Newspaper industry magazine Presstime carries a profile of the Santa Barbara News-Press this month (story not online, as far as I can see).

Key graph from my perspective:

Most content on www.newspress.com is available on a pay-per-view basis … Fleet (the publisher) makes no apologies: “Local news is our franchise;” he sees no logic in giving it away. … This policy, explains Alcorn (CFO), has made “our Web product among the first in the newspaper industry to be profitable.”

It’s a minor trend for newspapers to go to paid subscriptions, and contrary to the myth, enough readers will pay for content to make such a move profitable. But paid subscriptions are not the only way for a newspaper to make money online, and, in the long run, is probably curtailing potentially larger profits available to a free-content site.

It is also a myth that online news sites are not making money. Many, many sites are making money. In fact, it has become so easy to make money online for a newspaper site, that the only news sites not making money are only doing so because of poor management, not because putting local news online is a bad business model. There is no reason to resort to paid subscriptions to make money.

So my problem with the statements from the News-Press are two fold. First, contrary to Mr. Fleet’s statement, there is no logic in charging for content; and second, it is a bit of an overstatement for the News-Press to crow about being among the first to be profitable. Being profitable is old news late.

While it is possible to turn a profit charging for access, you greatly restrict the size of your audience, and there are bigger profits to be made from money-making applications that rely on aggregated eyeballs. There are numerous ways to repackage and upsell classified ads and featured ads, there are online auctions, and many local newspapers have found great success in banner advertising and building custom Web sites. When you restrict your audience size through paid subscriptions, you take all of those options off the table.

So, in short, I don’t agree with the way the SB newspaper is running their online operations.

UPDATE: Very smart media analyst Vin Crosby also finds fault with the growing trend
toward paid subscriptions. It’s a quick fix that only digs publishers in a
deeper hole.