Before I go any further today, let me again make the point again that the audience is not your customer. Your customer is whoever writes you a check. In most cases, that means our customers, as publishers, are the advertisers who pay for placement in our news publications. A customer also can be the non-profit foundation or angel investor that funds a news website. It even could be, as the New York Times hopes, the audience itself, if there’s a paid content scheme in place.

But keeping that audience/customer distinction in mind, even in the case of paywalls, is essential for journalist-entrepreneurs to have any hope of success in the news publishing business. Let’s take a look at a diagram I whipped up:

The beige circle is all the available audience out there that might be interested in your website.

The red circle is all the available audience out there that your customers (advertisers, foundations sponsoring your grants, etc.) want to reach.

The yellow circle is your current audience.

The orange overlap is the audience that you are reaching and that your customer wants to reach, too. Congratulations, that’s where you are making your money.

The rest of the yellow area? You might be doing public good by reaching that audience there, but it’s costing you money to publish to them and your customers don’t care. And if you are charging your customers to reach those audience members, reaching them is costing your customers money, too.

You goal, as a news publisher, ought not simply be to expand the size of your yellow circle. It should be to expand the size of that orange overlap area – meaning that you are attracting a larger number of the audience members whom your customers wish to reach.

First approach – shrink the circle

Some publishers have recognized that you can increase the orange area while making the yellow circle smaller. This, ultimately, is part of the thinking behind many paywall/registration schemes: Put up a barrier that drives away the “yellow audience,” so that your audience circle looks much more orange.

I don’t like that approach because it’s a negative one. In turning away audience, you might turn away some of the audience your customers want to reach, as well. (BTW, on the subject of paywalls, if you think paywalls are simply about raising money to support additional journalism, let’s not forget that the first 51,000 new annual paywall subscriptions to the New York Times will pay for only the salaries of the Times’ top two business executives last year. Paywall revenue supports the print news industry’s bloated business sides and profit margins as well as journalism.)

Crafting a negative strategy that eliminate the yellow “free riders” while retaining the lucrative “orange” audience is a tough task. As the perfect is said to be the enemy of the good, at some point, efforts to minimize or eliminate free riders cuts into your share of the lucrative audience, as well.

If you really want to reduce advertiser cost in reaching an audience that doesn’t deliver for them, consider restricting the placement and distribution of ads on your site, instead. This can help make your remaining ad inventory more valuable, and even result in higher revenue.

Be proactive about culling garbage pages from your site, as well: duplicates of existing coverage, empty comment pages and forums, spammy user-generated content and early versions of now-updated stories (redirect to the current version, unless there’s some strong archival value in the drafts). Don’t waste your audience’s time and clicks. Deliver value on every page for them, and you’re more likely to deliver value to your customers, as well.

Second approach – move the circle

If certain topics on your website are attracting the audience your customers want to reach, and other topics are not, it’s natural that publishers will choose to deepen coverage in those first topics, and reduce or eliminate coverage in the latter ones. This isn’t unique to the Web. I remember plenty of print sections dying for lack of advertiser support in the past.

Essentially, this approach is an attempt to move the yellow circle, to overlap the red one. It’s using a change in content to attempt to do what the pay- or registration wall was to do in the first approach – to eliminate less coveted audience members. But the implied addition of new content that appeals to the coveted audience would keep the overall size of the audience roughly the same. What you lose in one area, you gain in another.

Again, why eliminate audience? I agree that publishers need to consider customer value in deciding how to spend money on staff, licensing and assignments. But an audience member who lives in the yellow area of the circle today might move to the orange area tomorrow. Change the mix of your offerings too radically, and you might break many of your audience members’ reading habits, depriving you – and your customers – of those eyeballs on days when they are looking to support your customers’ causes.

Third approach – grow the circle

That’s why I recommend that publishers think about a third approach: growing the circle – not your yellow circle, but your customers’ red one.

Ultimately, publishing’s customers – whether they be advertisers or non-profits – are looking to reach an audience of individuals engaged in the customer’s community of interest. And the customers’ purpose in funding the publishing is to get those audience members more directly engaged in the customer’s cause.

For a shopkeeper advertising on a local news site, that cause is likely getting locals into the store. For a non-profit, the cause might be to raise public awareness of, or action on, a specific issue. In either case, though, the desire is engagement.

