To download the complete version of "The Story So Far: What We Know About the Business of Digital Journalism," a new report on digital news economics from the Columbia University Graduate School of Journalism, click here.

Another survey question asked readers if they would make a “voluntary financial payment” to support the Herald’s site. Nearly a third said they were very or somewhat likely to do so, and so a few weeks later, the Herald’s site instituted a “tip jar,” attaching this plea to many pages on the site: “If you value The Miami Herald’s local news reporting and investigations, but prefer the convenience of the Internet, please consider a voluntary payment for the Web news that matters to you.” Says Armando Boniche, the Herald’s circulation director: “We got about $1,000 to $2,000 total. McClatchy [the Herald’s parent company] had us pull it after six weeks.”

Meanwhile, the Herald increased print subscription prices, though not to the extent that Dallas did, and stopped discounting the paper in Broward County, just north of its home market. And the Herald made a few smaller price-enhancing moves, such as charging fifty cents a week for an insert with TV listings and $1 extra for the ad-filled Thanksgiving Day newspaper. (Still, old habits die hard. In January 2011, the Herald was offering six months of seven-day delivery for just seventy-seven cents a week—a whopping 83 percent discount from its stated price.)

The Herald also did some paywall calculations, modifying formulas provided by the Newspaper Association of America. In 2009, when the study was prepared, was attracting around 3.88 million unique visitors and
25.2 million page views a month. Its advertising mix was typical of many news organizations of its size. The Herald’s own ad department sold 42 percent of the total space available on the site, at prices averaging slightly over $13 per 1,000 views. An additional 36 percent of the available advertising space on the site was sold as “remnant”—very cheap—ads, under $1 CPMs. And 22 percent of the ad inventory on the site went unsold altogether.

The Herald first modeled what would happen if it imposed what Boniche calls a “10-foot wall” that would require a ninety-nine-cent monthly subscription for anyone to read anything on the site. The company predicted page views would fall by
91 percent, and total revenue from the site would drop by 76 percent. In other words, new subscription revenue wouldn’t come close to compensating for the ad dollars that would vanish as the audience contracted.

Herald executives mapped out several scenarios in which they could institute a paywall and match the results they were getting with a free site whose income was entirely from advertising. But all of the ideas required substantial leaps of faith.

One scenario, charging just ninety-nine cents a month for digital access, would require the Herald to attract 335,000 subscribers—about 30 percent more than the combined daily print circulation of the English- and Spanish-language newspapers. Another option: The Herald could make do with only 50,000 digital subscribers, but it would have to charge them nearly $120 a year—almost as much as a Wall Street Journal online subscription. Or, the site could enroll 50,000 subscribers at a more reasonable price (99 cents a month), but the paper would have to get advertisers to pay an impossible six to ten times its current rates for online ads.

Given how remote any of those possibilities seemed, the Herald analysis suggested that the most sensible approach to a paywall would be a hybrid model with 1 percent of users—about 38,000—paying $1.99 a month for unlimited access, and nonsubscribers getting a great deal of access as well. That would preserve the site’s traffic and advertising. But the revenue boost from digital subscriptions would be less than $1 million a year, and that sum, which represents less than 1 percent of the company’s overall revenue, didn’t seem worth the investment in time, marketing, and other costs.

One publisher whose digital subscription base has grown substantially is the Financial Times.

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.