Newspapers May Want to Rethink How High to Build Pay Walls

Forecast: Digital Ad Revenue Expected to Grow Again in 2011

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NEW YORK (AdAge.com) -- Just as the newspaper industry is getting ready to erect new online pay walls comes a reminder that digital ad spending hasn't begun to near its possible peak.

When digital ad revenue was growing at a double-digital percentage rate, newspapers thought they knew what to do online: Give away news free and sell ads against the big audiences that came.

Then when they got a recession bad enough to actually shrink digital ad spending, newspapers decided they'd been fools to post their news online without charge, and executives from the biggest newspaper companies recently met to hash out possible solutions to allow them to charge for their online news.

Digital ad revenue won't replace the print revenue newspapers used to wring out of near monopolies, but digital ad spending at newspaper sites won't keep falling beyond next year, PricewaterhouseCoopers is predicting in its new forecast.

By 2011, newspapers will be seeing digital ad growth again, a modest 1.8% improvement; 2012 should bring 7.8% growth; and 2013 returns papers to double-digit days with a 12% leap. From this year through 2013, newspapers' digital ad revenue will grow at a compound annual rate of 2.3%.

With some exceptions, such as the Newport Daily News in Rhode Island, papers aren't looking to put everything behind a pay wall on the web. But they're deciding where walls might work, and how high they could go.

The new forecast is just another word of caution before anyone builds their pay walls too high.

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