• by Gavin O'Malley  @mp_gavin, July 2, 2010

Heading into the holiday weekend, Gannett Co. quietly leaked word of a controversial paywall initiative. In what it's calling a "a small-scale test," Gannett told Poynter Online that three of its local newspapers -- The Tallahassee Democrat, The Greenville (S.C.) News, and The (St. George, Utah) Spectrum -- will now charge readers $9.95 a month for online-only access. Web access bundled with a print subscription, meanwhile, varies by market.

Gannett Co. representatives with knowledge of the experiment could not be reached for comment before the weekend. The news, however, comes as no surprise to Chris Saridakis, who served as Gannett Co.'s chief digital officer for over two years before leaving the company in April. "This is not new news, at least internally," Saridakis tells Online Media Daily.

Saridakis -- who joined ecommerce services provider GSI Commerce as CEO of its marketing services segment after leaving Gannett -- was rumored to have left the publisher over a paywall dispute. Not quite, he says. "I was incredibly frustrated by their lack of decision making, and the fact that they haven't thought [a subscription] model through," Saridakis says. "My opinion is that it won't work," says Saridakis. "They haven't done the right research," which he says would involve figuring out what readers would actually pay for, and then comparing those findings with available editorial resources. "If they're going to start charging [for content], they have to think about marketing ... like a marketer of consumer packaged goods," Saridakis adds. "They haven't done that," he says of Gannett.

Might the publisher have conducted the appropriate research since Saridakis' departure in April? "I'd bet my net worth they didn't," he says.

Saridakis first joined Gannett in 2005 upon its acquisition of rich media provider PointRoll, where he was then serving as chief operating officer. From 2005 to 2008, Saridakis served as PointRoll's CEO.

Due largely to its struggling CareerBuilder unit, Gannett saw digital revenue decline 1.8% during the first quarter. Digital operating revenues were $140.6 million in the quarter -- down from $143.2 million in the same period last year.

During the quarter, digital operating expenses declined 4.9% and totaled $137.3 million, while operating income improved at nearly all digital segment businesses, Gannett said.

Company-wide digital revenues, which include the digital segment and all digital revenues generated by the other business segments, totaled $225.7 million for the quarter -- 17.1% of total operating revenues.

Overall, Gannett reported a 51% jump in first-quarter profit thanks to a gradually improving ad market coupled with relentless cost-cutting.

The company's digital segment includes results for CareerBuilder, PointRoll, ShopLocal, Planet Discover, Schedule Star and Ripple6.

At the end of the first quarter, Gannett claimed more than 100 domestic publishing Web sites, including USAToday.com, as well as Web sites in all of its 19 television markets. In March, Gannett's consolidated domestic Internet audience share was 41.3 million unique visitors, reaching 19.4% of the nation's Internet audience, per comScore.