Make that word your mantra as a publisher: engagement. That’s why I dislike the first two approaches, because they include active disengagement by a publisher toward its community.

Instead, a publisher’s mission always should be to more deeply engage the community he or she serves. If you can grow the number of people in the community who are actively engaged with it – emotionally, politically, socially and, yes, even commercially – you’ve grown the red circle of potential audience members that your potential customers want to reach.

Focus on delivering, then, what your audience members need so that they can be, will be and will want to be more engaged with their community.

I can’t draw you map for doing that in your specific community. But I can, and do, urge you to adopt a positive attitude toward community engagement journalism. It’s our industry’s only hope to survive economically in the Internet’s business environment.

The two main points:
1. Users can view up to 20 stories (including video, slideshows and other multimedia content) a month.
2. Stories you are linked to from blogs, social networking sites and the like will not count against the 20 story limit.

The Times is testing this approach on Canadian users now and it will expand to U.S. and the rest of global readers March 28.

“It’s an important step that we hope you will see as an investment in The Times,” wrote Publisher Arthur Ochs Sulzberger Jr., “one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform.”

From a business standpoint he may be right. Newspapers’ current model isn’t working and they have to pay for all that great journalism.

Now for the BUT.

The Times attempted something similar to this and failed with TimesSelect, returning columnist content to free in 2007 after two years of behind a paywall.

This is what then-Times executive Vivian Schiller (we won’t get into what’s happened to her since) was quoted by Reuters as saying of the decision to end TimesSelect: “We now believe by opening up all our content and unleashing what will be millions and millions of new documents, combined with phenomenal growth, that that will create a revenue stream that will more than exceed the subscription revenue.”

So the logic then was to increase potential ad revenue by increasing the potential audience. Now it’s to do the opposite. It’s been pretty well established that putting up a paywall decreases views and thus decreases advertising revenue.

Then there is the other issue that so often gets overlooked: The NYTimes.com is hardly the only source for news. Many other sites, particularly those run by television networks have no incentive to charge for content. They never have. Savvy news consumers can simply go to cbsnews.com or ABCNews.com or a myriad of other sites to get essentially the same news.

Content is so widely available that, except for very specific stories, users don’t need The New York Times as much as The New York Times needs the audience for advertising. But legacy media, particularly media organizations with a proud history, have a hard time recognizing that.

That is a long way around to make my connection to television news and the challenge of paywalls.

For all of the other newspapers in cities across the country that have three, four or five television stations or more producing news and running their own websites, the news of the day is readily available for free. All a paywall will do is push people to other sources. No one likes to pay for something they can get for free someplace else.

Back to the Times, the decision to allow all users to read stories they are linked to makes their entire paywall moot, anyways.

If I really want to read a particular Times story and don’t want to pay, all I’d have to do is google the headline and find it linked from somewhere else and get it that way. That would just take a few seconds and not cost $15-$35 a month like the Times.

“Online it should be free,” said 19-year-old Shauna O’Brien, an economics major at the University of Massachusetts, Amherst.

In the fatalistic gloom of the news industry, Shauna’s words and the British survey reinforce what a long string of failures, from Times Select to Salon Premium, have shown anecdotally: people just won’t pay for Web news. Paired with stubbornly low online ad revenues and a high demand for news online, many news organizations find themselves cornered into a budgetary free-fall. The conventional wisdom is that changing this equation is impossible.

“This is the Google Generation,” wrote Wired editor Chris Anderson in his book Free, “and they’ve grown up online simply assuming that everything digital is free.”

“Nothing will work,” blogged NYU adjunct professor Clay Shirky. “There is no general model for newspapers to replace the one the Internet just broke.”

Perhaps. But could there be a lesson from something Shauna O’Brien does pay for?

Shauna buys a five-dollar pack of bottled water every few weeks. “My family has been buying water forever,” she said. In that the O’Briens have a lot of company: bottled water is a 12 billion dollar per year industry in 2009, double its size in 2000. Tap water, of course, is free, and available almost universally in the U.S. In taste tests, people often can’t tell the bottled brand from the tap.

Does the bottled water industry have any lessons for online journalism?

