Newspapers aren’t special snowflakes
There's only one Community, but there are multiple stories in most markets about house fires, robberies, murders and city government plans. Sometimes—by no means always—the local newspaper does the best job covering those stories, but the difference isn't large enough or apparent enough for paywalls to make financial sense to customers.
First, let's accept this as an article of faith: Paywalls aren't about getting new people to pay for content, they're a way to convince people to stop unsubscribing (call it an answer to “Why would I pay for this when I can get it online for free?). The Wall Street Journal said as much in March.
The numbers of readers signing up so far suggest that at many papers, "paywalls” aren't about to reverse publishers' deteriorating finances. Yet the results aren't discouraging industry executives, who say their efforts are succeeding in shoring up the core print business after years of declines.
The New York Times has nearly 500,000, but paywalls don't scale. (Some) people happily plunk down $8 a month for Hulu Plus or Netflix streaming (in my case, for both) because they get something they can't get anywhere else. I keep seeing the argument that people are willing to pay for the content they want, but I also keep seeing newspaper paywalls not succeed. The Boston Globe, for example, by any measure a very good paper, only had 16,000 online-only subscribers by the end of 2011. If you don't live in Boston, why would you pay $4 per week to subscribe?
But no matter what the cost of an online subscription, consumers are not paying for the content they want. They're paying for access to the content I want and a whole lot of other, irrelevant content (you could make the same argument about Hulu and Netflix, but they're still cheaper than most newspaper online subscriptions).
But the shows I can get on those services, I can't find easily elsewhere—at least not legally. But as Dan Conover notes, in most towns there are multiple options for news coverage. And they're coming from sites that will never charge, never put up a paywall and never post partial stories. After all, newspapers and news companies are expensive operations, but producing news stories isn't expensive.
So except in the case of truly great stories, there isn't much to compel local readers to pay for online content—especially if they weren't reading the print edition anyway.