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Paying for online news content?

Editors Note: Castanet is not entertaining thoughts of charging for news content.

Whether they're lauded as the future of online media or labelled a scourge on the flow of digital information, opinions abound on the rise of paywalls in Canada, and the conversation is only going to get louder.

The concept itself, asking readers to pay for editorial content online, isn't a new one, but it's now being instituted at many media outlets across the country.

Those in the newspaper industry say it's a natural and necessary evolution. But are Canadians willing to fork over their credit cards to sign up?

Observers say it's too soon to tell, but they warn that those who hope paywalls will crumble could be waiting a long time.

"I think the paywalls are here to stay," says Vincent Mosco, a Queen's University sociology professor who studies the media industry.

"I think it's an inevitable development that has no guarantee of success."

Experts say quality journalism costs a lot of money, and declining revenues from print advertising coupled with lagging digital ad sales have created a funding dilemma for many newspaper organizations.

The economic downturn of 2008 compounded the problem as it diminished advertising spending in general and forced many people to cut back on spending, which included cancelling subscriptions to newspapers and other print products, said Mosco.

Many in the industry hope paywalls will provide a new source of revenue as personal spending picks up once more. One frequently cited example of such success is the New York Times, but observers caution that the paper is an "elite" product.

"One of the reasons why the elite newspapers succeeded while the day-to-day kinds of newspapers have not is because the former have invested in top notch journalism, whereas what we've seen in the mainstream of 'next tier' newspapers is that they've been cutting back substantially on their investment in good journalism," says Mosco.

Canadian media companies implementing paywalls, which range from $6 to $20 per month, seem well aware of the challenge they face in maintaining the size of their readership while simultaneously trying to make a new funding model succeed.

Some Postmedia papers, including the Montreal Gazette, the Ottawa Citizen and the Vancouver Sun, have been experimenting with paywalls this year. The company plans to put the rest of its newspapers behind a paywall in the first quarter of 2013.

"We knew that, ultimately, in order to really succeed or save the industry from total collapse that you had to start charging for online, knowing full well that this wasn't an instant cure-all. It's a marathon, not a sprint, to bring in more revenue," Godfrey says.

The Postmedia papers with paywalls have seen "slow, steady growth" so far, and while Godfrey expects a minor dip in online readership numbers when all the company dailies start charging for digital content, he expects the decline to be a short-term one.

Whether enough readers will agree with that thinking remains to be seen and some observers are skeptical.

"The undifferentiated local paper is in great trouble because there are so many free substitutes and even if some people may step in and say they'll pay for the content, I'm not sure that's enough to support the decline in revenue," says Kaan Yigit, a media analyst with Solutions Research Group.





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