So how are these companies making so much money? Skillful marketing, says Dr. Chiranjeev Kohli, a professor of marketing at Cal State Fullerton, has had a “dramatic, significant impact” on bottled water profits.

“When they start pumping money into advertising, that’s when the consumers buy into the concept­– or, if that’s your perspective, they get sucked into it,” he said. “This is one of the most fascinating case studies in marketing. This is a product that used to be free.”

Bottled water marketers, he said, have used a cascade of claims to grow their business, from health benefits to purity to convenience.

Carol Elder has co-owned Famous Mineral Water Company in Mineral Springs, Texas, since 1999. She combines a firm belief in the quality of her Crazy Water mineral water (“More healthy than regular bottled water,” she said) with clever guerilla marketing. You can find a YouTube video of hockey player Mike Modano plunging into a dunk tank sponsored by Crazy Water.

“Our company is growing exponentially,” Elder said. Two years ago her company had six wholesale outlets; today it has over 700. In fact, the company is doing so well that they plan on using a growing marketing budget to buy ads in print magazines.

Could the successful and lucrative branding of bottled water work for free online content? I asked Rob Frankel, a branding consultant in Los Angeles.

“Absolutely,” he said.

“How?” I asked.

“I can give it to you in two words: hire me,” he said. “Branding is about creating the perception that you’re the only solution to your prospect’s problems. I haven’t run into a problem yet that couldn’t be solved.”

For bottled water, marketers have created that perception. They succeeded in branding bottled water as a healthy, pure alternative to the tap. (Plenty of people, including Dr. Kohli, are skeptical of some of those claims). In other cases, bottled water marketers act as if they’re selling convenience, not water. That’s worked too.

Undoubtedly, getting people to pay for news content online will be a rough slog. “If it started out charging, then this wouldn’t have been as much of an issue, said Dr. Kohli, who believes news organizations “can’t charge now for what they’ve already been giving away for free.”

But that doesn’t mean they can’t charge for new add-on services. Dr. Kohli, who grew up in New Delhi, said he would pay a dollar or two per month to the New York Times if they customized his page to have news from India appear front and center.

Apple, after all, will sell 50 million iPods this year– a fact impossible to untangle from the financial success of iTunes. With an Apple reader rumored to be imminent, perhaps news content producers can maneuver towards earning revenue from the hardware. Shauna O’Brien pays for music online, too, although she’s downloaded it for free in the past. She said she buys five or six iTunes songs every month because it’s “easier to purchase instead of researching and trying to find [the music illegally].”

Can journalists make this marketing work while still following high ethical principles? Radiohead could give their album In Rainbows away for free but charge for customers to see them perform in person. However, the proposed Washington Post “Salons” last summer created an ethical uproar. It’s one place where the parallels between the other free-to-pay industries and journalism begin break down.

Certainly those parallels are not perfect. From the point of view of even the most optimistic subscription or micropayment model online, the revenue generated could not support the large staffs of nearly every newspaper in America.

The fact remains, however, that bottled water proves that the American public will pay for a product that they used to contentedly get for free.

This article is a thought experiment, not a full prescription for the future financial stability of newspapers. But it’s worth remembering that logic is on the side of those who charge, if not empirical success.

“It’s strange to me that people will pay 44 cents to mail a letter, but everybody thinks that email should be free,” said Cat Armstrong Soule, a marketing PhD student at the University of Oregon who studies why consumer’s refuse to pay online.

And if organizations can find a more stable way to pay for their fixed newsgathering costs- the NPR donation model, or better online ad rates- the added upside of charging for content could be significant. Online, “once you meet your fixed costs, it’s all profits after that,” Soule said. “So if someone pays you 50 cents, then that’s better than nothing, right?”

The legacy news industry today’s got the hubris part cold. The humility? Not so much. News companies’ sense of entitlement regarding the news that they report is preventing them from developing the new business practices that they need to profit in an increasingly competitive information market.

Witness the temper tantrums that major news bosses have thrown during the past seven days about the use of news stories online.

First, Rupert Murdoch complained that Google was stealing newspapers’ copyrights. Then Associated Press/MediaNews chairman Dean Singleton threw down at the AP’s annual meeting, threatening unspecified websites with legal action for using AP material in unspecified ways.

