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In early December, America Online Inc., a company that seems to redefine Internet business practices on a weekly basis, made a portentous announcement. Sounding the now-clichéd mantra about declining ad revenue, the world's largest Web portal said it would start charging members additionally for so-called "add-on services" such as music downloads and news content.

It seemed like a response to a burgeoning trend. In August, the U.S.-based Online Publishers Association released a report stating that Web users spent $975-million (U.S.) on-line in the first nine months of 2002. Of that figure, a substantial $140-million was spent on "general news" content, which includes current affairs, business, sports and entertainment. Later in December, New York-based Internet research firm eMarketer projected that in 2003, 21 million U.S. consumers would be paying for on-line content.

At first glance, these developments might seem to herald the end of the free content era on the Internet. Yet many observers -- even those who might have strong reason to be bullish -- are resigning themselves to the contrary, resisting the notion that news on the Web will become a pay-as-you-go proposition.

"If I were to look in a crystal ball, I don't foresee a day when you have to pay for on-line news," says Michael Zimbalist, executive director of the New York-based Online Publishers Association. "There will always be resources out there that are free."

Timeliness and convenience are the biggest advantages of on-line news. While many people now see the Internet as reliable a news medium as print, TV or radio, the dilemma for on-line publishers is convincing surfers to pay for content that had come at no cost.

"The AOL thing is kind of unique," says Peter Krasilovsky, vice-president of Borrell Associates, a Virginia-based market research firm. "I'm actually supportive of the strategy in AOL's case." Mr. Krasilovsky argues that sites such as AOL and Yahoo are more justified in charging for news content because they have no print corollary, and thus have fewer options for creating revenue. Furthermore, AOL's affiliation with other news outlets -- such as CNN, Time and People magazine -- means that the portal's 35 million members can get a broad range of exclusive content without leaving AOL's Web space.

There's a problem, however, when newspapers try to charge for their content on-line. It tends to dissuade both users and potential advertisers, Mr. Krasilovsky says, hurting long-term circulation and ad revenue. "Our position is fairly consistent across the board," he says, "which is: 'Don't do it.' "

The Winnipeg Free Press, owned by privately held FP Canadian Newspapers LP,is one of the few North American papers to restrict access to its on-line counterpart. Laurie Finley, director of marketing and advertising for the Free Press, says the move stems from anecdotal evidence that more and more Winnipeggers were abandoning the print version to read it gratis on-line. Concerned about "an erosion in circulation," the paper decided to "lock down" its Web site in early 2002.

The idea was to drive more people to buy paper subscriptions, using the Web site to promote the brand. Special sections such as careers and classified ads remain open to all Web users, but the site restricts access to daily news to subscribers of the print version. Subscribers to the print edition can view the content on-line by registering, which requires them to enter their name and billing address as well as a password. In other words, if you want to see the Web site, you have to subscribe to the Free Press proper. The paper sells on-line subscriptions only to people outside of Winnipeg. For $5 a month, out-of-town users can view the entire Free Press site. Another site that restricts full access to newspaper subscribers is Canadaeast.com, the Web portal for the New Brunswick Telegraph-Journal, the Saint John Telegraph-Journal, Moncton's Times & Transcript, and The Daily Gleaner of Fredericton, all owned by the Irving family's Brunswick News Inc.

Mr. Finley admits the move has been tough for the Free Press. Prior to locking down the site http://www.winnipegfreepress.com, its page views were about two million a month. Since locking down, total page views of the Web site are approximately 900,000 a month. Even so, it's more than he had projected. While there have been fewer visits to the Web site, Mr. Finley says the newspaper has benefited. The latest numbers from the Audit Bureau of Circulations (ABC) show "the first ABC period that we've had in a number of years that didn't have a slide in circulation. In fact, we had small gains in every part of our circulation, whether it was weekday, Saturday or Sunday."

Mr. Zimbalist says the trick for news sites is convincing users to pay for "unique" content. ABCNews.com and CNN.com, for example, now charge a fee to view video footage of news stories. ESPN.com provides free sports scores and highlights but solicits money for special statistics packages. Larry Kramer, chief executive officer of financial news and statistics site CBS.MarketWatch.com, recently pledged to keep the news on his site free; the site does, however, offer paid subscriptions to some of its investment newsletters. Mr. Zimbalist also notes that more newspapers are making their on-line archives available for a fee.

"Paid services and content will become one of the legs in the stool that is going to support on-line publishing," he says. "Advertising, subscriptions and some syndication and licensing is going to be the mix that gets publishers to a winning combination and a profitable business."

Among the few sites that are profitable are The New York Times' http://www.nytimes.com as well as http://www.globeandmail.com. Lib Gibson, president and CEO of Bell Globemedia Interactive,says The Globe site's financial success is largely due to being linked to an existing news organization and a recognizable brand. She says the site has reached profitability through ad revenue and syndicating content for use by other firms.

Despite the overall drop in on-line ad revenue since it peaked in 1999, Mr. Krasilovsky feels this area is where on-line newspapers can capitalize. By registering users and tracking their mobility on the site, they can sell targeted demographics data about on-line readers to advertisers.