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Can Fairfax Media make its new model ‘pay’?

The Fairfax Media (ASX: FXJ) metropolitan newspapers – the Sydney Morning Herald and The Age – have this morning released details of their new ‘paywall’ – being called a ‘metered model’ by the group.

After 30 article views in a month, readers will be asked to pay for access to the online versions of the papers, whether they are viewed via the papers’ websites, on mobile devices or via iPad or Android tablet app.

The move follows on the heels of competitor News Corp’s (ASX: NWS) decision some time ago to erect a paywall around its Melbourne tabloid Herald Sun newspaper, and closely follows the approach taken by US paywall trailblazer The New York Times.

With traditional media being quickly subsumed by online competition that carries much lower advertising rates, and among declining readership of its physical newspapers, Fairfax has had little option but to embrace the new model.

The announcement has come at the same time the newspaper group announced it would secure more savings than originally planned from its restructure – an additional $60m on top of the $251m already earmarked – but also that current-half revenue to date had fallen between 9 – 10% from the prior year.

The group’s Domain.com.au website financials were broken out for the first time, and while there was no announcement as to any sale or IPO of the division, investors are now at least able to contrast its performance with listed rival REA Group (ASX: REA), owner of the realestate.com.au business.

The market seemed to give the decision an initial ‘thumbs down’, with Fairfax shares falling 4.2% in the first 30 minutes of trade, compared a decline in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) of 0.8%.

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Motley Fool advisor Scott Phillips does not own shares in any of the companies mentioned in this article.

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