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.

The FT started charging for access in 2001 and had a modest number of online subscribers for many years, getting to 126,000 online subscribers in 2009, slightly less than a third of its print subscription base. Subscriptions leapt to 207,000 in 2010, or more than half the number of print subscribers. And digital access isn’t cheap—the FT charges $259 a year for a standard subscription and $389 for premium access to more content deep within the site.

The growth is tied to a change in strategy. Nonsubscribers used to be able to come to FT.com and read ten free stories without registering; after registering, they could get thirty more stories a month before the subscription requirement kicked in. (This is similar to the “metered” approach that was put into effect in 2011 by The New York Times.) The FT toughened its policy in 2007 by preventing nonsubscribers from getting any stories without registration and limiting them to ten stories a month before the paywall rises.

So the wall has become less permeable. But Rob Grimshaw, managing director of FT.com, says there is a more fundamental change at work: Managers “used to approach it as newspaper marketing;” now they realize they “are direct Internet retailers.”

That means using behavioral targeting to determine which of the nearly three million nonpaying, registered users are most likely to subscribe and directing appeals to them. “What topics are people reading? We developed a dynamic model to determine readers’ propensity to subscribe”—one that is constantly shifting, with changes being made “on a daily basis,” Grimshaw says. “We’re spending the same amount on marketing as we used to, but we more than doubled our rate of acquisition.”

The FT has also been aggressive about shutting down “leakage,” as Grimshaw puts it—that is, unauthorized copying of stories. And when it comes to offering free content, “we’re more controlled than WSJ.com,” which offers free access to most of its stories via Google News and many stories at no charge on its home page.

The FT’s approach is a testament to the possibilities of paid content, but it also demonstrates how hard it is even for a premium publisher to extract revenue from digital advertising. When the FT’s parent company, Pearson, reported results in early 2011, it noted that for the FT Group, 55 percent of its revenue comes from “content/subscriptions” while 45 percent comes from advertising. A decade ago, the FT earned 74 percent of its revenue from ads, and only 26 percent from subscriptions.

“The outlook for the ad business online is quite bleak,” says Grimshaw. “There’s just not enough money there.” As a subscription site with a select audience, FT.com can charge higher rates for ads than general-interest sites. “We can create scarcity in a marketplace that has no scarcity,” he says. “In that light, subscriptions and ads are complementary.” But given that FT.com doesn’t use networks to fill up unsold ad space at discount prices, Grimshaw says “I’d be surprised if we sell 50 percent” of the site’s inventory.

After years of internal debate, The New York Times has entered the realm of pay-for-access. If its audacious and complex plan succeeds, that will likely encourage many other publishers to follow suit.

This isn’t the first time the company has tried online subscriptions. In 2005, the Times launched its TimesSelect service, charging those who didn’t get the print edition $49 a year to access opinion pieces. After a fast start, with more than 120,000 subscribers signing up in two months, the plan stalled, and the Times closed it down two years later; executives said the $10 million a year the service was generating wasn’t enough to compensate for the lost traffic and ad revenue.

So why would the Times take a new gamble to charge for digital access? Part of the answer lies in how dramatically the company’s revenue mix has changed in recent years.

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.