Singleton’s remarks elicited a flurry of Twitter posts from journalists gleeful at the idea of suing online aggregators into oblivion. But the two names most often cited for their use of AP copy – Google News and the Huffington Post – both have syndication deals with the AP. They’ve paid already for that content.

Anyone who hopes to understand the game being played here needs to understand the difference between republishing content, beyond fair use, and linking to content.

The AP, as well as any other publisher, has long had the ability to shut down any republication of its work. The Digital Millennium Copyright Act makes arranging the take-down of infringing content a snap. If the AP knows of websites republishing AP content in a manner that goes beyond established fair use, one letter can take down each of those sites. And the AP’s managers know that.

So why the dog whistle this week to AP’s subscribers? Because some journalists want to go beyond shutting down plagiarists. They want back their traditional role as the public gatekeeper of all news. That means shutting down the aggregators, whether they be automated agents such as Google News or bloggers such as Drudge and Huffington. Or, at least, requiring those aggregators to become paying affiliates of the AP and other legacy news organizations.

It’s the RIAA game plan versus online upstarts all over again: If you can’t beat ‘em, sue somebody.

At least the recording industry had a catalog of unique works to defend, music that people wanted to hear time and again. But news isn’t music. News is information, a commodity that belongs to no one. True, a journalist (or his employer) owns that reporter’s telling of that story. But that story itself, the core facts of what happened, when and where, those cannot, and in a free society should not, be owned by any single entity.

Newspaper companies became gatekeepers of information due to the happenstance of technology. They happened to own what was, for several decades, the most efficient medium by which to transmit large quantities of information to local audience – the printing press and gobs of newsprint.

Now, the Internet provides a better, cheaper and faster, alternative. But I fear that too many managers in the newspaper industry have conflated their ownership of a news medium with ownership of the news itself. That belief cannot stand. People must have the right to talk about the news, to link to it and to report upon it on their own.

As Danny Sullivan has pointed out, the news industry today is functioning better than it ever has, with more original content and more opportunities for more people to find that content than ever before. If you look beyond the established media brands, that is.

So what’s the problem? Oh, yeah, that means competition for long-established media brands. And many of them would prefer not to have to deal with that.

They got used to owning the means of communication in the past, and came to believe that history entitles them to own the means of communication in the future. Every moment and dollar that Murdoch, the AP and the newspaper industry spend pursuing that false entitlement is a moment and dollar wasted. And the news industry no longer has any money, or time, to waste.

Here are four essential articles from the past two weeks that anyone concerned about the future of news should read. They do not speak with unanimity, but do provide a sample of the voices that ought to be leading any discussion about the future of journalism online.

Steve Yelvington
Another day, another Van Winkle, Feb. 28

Everything I’ve learned since 1994 leads me to believe that business approaches built around an assumption of scarcity will not work in an economy of surplus. And imagining that newspapers have some sort of defensible monopoly on the consumer value they provide is delusional.

Yelvington destroys the argument made by the L.A. Times’ David Lazarus, among many others, that iTunes provides a compelling model for charging consumers for news stories.

Paul Robinson
Business Models of News, Feb. 23

In essence to secure the advertising for the print edition, they have in the past completely undermined the business they need to survive in the future. They have told every one of their advertisers that online adverts are not worth paying for.

The problem, Robinson writes, is not that early online newspapers gave away the content. The problem is that they gave away the ads. Now, newspaper companies, as well as their online start-up competition, are paying the price, earning less than they would for online journalism had the newspapers not “sold out” the Web in its early days.

Earl J. Wilkinson
No Iceberg: Separating Truth from Fiction About Newspapers In This Recession, Feb. 25

I’ve heard that one of the Tribune Company’s leading newspapers may have made a US$100 million profit in an otherwise horrible 2008 due to cost containment and targeting its opportunities. But put that in the context of the US$13 billion debt the Tribune Company has amassed and must service!

You can throw off impressive profits, but the way newspaper companies structured their debt to acquire other newspapers assumed they could lift 20 percent margins to 30 percent and more. Little thought was given to the idea that margins could drop from 20 percent to 10 percent or less.

That is turning into a Shakespearean miscalculation.

