Here Come the Paywalls

This may be the year when newspapers finally put up or shut up. Print editions of newspapers continue to be under fire, losing both subscribers and advertisers at a rapid pace. They have no choice but to try to make money in other ways, the most obvious one being in producing digital editions.

Last September, ReveNews writer Duane Kuroda wondered why newspapers were looking at paywalls as their only means of survival when other options were possible. In November, CT Moore pointed out that News Corp.’s British newspaper, The Times, took a big revenue hit when it implemented a paywall. Data from Nielsen confirmed that ad revenue dropped as the websites of The Times of London and The Sunday Times saw a 40 percent decline in traffic in the first few months after paywalls were implemented.

So what is The New York Times about to do? Implement a paywall.

The New York Times is planning to launch what is essentially a paid online version of its product during the first quarter of this year, according to Times Co. CEO Janet Robinson. She made the announcement at an investor conference in December, indicating that online readers will get a specified number of articles without cost each month, but heavy users would pay a subscription fee. Unofficially, it seems likely that subscribers to the print edition of The New York Times would get full access to the online edition at no additional charge.

As for the cost of the online edition, that is yet to be determined, but it will probably be under $20 per month, according to a report from Bloomberg. Even at $20, or $240 annually, that would make it less than half the cost of a full print subscription, which is about $50 per month, or $600 annually. Still, rival daily newspaper The Wall Street Journal, also owned by News Corp., is charging new subscribers to its online edition $1.99 per week for the first 52 weeks ($103.48 annually) and $2.99 weekly thereafter ($155.48 annually).

Bloomberg reports that the Times Co., which also owns the Boston Globe, will implement a similar model for that city’s daily newspaper. Meanwhile, The Philadelphia Inquirer and the Philadelphia Daily News, which are owned by Philadelphia Media, reportedly will soon begin charging for content “below” the Philly.com website that acts as a portal for both newspapers.

Much has been written about the general failure of paywalls. Some feel newspapers would be better off simply migrating to paid tablet and e-reader editions – but is it realistic to think that a device-bound digital version of a news publication may be perceived as more valuable? The New York Times already has a Kindle edition for which it charges $19.99 per month. The Times had been offering an iPad app for free, but current information on the Apple website says it is “free until early 2011.”

I can’t fault newspapers for scrambling around to find ways to adapt to a digital world. But I do fault them for not figuring out a lot earlier how to keep themselves from being a dying breed. Like it or not, basic news stories have been commoditized and virtually any information a consumer needs is available for free over the Internet. What newspapers have failed to do is make a case for their unique value, like having commentary and features that are so unique and valuable consumers are willing to pay for them.

The dilemma of traditional newspapers fits nicely into my previous commentary about opportunities for monetization on the Web. I’m not sure paywalls are the best answer for publishers. Instead, every publisher of Web content needs to think creatively about how to make money from publishing content that most consumers perceive should be free. It’s a matter of meeting consumer demand in the new digital world. If publishers aren’t visionary, like newspapers, they’ll be going out of business.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

4 Responses to Here Come the Paywalls

  1. bdsilv says:

    A relevant update to this article: A recent study by the Pew Internet and American Life Project shows that nearly two-thirds of Internet users have paid for content online, but that includes music and software. The average amount spent per month was typically only about $10. Only 11 percent paid for premium content on websites that also had free information. The complete study is here: http://www.pewinternet.org/~/media//Files/Reports

    This is one more piece of data suggesting paywalls could be a difficult sell for content publishers.

  2. I think people are finally starting to wake up to the fact that they weren't buying a newspaper… they were buying news. As an object, the news "paper" is history, but news will always be relevant and worth paying for if it's valuable.

    Everybody loves to throw around the saying "information wants to be free," but what most people don't know is that's an incomplete quote from Stewart Brand. The full quote is:

    "In fall 1984, at the first Hackers' Conference, I said in one discussion session: "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." That was printed in a report/transcript from the conference in the May 1985 *Whole Earth Review*, p. 49.

    So we have a situation where people would never pay for some kinds of information but gladly pay for other kinds of information.

    But I think we can even take it one step further: certain experiences on the web are not worth paying for and others are. A site that has headlines and basic news stories and not much of a memorable experience would not be worth paying for and could be supported by advertising.

    A site or product (for iOS, as an example) that is a memorable, valuable experience (even if the news itself is the same at a factual level) is worth paying for, in my opinion. I have a feeling that's how this will play out.

  3. CT Moore says:

    I don't believe in Paywalls, but if anyone can make them work, it's the NYT and WSJ, and that's because they are very reputable brand names.

    I think the danger is in the example they are setting, though. Smaller and/or more local papers are going to try and do the same thing, and it's going to be to their own detriment. Newspapers overall just need to reinvent their revenue model, and I think there are sufficient digital channels for them to do this.

    Newspapers need to become "social news organizations" — they need to integrate with social APIs and use that data to better understand their audiences. This will open up their eyes to new editorial options, new advertising opportunities, and better ad targeting. In turn, they can start running CPA/CPL offers because they'll have confidence in who they're reaching.

    And I think the opportunity for local publications is even more salient. With the rise of personalized and mobile search, local publications are in a great position to gain significant traffic. Coupled with deal-of-the-day offers, local papers should be looking at a very bright future rather than a grim one.

  4. […] wrote about paywalls previously, suggesting that they may not ultimately be the best solution for newspaper publishers. […]