The Otago Daily Times has called time on the great online giveaway. The big New Zealand publishers will be watching closely, writes Tim Murphy, former editor-in-chief of the NZ Herald.

Its masthead describes it as the “Independent Voice of the South”. Others, affectionately, call it the Oddity.

Now the Otago Daily Times lives up to both labels with its decision to charge readers to use its website.

From mid-April, Dunedin’s leading newsroom will introduce a metered paywall offering between 15 and 30 free stories a month before readers have to cough up about $27 a month as a subscriber. Print subscribers already pay that figure monthly and will get the digital subscription free.

It will be the first major news publisher in New Zealand to do so, following many in the United States, Europe and Australia. And it could be in the right place, at the right time, to make it work.

The two big players in this country, stuff.co.nz, owned by Fairfax, and nzherald.co.nz, run by NZME, have vowed not to go there any time soon with paywalls – both are intent on earning money from their digital content by attracting advertisers through ever-rising audience numbers.

Stuff is winning that battle, with 1.8m monthly unique visitors compared with nzherald.co.nz on about 1.3m. Fairfax has all but ruled out a paywall and NZME toyed with one but lost its nerve, worried that its audience would leach to Stuff as soon as readers had to pay. The sites’ home pages have become blow-for-blow, populist, entertainment extravaganzas – clickbait to win bigger audiences and hopefully more advertising.

There are problems with that strategy. Most importantly, the really big players like Facebook and Google make a battle to be biggest unwinnable. Then, sustaining the content resources to keep fighting a neverending, all-fronts click-war gives shareholders nightmares. Ad rates are plummeting digitally because of automated “programmatic” advertising. And now mobile ad-blockers allow readers to tune-out completely from commercial messaging.

All the while, people who take the print edition have to pay while they see identical content, fresher and fuller, for free on their own and others’ phones.

So the ODT, a part of the Dunedin and Otago character for more than 150 years, has declared it has been giving away its content for free online for too long. Ads alone are not the answer for its revenue needs. Digital subscription revenue becomes another option.

Limiting access to your content on digital channels has its own risks. Total audience drops, advertising falls as a result, stories and videos are not shared on social media as frequently, reducing your traffic through that vital conduit.

But you only need a small percentage of your total audience to subscribe digitally to bring in a reasonably meaty amount of money. In the US, studies have shown tidy revenues for publishers who can convince just 2% to 5% of readers to pay up. And because all your print subscribers have digital access a big chunk of the total audience will remain loyally on your site.

On top of that, and the ODT is open about this, there is often an increase in the sales of the print edition of the paper – counterintuitive in these days of dying publications – as people see the value in retaining or adding a daily paper to get the benefit of the “free” digital access.

Two smaller New Zealand regional papers have introduced paywalls. The Ashburton Guardian makes visitors to its Guardian Online site pay from the get-go to read its stories. The Gisborne Herald allows seven free reads of stories before seeking a subscription payment.

It’s no surprise the publishers bringing in paywalls, euphemistically dubbed “value-gates” by one US commentator, are in discrete regions in which their roots run deep and their coverage is close to the community, parochial and proud.

The ODT’s owner Allied Press is a family-run company proud, too, of its independence from the two major newspaper groups. Its chief, Sir Julian Smith, leads a business which still has a total editorial staff of almost 80 and an overall headcount of 400 or so – a big presence in both senses in Dunedin and the province.

But it does not, of course, have Dunedin or the region to itself, news-wise. Digital rivals are muscling into the Oddity’s space. Fairfax is active through the area via Stuff, and RNZ, once absent but now staffed and armed with still and video cameras, is well-regarded for its attention to the region.

The ODT will need to do more for its paying digital customers than report the breaking or spot news of car crashes, storms and sports results. To convince people to pay it will need to have content that you can’t get anywhere else, in a voice and character and feel that you want to support because it is your ODT.

A value-gate demands value for the reader. Loyalty should not be a problem. The paper has had one of the best circulation and readership performances of any metropolitan paper here for a long time. It is, relatively, stable in a print industry tumult.

Local news is hard to emulate by bigger players. Boots on the ground in Central Otago or Milton have found the people and stories locals can’t read or view elsewhere.

Allied Press commercial manager Matthew Holdridge told staff yesterday: “We’re confident that with the new site, our unique and continually updating local news, photos and increasing video content, this will be the right move for the long-term.”

For a time in the past year it seemed as if the worldwide trend to paywalls had ebbed. The Toronto Star abandoned its altogether, reverting to the quest for audience size and advertiser income. The Sun in the UK dropped its hard (no free reads) paywall as well because it was being obliterated in the digital world.

But an American Press Institute report just out says metered paywalls such as the ODT’s are being used, successfully, by two-thirds of newspaper publishers with over 50,000 daily circulations that it surveyed. Most offer about 10 articles free a month.

“It is not clear whether digital subscriptions were mostly a ‘one-time’ cash infusion that simply capitalised on the most loyal digital readers who were always willing to pay – or if newspapers will be able to consistently persuade more people to sign up in years to come,” the API report said.

Sir Julian will be hoping a Meclab survey finding from the US this month on willingness to pay – that “respondents point above all to the ability to gain access to exclusive content unavailable from other news orgs, including arts and culture and local news” – will be reflected in the south.

Everyone further north will be watching.