Summary:

Conventional wisdom has it that the internet is killing newspapers. Paid-for circulations are relentlessly down across most of the market wh…

Conventional wisdom has it that the internet is killing newspapers. Paid-for circulations are relentlessly down across most of the market while, according to last week’s ABCes, free internet access is just as relentlessly up.

If these two are related – as most people in the media industry believe they are – the road to business nowhere beckons as analogue (or in this case hard-copy paper) pounds are unavoidably swapped for digital pence.

But what of affairs over at the good ship Beacon of Hope (otherwise known as paywall city or News International)? Well, no one knows for certain since the company hasn’t released much by way of useful data, but a report from the internet traffic analysts Nielsen last week did not make especially happy reading. In the three months the Times/Sunday Times paywall’s been up, total monthly unique visitors have, according to Nielsen, dropped by more than 40% from over 3 million to nearer 1.7 million. And the estimate of those going beyond the front page (free) to the paid-for delights within is just 362,000 per month. As this flatters the paywall by including anyone given access free, discounted, or as part of a print subscription, if it’s anywhere near accurate, Wapping will be a worried place.

There is some upside, of course. Many of these customers are bringing new revenues and they are almost certainly worth more to advertisers – since more is known about them, as subscribers, and advertising can be more targeted and effective – and therefore priced more highly. And the experience of their cousins at BSkyB (NYSE: BSY) (who know a thing or two about managing a subscriber base) suggests there are a multitude of opportunities for News International to monetise its relationship with them as customers.

Unfortunately, without a huge increase in the number of subscribers, these revenues – nice as they are to have and more resistant as they may be to economic ups and downs – don’t come close to recovering the substantial advertising revenue foregone by not being free. And then there is the loss of salience so keenly felt by many of the Times titles’ better-known and more accomplished writers. They naturally want their work to be as widely available as possible so as to maximise its impact on the national conversation. And in the emerging digital world where recommendation via Twitter and Facebook is becoming so important, being stuck behind a paywall that most ordinary internet searchers simply won’t cross is a lonely place to be.

So is that it, then? Are we all doomed? Well, maybe not. And something else that happened last week perhaps gives a clue as to where the future may lie.

Very much against the run of play, Britain saw the launch of a new, national, paid-for daily paper – the first for a quarter of a century. The launch of the Independent’s 20p spin-off i can easily be dismissed as the action of a madman with more money than sense. But look a little deeper and he could be on to something. If you can see through the blizzard of PR, i is aimed squarely at commuters. Intelligent and interested, available to read but with limited time.

Simon Kelner, the Independent’s editor in chief, described it as a paper for people “daunted” by the sheer size and scale of other daily national newspaper offerings – including his own. But this doesn’t quite get to the real point. His i is designed specifically to meet the needs of a particular group of consumers at a particular point in their day. It is in that sense perhaps better thought of as a “service” for people who do want news, information, analysis and even comment but delivered in a way that suits them when and where they want it. First reports, again unreliable and difficult to disentangle from corporate spin, do however appear to indicate that i has already found a following – not least among readers of its big sister, the Independent.

Elsewhere, there appears to be a roaring trade in newspaper apps for iPhone and iPad type devices. Reliable numbers are hard to come by here too, but the FT is reckoned to have dispensed some 400,000 and Guardian executives nearly fainted when over 200,000 people downloaded its iPhone app – and paid for it. This suggests newspaper content does appear to have commercial potential in the digital world if it can be delivered in ways that are tailored to consumers. I have the Guardian at home, but buy the Times whenever I travel into London on the train because it meets my needs there and then. What’s more, that has nothing to do with whether it’s available free on the web. When I’m searching for information online I’m doing one thing; when I’m sitting on a train or eating breakfast on a Sunday morning I’m doing another.

And maybe that’s the point. No one ever really paid for content per se, they only ever paid for the whole package: the content and the manner of its delivery. In other words, what could be called “services”. By charging for content on the web, News International may have gone up a blind alley; but there are other solutions based on paid-for services alongside paywall-free internet options that could make for a more durable commercial future.

This article originally appeared in MediaGuardian.

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