Credit: drumminhands/Flickr/Creative Commons License

Digital-only and hybrid digital-print subscriptions drove up total newspaper circulation revenue by 5 percent in 2012, according to a report released this week by the Newspaper Assn. of America. It marked the first circulation gains in a decade, and hinted that the industry’s adoption of website paywalls is starting to pay off.

Still, total newspaper revenue in 2012 declined by 2 percent to $38.6 billion from the previous year.

Circulation accounted for $10 billion of industry revenue in 2012, according to the report. While print subscriptions and single-copy sales declined 14 percent, digital-only and hybrid digital-print subscriptions increased by 275 percent and 499 percent respectively.

Newspapers also saw gains in new revenue streams, including digital marketing and advertising consulting services, e-commerce, transactions, and commercial print and delivery services.

“America’s newspaper media are transforming themselves,” said Caroline Little, president and CEO of the Newspaper Assn., in a statement. “In virtually every community they serve, newspapers have the biggest newsrooms, the best-known brands and significant audience market share. Now they are building on those to find new ways to serve audiences and local businesses.”

The report seems to support sentiment in the industry that after a decade of false starts, American newsrooms are finally proving to be incubators for successful 21^st century journalism models.

Legacy media like the Los Angeles Times have been experimenting with paywalls for years. When one model failed, they tried others, until something clicked.

“What I think is most exciting right now is that we are very much a start-up in a mature company,” said Jennifer Collins, vice president of digital revenue at Los Angeles’ biggest paper.

In 2003, the company attempted to “wall off” the content of its Entertainment section, CalendarLive.com, by charging a $4.95-per-month access fee. Within six months of the paywall’s implementation, visits to the site fell 61 percent. Users’ interactive engagement with the site plummeted 97 percent. It came down in 2005, just 21 months later.

The Los Angeles Times tried again in March 2012. This time, the paywall isn’t going anywhere.

As of March, 412 American papers were charging for their digital content, according to News & Tech, a trade publication pushing digital integration to news organizations. They include industry giants such as The New York Times and The Wall Street Journal as well as entire chains like Gannett, Tribune, MediaNews, and Media General.

Last summer, Ebyline sliced and diced an earlier version of these numbers to make a couple of observations worth noting: first, about a third of daily newspaper readers are affected by paywalls; and second, the trend toward paywalls is dominated by newspapers with high circulation numbers.

But paywalls aren’t limited to old media. In a counter-intuitive twist, digital-only media is following the lead of legacy media in the search for a second (to advertising) revenue stream online.

Investors are taking notice. In 2012, six of the eight publicly traded newspaper companies saw stock prices climb between 10.3 and 62.9 percent. The gains followed across-the-board losses in 2011.

The Orange County Register recently created a splash when it announced it would introduce a hard paywall (meaning no “first 10 articles for free” policy) with a single price — $1 per day for digital, print or both. Also arriving to the party in 2013 are Scripps, McClatchy, and The Washington Post.

Here’s a few more highlights from across the paywall landscape that tell the story in different ways:

New Chasing Old

In his most recent open experiment — the transition from a hired gun for The Daily Beast to independent blogger — we see Andrew Sullivan asking  readers to support his work (like scores of print publications before him). Sullivan wants readers to pay $19.99 (or more, if they like) to subscribe to his new venture. So far, it’s all gravy: in the first 24 hours of rolling out his paywall, he made a third of his million-dollar goal from almost 12,000 subscribers; after the first four weeks, he made half his goal. But he may have leaks in his own leaky meter model. The question, asks Hamish McKenzie, is if Sullivan can exceed the 1-percent rate established by The Times to convert unique visitors to paid subscribers.

A Mixed Bag for The Times

The New York Times has the most high-profile metered paywall in the business, and it’s no surprise observers were intensely interested in its most recent quarterly earnings report, which also summed up the entirety of 2012. Financially, The Times posted numbers that were down slightly from 2011. The good news was that the paper added 186,000 digital subscribers to increase its online-only subscriber base to 640,000. The bad news was that the gains in digital subscription were accompanied by losses in digital (and, of course, print) advertising revenue. In other words, The New York Times still can’t compete with folks like Google, Facebook, AOL, and Microsoft in attracting online advertising dollars. Newsonomics has more on the topic.

Six Principles Clark Gilbert Used to Transform Deseret News

Industry-wide, American newspapers today derive an average of 17 percent of their revenue from digital. The Deseret News and Deseret Digital Media average 45 percent a little more than three years after former Harvard Business School professor Clark Gilbert took over the company. The American Press Institute explains how he did it.

The newsonomics of paywalls all over the world 

These numbers are only a snapshot and come from some of the better practitioners of the digital pay craft. Many more are underachieving. The point is that there is an emerging playbook of how to get pay working right. Nieman Journalism Lab has an article boiling it down to the 5 P’s.

 Half of first year’s paywall revenue comes in first three months

Our-Hometown, a company that handles Web publishing for small community newspapers, has published a report showing the pace of digital subscription revenue for one site over about three years. 

Washington Post building back before the web was even a thing. (Flickr Creative Commons: DC Public Library Commons)

Dean Starkman at CJR has a meditation on what will survive when The Washington Post puts up paywalls for its online content.  Weighing sustainability and readability issues, Starkman mourns the possibility that the Post’s recent shows of public-interest feature reporting won’t rake in audience dollars. He offers a page-one profile of a lower-middle class high school student struggling to make it out of her home town.

“[L]et’s face it,” he writes, “the downer subject, and the five screens of copy, all but cry, ‘skip me.’  It had other obstacles to popularity. It’s written in newspaper-feature-ese, so some of the writing might seem strained, depending on your taste.  I couldn’t find it on my mobile phone, either on the Post’s mobile app or via my browser.  The piece is economics-statistics-free–a smart editorial decision, but it doesn’t leave much room for interactivity.”

Starkman notes that type of public interest reporting is important because it connects elite readers with people and stories they would otherwise never know about. But it also takes months to report and comes, therefore, with a hefty price tag.