Newspaper paywalls

I just realized that I haven’t posted much of anything to this blog for nearly 6 months.  Wow.  To end my dry spell I thought I’d talk a little about paywalls currently being considered by several large news organizations.

Let me start by saying that I don’t want newspapers to JUST survive.  I want them to prosper and grow.  I love newspapers. However, in order to prosper, they will have to make radical changes to their current business and operational models.

It’s no secret that newspapers are in an unpleasant predicament right now.  Business models that should have gradually evolved over the last decade to adapt to the current climate have instead stagnated in the last decade.  The only real changes newspapers made to their business models over the last dozen years was to raise their advertising and subscription rates.  Paywalls are certainly a radical change from that stagnation, but perhaps not the best solution available.  Putting the genie back in the bottle is a lot harder than letting him out.

Here are a few thoughts surrounding newspaper paywalls:

1. Exclusive and utterly fantastic content.

All parents think their children are unique, brilliant and precious.  However, without sounding mean, the vast majority of those children are probably pretty average.  (I know, that sounded mean, but hear me out.)

Newspapers think the same thing about their own content.  Each section of the newspaper is a precious child with perfect teeth and above average grades.

But what I think they don’t understand is that it’s nearly impossible to charge for content that can be found elsewhere on the internet for free.  If the content isn’t unique, then it has to be the best example of that content available.

Are you covering your technology section better than Tech Crunch?

Are your photo galleries more interesting than Flicker?

Are you covering your local dining section better than the dozen passionate food bloggers in your city?

Are your podcasts and videos more compelling than YouTube?

This is your competition…and they’re all free.

If a newspaper can’t answer “yes” to these types of questions, then perhaps that content isn’t a good candidate for subscription services.

2. Enterprising local bloggers

Several outcomes are inevitable when a local newspaper begins charging for specific categories of content.  For example, if the Boston Globe began charging for access to their Red Sox content, you would probably see 3 outcomes.

  1. People would pay for access because they love the Red Sox so deeply, not even a paywall would stop them.  Web traffic would drop to that particular section, but the true fans would remain.
  2. People would stop reading Red Sox content at the Boston Globe, but seek it out via bloggers, or other reliable news agencies.
  3. Seeing a ripe opportunity, people would begin to blog about the Red Sox themselves and become competition for the Boston Globe in that category.

How many enterprising bloggers would cover niche news categories if your local newspaper decided to charge for content?  Are they any good?  Should you recruit them instead of compete against them?

This will not be a big deal in smaller communities, simply because smaller populations foster fewer bloggers.  However, larger metropolitan areas will be filled with bloggers writing in the exact same niche the newspaper covers.  And sometimes, covering it better than the paper (remember those unique and precious children?).

3. Run the numbers, it may (or may not) help

The New York Times launched their “TimesSelect” subscription service in September 2005 and filled it with unique and exclusive content that could only be read with a TimesSelect subscription.  Two years after its launch, the Times determined they could make more money by removing the subscription paywall and running advertising on the site.

By some accounts, TimesSelect didn’t fail (it was projected to make $10mil in revenue).  It just didn’t live up to its financial goals using that particular business model.  TimesSelect was conceived before the explosion of traffic that search engines like Google and Yahoo began delivering to news sites.  It was impossible to capitalize on that increased search engine traffic through a closed system that requires a subscription to participate.  The New York Times wasn’t able to foresee that explosive search engine growth.

Under normal circumstances, a newspaper will need to dig deep into the traffic and financial metrics and try to forecast how many loyal visitors they have available for subscriptions?  How many of these visitors will pay to return?  Is it enough to compensate for the drop in traffic?

Implementing simple registration walls caused about a 20% immediate drop in traffic when registration was all the rage a few years ago.  I can imagine the drop in traffic for requiring payment would be even greater.

The New York Times is currently building a paywall in which visitors “will be allowed to view a certain number of articles free each month; to read more, the reader must pay a flat fee for unlimited access.” This system will be in place by January 2011.

It will be interesting to see how this works for the Times in 2011.

In closing, I will leave you with this quote from Stewart Brand on the cost of information.  Hopefully newspapers can find a happy medium…

On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other. – Stewart Brand

(Also…my disclosure, I work for a company owned, in part, by Media News Group and they’re not responsible for any craziness I may spew on this blog. Nor am I representing them in any way.  Yadda yadda yadda…)

(Images from viZZZual via Flickr, ThinkGeek, Robot in Disguise)

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8 Responses to Newspaper paywalls

  1. Slusher says:

    I wonder if newspapers would do better to forget a paid subscription model, but rather concentrate on ways to push relavant content to potential viewers by doing a better job of participating in social networks?

