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Posted by Belinda Alzner on November 30, 2011

What happens when a province sees the bulk of its online news move behind a paywall? That’s the question that will be answered as early as next week when the Irving-owned Brunswick News Inc. ends free access to the online counterparts of 26 of its newspapers – 18 English-language and eight French. Kelly Toughill looks at the paywall in comparison to others in the industry and why the move just might work for Brunswick News.

New Brunswick is about to become the first place in Canada where readers must pay for local news.

The Irving-owned Brunswick News Inc. has decided that the era of free content is done. As early as next week, the company will shut down free access to websites for 18 English-language newspapers and eight editions of the French-language newspaper L’Etoile.

This is a bold experiment that will make New Brunswick Canada’s most interesting laboratory for the future of the newspaper business.

Paywalls have garnered a great deal of attention this year. The New York Times launched its new paywall last spring, and has sold more than 300,000 subscriptions so far. Dozens of small newspapers in the United States have set up some version of a subscription system, though many, like The New York Times, are finely shaded so that readers can still get partial access without paying.

The New York Times’ paywall only keeps out readers who call up more than 20 stories a month. Readers in certain cities are exempt from the paywall, as are readers who reach content through social media links such as Twitter and Facebook. And hundreds of thousands of New York Times digital subscriptions have been subsidized by corporations or discounted to $1 for a month-long trial.

Other newspaper companies have left some content free online while charging readers for specialty features such as columns and commentary.

Brunswick News has adopted a radical version of the paywall system – something very few other publications have tried. According to those familiar with the new system, every single scrap of content will have a price. No one will get free access to any part of the newspaper websites run by the Brunswick News subsidiary Canadaeast.com.

Both Brunswick News vice-president Jamie Irving and editor-in-chief Rob Warner declined to speak with J-Source for this article.

“We are not prepared to discuss the site or the paywall as yet, but perhaps will do so in the new year,” Warner wrote in response to an email request for an interview.

This is not the first time that New Brunswickers have been asked to pay.

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Most of the paywalls now going up are a second-try for newspaper companies. Brunswick News had a subscription system for online news at first, but ditched it several years ago.

As well, The New York Times ran “Times Select” for two years before shutting it down in 2007

There are three reasons that companies are revisiting the idea of online subscriptions now.

The first is that subscription revenue is far more important, overall, than it was in the past. Consider The New York Times. In 2005, only a quarter of the company’s revenue came from subscriptions. Five years later, 40 per cent of all revenue was generated by selling newspapers. If subscription revenue is increasingly important, it makes less and less sense to give away the content for free.

The second reason is that technology has improved dramatically. The New York Times allegedly spent $40 million to develop and build its new paywall, but that paywall allows a mind-boggling complexity of pricing and access points that can be tweaked to bolster company strategy, or satisfy the needs of specific advertisers.

The third factor is the public mindset. E-commerce is now widely embraced by the buying public, so positioning news within that sphere may become easier.

Brunswick News Inc. has several advantages in erecting a paywall.

The first is lack of competition. The company owns every English-language newspaper in New Brunswick except one.  The CBC has a very strong following in New Brunswick, but can’t match the number of rural reporters employed by Brunswick News.  Readers will miss stories if they don’t pay for the paper to be delivered either to their computer or to their doorstep.

The second is its ownership structure. Brunswick News Inc. is owned by the Irving family. It does not report to shareholders, so the company need not fear the public scrutiny of financial analysts who focus on short-term stock value. It can keep the experiment cooking for longer – and adjust it with less consultation – than a public company could.

The great debate around paywalls is not just whether they work, or how. The paywall debate leads to a more fundamental question about the true value of news. The Irving experiment is an important step toward finding the answer.

Comments

Actually, Brunswick News isn't the first company in Canada to use a paywall. Northern News Services Ltd, which operates seven newspapers in the Northwest Territories and Nunavut has been operating a successful paywall for a number of years. Like Brunswick News, they too face little competition and are able to make it work for them, despite some objection from newshounds.

Your analysis is flawed. The Irving example is a lousy example for a variety of reasons, none more so than your thesis that it is about the 'value' of news. Anyone living in New Brunswick knows the Irving publications for what they are and that is worthless. They have nothing to protect by putting the content behind a paywall. Here is why the Irvings have a paywall:

The Irvings, unlike many newspaper owners, still make a lot of money from the print product. They own the trees. They own the paper making machinery. They are less vulnerable to shifts in paper prices. Nor are they straddled by debt like some newspaper chains which took on too many assets with a view to recouping the money through advertising which failed to materialize due to the recession. As well, they invested heavily in new printing presses not that long ago and are desperate to recoup that money. Because of this, the Irvings have no interest in online news. They want people to buy the printed newspaper and that is why they are pricing the online version as they are, not because they want people to go online or because the online version has any value. While all this may seem illogical given the way technology and the Internet is changing the way many people access news, the Irvings don’t care. They have a monopoly in every city. If you want a local newspaper you have to buy an Irving paper. They will reap every last penny from their print product until they can reap no more.

J-Source and ProjetJ are publications of the Canadian Journalism Project, a venture among post-secondary journalism schools and programs across Canada, led by Ryerson University, Université Laval and Carleton University and supported by a group of donors.