Since The Times’s website just went from registration-wall to full-fledged paywall, the articles about paywall journalism are coming out in force. Here is a trio of particularly interesting ones.
On the “Strange Attractor” blog, Kevin Charman-Anderson goes into the economics of print versus web publication and advertising. He notes that printed papers cost a lot more than web publishing (pointing out the statistic that for the amount the New York Times spends on printing, it could send every subscriber two Kindles), but print advertising makes up 80% of most papers’ revenue.
Charman-Anderson points out that online advertising revenues have traditionally been low, but suggests that this is because most papers simply don’t know what they’re doing in the online advertising market.
The problem with newspapers’ digital strategies has been that they have largely been content strategies without effective commercial strategies. For too long at too many publications, digital advertising has simply been a sweetener bundled in with the print ad sales. For too long, we have not done enough to know our audiences online, understand their needs and adjust our strategies accordingly.
He points out that a number of papers have succeeded with online advertising, but it required coming up with new strategies to maximize the revenue and cut costs. It’s not impossible, and it doesn’t require a paywall. But it does require some effort.
The Guardian, one of The Times’s staunchest competitors—and one that has been quite happy about The Times’s paywall plan, feeling it will drive more traffic its way—has an interview with Clay Shirky in which Shirky explains why he believes paywalls will fail.
"Everyone’s waiting to see what will happen with the paywall – it’s the big question. But I think it will underperform. On a purely financial calculation, I don’t think the numbers add up." But then, interestingly, he goes on, "Here’s what worries me about the paywall. When we talk about newspapers, we talk about them being critical for informing the public; we never say they’re critical for informing their customers. We assume that the value of the news ramifies outwards from the readership to society as a whole. OK, I buy that. But what Murdoch is signing up to do is to prevent that value from escaping. He wants to only inform his customers, he doesn’t want his stories to be shared and circulated widely. In fact, his ability to charge for the paywall is going to come down to his ability to lock the public out of the conversation convened by the Times."
Shirky has written books about the value social networking and media add to people’s lives (and most of the rest of the article actually talks about that, despite the paywall-related headline); small surprise that he would see the social disconnect as one of the paywall’s major problems.
And finally, also on The Guardian, Roy Greenslade notes that the Sunday Times lifted some copy from a free blog and posted it to the site without proper attribution. The editor of the blog complains the The Times wouldn’t have done this “in the old days”. Greenslade notes that they actually probably would have, but it certainly does look bad for a site that insists on payment to read it to lift content without attribution from one that posts things for free.
Paywalls will work, if all the news sites use them. When only one among many puts up the paywall, as in the case of The Times, it will hurt. Murdoch had better hope to be joined, post haste.
The thing about newspapers and online advertising is how different the markets are, print-wise and online. Your typical newspaper is based in one city and covers metro, local, and statewide issues; almost all the readers are within driving reach of one another — and the advertisers.
Online readership is global. How much good are the readers in Pakistan, Tokyo, and Moscow for your local car dealership? So, why should that car dealership pay to reach them?
The way around this dilemma might show up in Android and iPhone/iPad media, since the devices include GPS and thus ‘know’ where the reader is. Ads can be syndicated and delivered only to the local readers. The newspaper app then gets ad revenue from the syndication. Pakistani readers get local ads from advertisers in Pakistan, so do the Tokyo readers get ads from Tokyo, and Moscow readers ads from Moscow.
I imagine something like this is behind Apple’s very-costly iAds, and that if Google isn’t doing something like it yet, they soon will be.
“Paywalls will work, if all the news sites use them.”
Not in the long run. If every newspaper charged £1 per week, in a matter of months new free web sites would emerge with the same news and similar editorial for free. The cost to set up a Newspaper is probably a hundred million for the start up expenses, a fast press and distribution contracts with unionised writers and delivery folks. On-line is a new ball game. It is probably 1,000 times less expensive to get started. If all the newspapers close up their free material, new sites designed from the outset for the on-line world with a cost base to match the reality will surely blow them away.
The Wikipedia model works – readers with expertise write the news rather than journalists who have zero insight and can’t even add up yet have an ego the size of Manhattan.