“The fundamental problem facing the news industry is simple: As the shift from print to the web accelerates, their revenues are no longer covering the cost of their operations. It’s not that they aren’t making money online, it’s that they aren’t making enough to cover their operations.
The potential solutions are, at a fundamental level, obvious: (a) generate more revenue from the web; (b) cut operating costs; or (c) both. Small measures will not do the job. And things are getting worse as more readers shift from print to the web.”
As usual, Gruber is dead-on right . At Want Ad, we took down the online pay wall too late. Once we did, web traffic took off and we needed to have a way to generate additional revenue from that traffic. We didn’t do that quick enough either. The David Simon essay he links to has one piece right – act quickly. But putting up an obstacle to getting to your product? Wrong action.
Figure out how to make ends meet with the traffic you get. Figure out how to increase your traffic. Figure out how to get more money for the traffic you get. Whatever you do, don’t make it more difficult for people to get to your content.
 Well, except for being a New York fan.
Update: More discussion of the same subject at MetaFilter, which is interesting as they are actually a closer model to what I believe the papers need – pay-to-contribute, small staff, open access to content. They don’t have ads for people who paid for an account.