    Also with more paper doing a better job at collecting semantic metadata could they match advertisers up to the exact metadata the advertiser wants and allow advertisers to sponsor content? In this model the sponsorship follows the article wherever it goes whether it goes in print, online, ipad, mobile etc. In theory you could reduce the number of display ads and not burden the user with charging them for the content. Additionally the advertisers sponsorship is pushed to every platform and is associated to the content they want. You might be able to reduce or remove print subscription fees as well.

    Pausing for lightning to strike now.

  2. Dave says:

    I think you’re right about needing to capitalize on content from any platform (iPad, Kindle, paper, web, mobile, etc).

    Although, I think the demographic for users of each medium may be so different it may warrant different advertisers for different platforms (ie. Kindle users are probably very different from physical paper readers).

  3. Brian says:

    I dont want to see the newspaper go away but I like to see innovation, we have more free speech and free press then ever before in our history and some companies and people hang on (insert Amish) Not a bad thing to embrace old habits old way of life, people move on but a small few dont. I also think that the publishers and owners have left it slip by and that is no one fault but there own. But on to the issue

    It’s not really ALL about advertising to solve the problem and it sure as hell is not a PAY WALL or taking their content from the GOOGLES MACHINE, their BIG problem is TRUE innovation. If there is an audience advertisers will PAY for it no matter what platform. We have seen targeting re targeting behavioral targeting, BIG ADS, SMALL ADS, TEXT ADS, Audio, Video, IN Video Games, In theatre, product placment (THIS SECTION BROUGHT TO YOU BY You get my point

    Dave You hit the nail on the head about their outcome and content. They need to re invest in delivering a truly unique content environment and embrace platform and change not re purpose the NEWSPAPER style (i.e. E Readers although a cool product). Once the news rooms and publishers can establish themselves in a unique, engaging, informative, and entertaining NEW platform they will continue to erode to the global NEWS INFO MEDIA, and the true innovators will prevail…
    If you look at what film makers, music and now comic books are doing to embrace the new platforms this would be a good time for news print to step up!

    Love you blog thanks

  4. Slusher says:

    I definitely agree that newspapers need to innovate, but they also need to make money. I personally don’t feel like any paid subscription model is the right answer , but more of a model that worked previously for a different platform. Even with unique content, if the model is still paid then that kills news distribution and syndication which opens doors for competitors. Thoughts?

    Great blog Dave, wished I had found this earlier. Also if my spelling is bad the. I blame it on the phone…

  5. Brian says:

    Believe me I know they need to make $ (For their owners) the newspaper is a good thing for the communities but not entierly needed at the current cost of content and advertising (see internet). But again they are a FOR profit company and if they cant figure it out how to innovate and sustain their business model then too bad shut your doors and the market will figure out what the public wants/needs (yuck for bail out — Heard the Rumors). Paid Subs are not going to work, their .com’s are pennies to what it takes to run the PRINT product. I suggest cutting out some products (Stock Table, only weekly classifieds, and maybe going online only or print 1x/week)if they really want to stay in priniting.

    What is the value of their product? I think that maybe what is really keeping the suits up at night!

    Last Question are Newspapers in the PRINTING business or the NEWS Distribution Business? Seems as their highest expenses (people, paper, and ink, oh and fancy office)

  6. Slusher says:

    Now I def agree with that. Sending virtual hi fives your way. I know the business we want to be in, but it may not be necessarily the business we are in… If that makes any sense.

  7. Dave says:

    I think innovation is important for newspapers, but I think they need a stop-gap between the current emergency and a more refined future plan.

    I doubt the subscription model (which is about 150 years old) will be the answer to all their problems. It may give them some breathing room…or it may help them fall faster. We’ll see in a few short months.

    Electronic subscription models do not have a good historical track record (barring a few unique examples like the Wall Street Journal…which produces the most sought-after business content on the planet).

    Brian, you are right about newspapers needing to become media companies. I spoke to some CU journalism students a week ago and they actually still have their journalism program split into separate tracks of print, broadcast, media, etc. They really need to prepare the students for this convergence of media that is happening right before their eyes.

    The first time an editor tells them to edit a podcast or produce a video, they will be very surprised.

  8. Lina says:

    Nice post, Dave. Subscription – agree. Innovation – although quite late but agree definitely needed. Change is in the works but I wonder how quickly it will take to make them and how many more newspapers will need to shut its doors until it’s figured out. I suppose only time will tell. It’s important for newspapers/media to stay on the edge of technology not play catch up with it. That observation is obvious, right?

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