Wilkinson contrasts U.S. newspapers with those in Europe to portray American papers as behemoths that have borrowed too much to spend too much, focusing on their own products rather than making valuable connections with their audiences. But failure is not inevitable. Wilkinson offers broad models that he believes can help U.S. newsrooms survive this downturn.

Eric Ulken
Newspapers’ supply-and-demand problem (Why you should quit doing what everyone else is), Feb. 25

I’m no economist, but I think the problem comes down to this: The Internet is a single, efficient market governed by the laws of supply and demand. Because there’s surplus ad inventory online — particularly low-grade inventory — prices are falling. But what if the surplus inventory is largely the result of a glut of duplicative content? Would the problem go away if news organizations simply stopped doing about half of what they do and focused on the stuff nobody else is producing?

Ulken brought it all together for us last week, offering the apparently-not-so-simple solution that should provide hope for any news publisher: If you want to have content that has value, create valuable content… and quit wasting your money and staff time creating everything else.

This is not a crisis of journalism. It is a crisis of management. Rather than hoping newsrooms burdened by corporate debt can escape bankruptcy, perhaps we should root instead for them to liquidate (and not simply to restructure) as swiftly as legally possible. Perhaps then, individual newsrooms can pass from the hands of the managers who got us into this mess into new ownership that might better respect and value its relationships with readers and advertisers.

Those who managed us into this mess have had their chance. Rather than moan about how our communities should change to save our businesses, we need new leadership that will change our businesses to help save our communities. It’s time for new voices to run journalism. If the corporate boards that oversee the industry do not identify those voices, their competitors – from online start-ups, non-profits or even partisan media – soon will.

A confidential memo from multimedia publishing pioneer Steve Brill obtained by Romenesko argues that the Times should “[flip] the Web’s lethal dynamics” and start charging for online content. Under Brill’s elaborate pricing scheme – you have to read his whole, alternately maddening and inspired memo – nytimes.com visitors would pay $55 a year to get access to all content. Search engines and aggregation sites would continue to get free access to the headline and first paragraph of each story – to help keep nytimes.com relevant as an information source on the Internet. Brill, who unsuccessfully tried to sell paid content with his Brill’s Content during the dot.com boom/bust, acknowledges in his memo “all of this may seem unrealistic,” but nonetheless concludes, “There is no alternative.”

Times Select was a bust, as was Brill’s Content. But there’s another way for the Times to exploit the potential of its website to raise needed revenue that advertising by itself can’t bring. Why doesn’t the Times mobilize its redoubtable 1,300-person-strong newsroom to start producing added-value online content for which, I’ll bet, a good fraction of nytimes.com users would pay a monthly fee? A lot of the content would help out-of-town visitors make their trips to NYC and other cities more interesting and even memorable. I spelled out some content specifics for what I called TimesPlus in an OJR article last December.

The Times is already half way there in producing added value beyond the daily report – and for which it rightly charges (and finds willing buyers). Except you can’t find it online.

There’s the New York Times Travel Show – Feb. 6-8 this year at the Jacob K. Javits Convention Center – for which tickets cost $15. The Times charges as much from $30 to $65 ($100 for “VIP” seating) for lectures, musical performances and other events at TimesCenter, the popular multi-purpose venue in the New York Times Building. Those events, and others like them, could be re-purposed as part of the multi-media TimesPlus subscription package. After all, millions of out-of-town nytimes.com users can’t go to the Javits Center or TimesCenter.

To make TimesPlus happen, the paper needs to hire an online Sol Hurok-type impresario – I doubt there’s any such person on the premises now – who could figure out how to creatively unlock all the under-used talent in the newsroom – and maybe in other departments at the paper. One Hurokian gambit might be for the Times to persuade Broadway and other theater producers to permit video clips of their shows to be part of the TimesPlus package. What a draw that would be to lure subscribers. With the theatrical industry facing shrinking audiences in what is likely to be a long-term economic crunch, producers might see such a deal as a win-win.

The annual bill for the Times daily news report is above $200 million, according to one recent estimate. If just 10 percent of the website’s 20 million unique visitors signed up for TimesPlus – at, say, $100 a year – that would pay for a big chunk of the news, which Executive Editor Keller rightly says comes only through “hard, expensive, sometimes dangerous work.”

