Paywall or not paywall? It’s not black and white

Posted on September 24, 2010 by Ian Betteridge

Roy Greenslade asks “where’s the proof of paywall success?“.

“What we have yet to know is whether paywalls work. Even magazines that have erected them for a good while are either unsure about the results or, more usually, secretive about them. Similarly, News International isn’t revealing figures for its subscriptions take-up.”

One might equally ask which, if any, magazine or newspaper publishers are making a success of the advertiser funded-only models? Where’s the proof of the success of advertiser-funded publishing for big companies?

As far as I’m aware, The Guardian (for one) is losing money on its online properties. Clearly, The Times was – otherwise there’s no chance it would have retreated behind a paywall. Magazine publishers seem pretty reluctant to talk either way, and certainly not in detail.

In other words, one could equally argue that for both magazine and newspaper publishers, the “everything is free” model has failed.

However, I wouldn’t argue that. What I would argue is that different business models will prove successful for different audiences, and it’s up to publishers to find the path which works for their individual publications. There is no One True Path to success.

But, really, it’s myopic to think there ever has been. There have always been print publications which charged a high amount to readers, but carried no ads. Likewise, freesheets which subsist solely on advertising are as old as the hills.

So why are we pretending that the online world will be different?

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  • http://twitter.com/ac_swift Andrew Swift

    It’s a little misleading to equate the two sides in this debate (one could argue…).

    If you don’t make money without a paywall, you still have your audience. If you don’t make money WITH a paywall, you’ve killed your business by losing one of your biggest assets.

    Both strategies could be declared a failure, but it’s like the diffence between getting a bad sunburn and getting your arms and legs amputated.

    In the first case you can still adopt new strategies — in the other, you’ve sacrificed the things that make it possible to continue at all.

  • http://www.technovia.co.uk Ian Betteridge

    An audience you can’t monetise is an expense, not an asset – servers, bandwidth and maintenance aren’t free.

  • http://www.technovia.co.uk Ian Betteridge

    To give another, longer answer (never try and type comments while eating a sandwich): I don’t think that in media, “build an audience and pray that a money-making plan comes along” is a tenable solution. The bigger your audience, the more money you’re actually losing every year. What’s more, because the audience you’re building have zero brand loyalty (people who don’t pay don’t have much loyalty), you’re caught in a trap of investing more and more to retain the same levels of traffic. Consider the amount that has been spent on moderation costs because you *have* to have comments.

    It’s also damaging to the focus of the brand. To pick a concrete example from the tech journalism world, you will get audience if you write about Apple. In fact, if you can spin a story so it has an Apple headline you’ll treble your traffic over one which doesn’t mention them.

    That’s corrosive, because you start undifferentiated pageviews over a coherent audience. You lose your identity as a news brand.

  • http://twitter.com/ac_swift Andrew Swift

    I agree that an audience that can’t be monetized is not worth much. However, having an audience at all is a prerequisite for success — if you haven’t got that, you’ve got nothing.

    In traditional media, the money comes from advertisers and the readers are the product being sold. In this context, a failed paywall means no inventory to sell.

    For a company to change from the advertising business to the cont business is a large conceptual shift, even if the superficial structure looks similar. For example, creating a distinctive product might evolve from a geographic basis (reach all of South London by advertising in our magazine) to a content niche basis (get the most in-depth
    reporting about South London). The editorial priorities wouldn’t be the same at all.

    This shift is a precondition for the success of a paywall, but so far most example of paywalls that I see are just news as usual, but suddenly it costs more.

    There’s a great interview with one of the guys at Google News who describes what it looks like to see 20,000 news sites all over the world all publish the same story with the same content. He says that it’s obvious that this can’t continue, and that the future of news is more in-depth reporting and content differentiation. I can’t find the link right now but I’ll try to post it later.

  • http://twitter.com/ac_swift Andrew Swift

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