass a pay wall" and you'll find other hacks, including clearing your computer's cookies, for getting around a pay wall.

Particularly in the Triangle, McClatchy's one-size-fits-all solution may come up short. The N&O is hardly the most trafficked news website in the area. That's WRAL.com, a site which has no intention of going behind a pay wall, according to its editors.

WRAL's website attracts 4.6 million unique visitors a month, according to the media kit of its parent company, CBC New Media Group. By comparison, The N&O site attracts roughly 1.6 million unique visitors per month, according to its publisher.

Jodi Leese Glusco, WRAL's content director, says the website side of the business, CBC New Media, has been kept separate from the television station and that CBC is a profitable company in its own right. While TV and web reporters, under separate company umbrellas, work together, WRAL doesn't milk the resources of its TV newsgathering operation to fuel its web content.

"Our company has all along had a great understanding of technology and willingness to invest in technology," says Glusco. She says WRAL, a locally owned company, realized early that it needed to put significant financial resources into creating a strong web presence, because that's where the audience was going.

To turn a profit, CBC relies on more than Internet advertising. The company started side ventures for the web, including a Groupon-like business and another that reviews companies, much like Angie's List.

WRAL did not release to INDY Week the number of full-time web editors, writers and designers it employs. However, it has a team of moderators who oversee comments on the website from 8 a.m. to 8 p.m.

The N&O's pay wall isn't necessarily a death sentence. Take, for example, The Herald-Times of Bloomington, Ind., with a weekday circulation of roughly 19,000. The H-T has been behind a pay wall since 2003, almost since the website's inception.

"It was our publisher. He was really sort of adamant that newspapers traditionally have had two revenue streams. One is subscription fees and one is advertising," says editor Bob Zaltsberg. "We have always believed that our content was important. It just didn't seem like a logical business model to give it away."

In its nine years behind a pay wall, The H-T has gradually grown its digital subscribers from less than 1,000 in the early years to around 2,500 today. It has also consistently increased the number of unique visitors to its website each month.

The H-T's current digital subscriptions represent roughly 13 percent of its weekday print circulation. For The N&O, that would translate to more than 15,000 digital-only subscribers.

While The H-T's decision was bold in its day, the paper hasn't been sheltered from industry decline. The newsroom, not counting other departments, has lost a quarter of its staff since the pay wall went up. Circulation and ad sales are still sinking.

"Some people say it's backwards and some days I'm one of them," says Zaltsberg of the pay wall. "I don't know if we did the right thing or the wrong thing, but I believe it succeeded for us."

This article appeared in print with the headline "Banging their heads against the pay wall."

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