You don’t get free gas from a gas station.

You don’t get free meals from a restaurant.

You wouldn’t walk into the Googleplex … that’s Google’s corporate headquarters in Mountain View, Calif. … and expect a staffer to rush to the lobby with 1,000 free shares of Google stock for you.

At least we don’t think so.

So why is the newspaper industry the only one in America that is expected to give its product … in its electronic version … away for free?

Wrestling with that question will determine the fate of this nation’s newspapers.

Our answer: except for the “Big Four” national players, newspapers will not survive unless they 1) convert out of print and totally into the Internet, 2) confine themselves to local news and, most importantly, 3) charge for it.

Astonishingly … despite many erstwhile titans now tottering on the brink of bankruptcy or outright extinction … we’re talking about big ones like the Chicago Tribune, Los Angeles Times, Miami Herald, Rocky Mountain News, Chicago Sun-Times, Minneapolis Star-Tribune, Philadelphia Inquirer … almost no one in the industry charges for their web site product. Even as they swirl down the drain, they give it away for free.

“Giving away information for free on the Internet while still charging 50 cents to $1 for the print version of the paper was one of the most fundamentally flawed business decisions of the past 25 years,” says Prof. Paul J. MacArthur, who teaches public relations and journalism at Utica College. “Newspapers told their paying customers that the information truly had no value. They told their paying customers that they were suckers. Why would anyone pay 50 cents for something he or she can get for free? This poorly conceived and obviously flawed strategy has helped put the newspaper industry into its current financial condition and hastened the demise of many publications.”

Prof. MacArthur is one of the experts across the nation who responded to my web site, www.ourblook.com, and our special project examining the future, if any, of newspapers.

Step 1: Papers are being overwhelmed by enormous newsprint, production and delivery costs … and a huge amount of staffing associated with them. All no longer needed.

Newspapers can still “deliver” their product … instead of being flipped from a speeding pickup truck at 4 a.m. on or near a driveway, its content can be delivered electronically to a customer’s computer or to a portable wireless electronic reading device such as Amazon’s Kindle.

What’s more, “content providers, once called newspapers, are experimenting with on-demand delivery particularly to mobile telephones,” says Michael Ray Smith, communications professor at Campbell University. “Telephones are computers and computers make moving information more convenient than ever. In some cases, information alerts and bursts can be downloaded from a source at work or home or even in transit and then read while on the road.”

Let’s hope that papers have a heart and offer the best severance packages and retraining possibilities they can to their blue-collar workforce, many of whom tend to be long-term, loyal employees.

But obsolescence is obsolescence.

Oh, yes, the four papers that probably can survive in print … of course they’re USA Today, the Wall Street Journal, the New York Times and the Washington Post.

They’re in the right place … “I see New York and Washington always having newspapers because they are the seats of financial and political power,” says David E. Johnson, CEO of Strategic Vision, an influential public relations firm in D.C.

They have a national base in their financial and/or political reporting and an affluent readership that surely is strong enough to keep them going.

Step 2: Carve out a niche that makes the paper’s web site dominant, irreplaceable and one of a kind.

“I would like to offer a two-word solution to the financial woes of our ink-stained friends: ‘local news,’ ” says business consultant Jonathan Stark, who has consulted for a number of U.S. papers. “Newspapers have real roots in the communities they serve. They have history, tradition and personal relationships. In some cases, they are a source of local pride. If newspapers are willing to let go of their print-based history, invest in their writers, embrace technology and dedicate themselves to being THE source for local news, they will have readers for as long as people can read.”

Who else can do it better? Local TV station news anchors and skimpy throwaway weekly papers can’t. They feed off the big local paper anyway.

While papers have cut their editorial staffs not only to the bone but inside the bone, there’s no excuse for them not coming up with a dynamite local news website. That’s because they can reallocate the staffers who work in national or international news or other areas of the paper to the local effort. Go for it … marshal all the resources into this one specialty. Local news, local features, local business, local sports, local commentary. If necessary, use “citizen journalists” for neighborhood news. Cover the community top to bottom.

