Newspaper market agog as Telegraph decides to erect paywall

Telegraph Media Group, publisher of The Daily Telegraph, is looking at the introduction of a payment system that would charge users for frequent access to its website.

The plan, inspired by a strategy already used by the Financial Times, stops short of the paywall system operated by Rupert Murdoch's News International, which charges for any access to the websites of The Times, The Sunday Times and the News of the World.

If TMG goes ahead with a metered system – where payment is demanded from users who wish to access more than a limited number of articles – it will signal a further shift within the industry towards the notion that charging for digital content is necessary to offset the decline in revenue from print sales.

The British newspaper industry is split into two camps with the publishers of The Daily Mail, The Independent, The Guardian and The Daily Mirror sticking to the philosophy that internet access should be free. The Telegraph – which has a web audience of 31 million – denies it has changed tactics, saying no decision has been made.

The debate about charging readers for online access to newspapers has been raging since the financial meltdown of 1998-99, which brought many venerable publications in the US and the UK down to their knees as advertising slumped. Pundits have pointed out that the papers made a mistake in the first place by allowing free access to online content – it is difficult now to convince readers to pay for the same. However, that is hindsight.

As a blogger in The Guardian points out, The Times Online is not yet shooting the lights out, so following that model would be risky.
 
News International has only acknowledged signing up 50,000 subscribers at reduced prices, while the daily's print circulation has been falling sharply in the UK, down 10.6 per cent in January compared with the same month a year earlier.

The Financial Times may be faring better, but that is specialist news and information (Bloomberg charges £20,000 a month per terminal, which shows you how far charging for financial information can go). The Wall Street Journal is another paper that has successfully installed a paywall, but again it is a specialised paper.

Observers feel it is a high risk proposition for The Telegraph to go for a restrictive paywall if it means its readers will jump ship to rivals like the Daily Mail.