This is not only a financial and logistical advantage. It creates a journalistic improvement, too, as news can be instantly added and obsolete or inaccurate information removed. The expertly crafted story or hard-charging enterprise piece or beautiful set of photographs can remain on the site for readers’ enjoyment for a while instead of becoming tomorrow’s bird cage liner.

In doing so, it would behoove the papers to play it straight. Millions of readers have deserted newspapers in disgust over political agenda-driven reporting.

Step 3: How much to charge? The Arkansas Democrat-Gazette, one of the few if not the only sizable metro paper to charge for its web site, makes readers pay $4.95 a month. Since that’s about 16 cents a day, we’d say it’s far too low. We’d make it a nice round number, easy to remember … $20 a month. That hopefully would bring in a substantial amount of revenue.

Readers, of course, have become conditioned to free content on the Internet. Many expect it, some stridently demand it. Can that habit be broken?

“The only way you can charge online is if you have something so special that no one else can re-create it,” says Paul Swider, a former St. Petersburg Times reporter who also did a citizen journalist web site for the paper. “Don’t charge for national politics because there’s 1,000 other outlets to which the reader can turn, so you’re done. But if you have a synthesis or data or other unique quality of content that others can’t duplicate, you could charge for it and succeed.”

That means local news.

And what of the current business model of newspapers … the one that has them give content away free on the Net in hopes of luring huge number of readers and the attendant “page views” to lure advertisers. Well, if it works, why are so many papers failing?

Papers should do both … charge for their content and work hard to get advertising on the site. Wouldn’t a lot of advertisers prefer quality over quantity in readership … wouldn’t potential business customers be a lot more likely to be those who pay for the paper instead of those who freeload?

Walter E. Hussman Jr., publisher of the Democrat-Gazette, noted in an op-ed piece for the Wall Street Journal in 2007 that the U.S. newspaper industry collectively spends about $7 billion a year to gather news. “By offering this news for free and selling it to aggregators like Google, Yahoo and MSN for a small fraction of what it costs to create it, newspaper readership and circulation have declined,” he wrote. “Why would readers buy a newspaper when they can get the same information online for free?”

He added this point: ads have much more impact in print than on a computer screen. “While consumers often find pop-up ads a distraction (on a web site) and banner ads as more clutter, readers often seek out the advertising in newspapers.”

Hussman’s paper, incidentally, while not exactly flourishing, has suffered much less advertising and circulation declines than most other of his peers. Since Hussman whipped the much larger Gannett in Little Rock’s famed newspaper war of the early ’90s, we’d say he knows how to survive in this business.

Which brings us back to our original question: why do people expect newspaper web sites to be free?

And there’s no good answer. The so-called experts use airy, meaningless phrases like “because that’s the Internet culture” as if this notion just floated down from heaven somehow.

In fact, that’s how Google CEO Eric Schmidt, who benefits immensely from basically free news, views it. In an interview with Fortune’s Adam Lashinsky, he actually said, “the culture of the Internet is that information wants to be free.”

Information doesn’t want to be free any more than gasoline wants to be free or food wants to be free. When Mr. Schmidt stands in the lobby of the Googleplex and hands out free shares of his company stock, then maybe we can believe the “free” rationale. Until then, papers should charge for what they do so they don’t go out of business. Simple as that.

With advertising in its print edition continuing to slide by double-digit percentages, the Times is pursuing, in the words of President/CEO Janet L. Robinson, a “strict cost discipline.” But, happily, it’s looking as if the company finally understands that it can’t cut its way back to financial health (and a stock price that doesn’t look like an unfortunate misprint).

In August 2007, when the company’s stock had already fallen to a 12-year low, I argued in these pages that the Times could fight back by leveraging the power of its nytimes.com website through the force of social networking. Finally, it’s begun doing so.

The results of the Times recent presidential election promotion on Facebook are amazing – 68.3 million page views of the “What should Barack Obama do first as president” teaser ad and the number of Times “fans” on Facebook soaring almost overnight from 49,000 to 164,000. That’s precisely what viral marketing can do – when there’s untapped potential behind the marketing hype. And nytimes.com – with more than 20 million unique visitors monthly – has potential that no other newspaper site can approach.

I stress “potential,” because the Times, so far, has done too little to capitalize on an audience that includes big slices of all the demographics that advertisers want: