Newspaper paywalls: using a Band-Aid on a bullet wound

As more newspapers move to paywalls, it comes clearer to me that publishers are attempting to use a Band-Aid to cover a bullet hole. I share an anecdote:

I asked my class of 20-year-old Elon University students how many were on Facebook. All 33 raised their hands. Many of them suggested they were addicted to the social network. (It was all I could do to keep them off Facebook during class.) I asked how many would pay $1 a month for Facebook membership. All raised their hands.

“Five dollars?” I asked. A few dropped out.

“Ten dollars a month?” I asked. Nearly every hand stayed down.

“No one?” I said. “I thought you guys were addicted?”

A student piped up with an explanation: “Someone will invent something else to take its place that is free.”

I shared this anecdote with a newspaper executive when we were talking about newspaper paywalls. I said that if people wouldn’t pay for Facebook, they wouldn’t pay to get through a newspaper paywall. His response was dismissive. “They aren’t our readers anyway.”

No, they’re not, even though they should be: college-educated, inquisitive, relatively well-to-do and can afford the price of a paper or paywall. They won’t be newspaper readers in five or 10 years, either, when newspapers traditionally have expected them to subscribe to the newsprint edition and, presumably, the paywall. They will have been trained not to go to the newspaper website.

I can understand paywalls as a leaky short-term strategy, catching some newspaper readers who are addicted to their local papers. But without significant “value-added” content, that won’t last. Paywalls can’t be a long-term strategy; the audience will not be there.

What is the long-term strategy? Looks like it’s paywalls. And more paywalls.

Or, they could listen to what their prospective customers are saying and doing, and try something else.

37 thoughts on “Newspaper paywalls: using a Band-Aid on a bullet wound

  1. The less one understands the nature and extent of the disruption taking place, the more likely one is to erect a paywall.

    To me, a reader, a paywall says you’re out of ideas to engage me.

  2. I did a similar exercise in a media economics course, when I asked the class how much they were willing/able to spend for all media (of any kind) every month. For the majority, it was somewhere between $5 and zero.

  3. Pingback: Paywall, smash! « Mostly Modern Media

  4. The notion that millennials are uniquely uninterested in paying for serious news at their young age is bullshit. It’s a universal truth of youth. We were all that way.

  5. Paywalls are a defensive strategy! If you seriously think that the NYT paywall will ever get more that 100k subscribers, you are out of your mind! People never read the newspapers for news! They only wanted the ads and inserts! That is why I was one of the 50k people who signed up for the Dallas Morning News paywall! I only wanted to read the banner ads online! Who cares if the NYT paywall caused that one paper to reverse its revenue losses and grow revenue! That means nothing! Who cares if it has also boosted circulation at dozens of papers and NEVER LOWERED DIGITAL REVENUE! Who cares! This is about abstract concepts and theories of news! It’s not about surviving financially and being able to pay for journalism.

  6. Newspapers that put up walls should be wary of this line:
    “Someone will invent something else to take its place that is free.”
    While they are busy putting up walls, some of us are out there working on developing systems for local news that are more efficient and offer better value for advertisers. We’ll have to wait and see which side wins in the end.

  7. I was initially of the mindset that paywalls were stupid and a product of legacy thinking with limited foresight for the future. But I’ve changed my thinking on this lately. The problem with newspapers has not necessarily been the internet, although it certainly contributed.

    The problem has been that their primary source of revenue is advertising, and the secondary source is subscriptions. In this model, the readers’ interests are secondary to the advertisers’ interests. Newspapers have become less about informing the public and keeping government and businesses accountable, and more about keeping advertisers happy.

    Without a paywall, this mindset continues and even worsens because there’s no subscriber revenue at all. We need a revolution in news that drops advertising altogether and places a premium on the interests of the reader and the public at large.

    Community-supported news similar to NPR perhaps?

  8. You can’t compare Facebook with a Newspaper. Newspapers sell content that is very expensive to produce. Facebook doesn’t. Good news is everything but cheap stuff. I wish ad revenue would someday be enough to pay for it. But the fact is that today it is not, and journalists like me like to get payed.

    • Thanks. My comparison was based on what users might pay for. My point is that if users don’t want to pay for Facebook, there is a slim chance they will want to pay for news.

      • Facebook is a social media and really can’t be compared to news, especially local news. Your students love Facebook because it is an easy way to stay connected, share pictures, etc. When they become part of a community and more interested in what is going on in the community, the newspaper, either print or digital, is the only source they will have. Whether they will pay for it and how much they will pay simply cannot be determined or projected by the sampling of your students.

        • Thanks, David. That’s been the philosophy of newspaper folks for years, but it isn’t bearing out. Each generation since the Boomers has depended less and less on the newspaper. There is no reason to expect the Millennials to depart from that.

          • Thanks, John, for reminding folks about the General Social Survey and what it has shown for years.
            David, the hubris of your comment is shared by many news people (and I used to be one of them). Then I actually read the research that’s been on the books for almost two decades. I’d recommend it. And to say the newspaper will be the “only” source ignores what the student was telling you – an abiding faith that someone will come along to challenge you. That faith continues to turn into reality in so many ways. So my question, as was said in the movie, “Feeling lucky?”

  9. The paywall conversation always seems to turn into a religious issue, a black-or-white topic with parties in one camp or another. We all know that paywall technology isn’t a silver bullet, but it provides a robust tool in your arsenal for revenue diversification. In print, you got high yield from a few revenue streams, subscriptions, national advertising and classifieds. On the Web, you get low yield from many revenue streams (display advertising, email ads, ad networks, sponsorships, paywalls, deals, single-purchase ecommerce, DSP’s, licensing, job ads, etc.

    The long term strategy is user segmentation. This allows you to identify how to maximize the RPU (revenue per user) by identifying user wants leveraging that data into a purchase, ad view, lead generated, etc. Paywalls aren’t just a way to monetize your audience, it’s a way to segment them as well. If someone has bought something from you once, it’s easier to upsell them to something else. Paywall subscribers are a newspaper’s super users, ones who they can monetize fare more than those that don’t.

    GoDaddy makes a living off of upsells. Newspapers can too.

  10. Only a few niche papers are making any headway towards paid for online content. The rest of us have to be a lot more inovative to create new revenue streams. The days of revenue from circulation is all but over and no ammount of coersion to readers to pay for online content will work. Twitter, facebook even our homepages of our email accounts carry news. As for the local market I seriously feel we are getting out of touch with there wants and needs. We must look at free content nand create revenue from smarter analsis of readers online profiles and target them this way. One of payment for aps is one way to keep readers onboard and then utilise all the technology available for target advertising.
    We are no longer “News Papers” but “Information technologists”. The days of thw old Thunderer have passed. by 2015 half our readers will be on line and 75% of our content taken via social networking like twitter and facebook.
    Its hard to take I know but we must look forward and take our heads out of the sand. It is exciting times within the industry with great challanges ahead. In my own company we have made a consious decision to take on this challange head on and have accepted that our readers and now in the mobile age. Our digital revenue is growing every quarter and we have taken the painfulll decision to publish the majority of our daily titles digitaly each day with a printed edition at the end of the week. So far this has worked as it has for others. How long we will continue to print is unknown. In my own opinon I cant see us going past 2020. Then I must say the technology that will be available will have killed off the printed product as more and more middle ground readers embrace the new mobile era.We have but a short time to prepare ourselve, use the time wisely

  11. This is really a great topic for discussion, but here are a few hard facts about the newspaper industry. First, content is NOT fungible. Newspapers have survived, because they deliver accurate, insightful content. News companies like Atlantic, which happens to be a free site for now, have proven that quality content trumps price and because newspapers have such strong brands in place, they have, for now, a first to market advantage over other news reporting sites. This advantage is their’s however to lose. Second, newspapers are attempting, with the implementation of pay-walls, to earn back dollars that are being lost when print advertising is switched from newspapers to digital. I have heard that one dollar of print advertising losses about 80 percent of its value when it moves online. So, how then can you expect for media companies to forgo the millions that can be made from the pennies consumers are willing to pay for quality content? Free internet, as Warren Buffet put, is unsustainable becaue people will pay for quality.
    I remember when MTV was the best thing cable TV had to offer. Today, consumers spend on average $200 per month for cable. Why then should the internet be handled any differently by newspapers? For more from Gregory Clay follow me on Twitter @PNJ Media

    • Thanks, Gregory. I simply see little evidence that people in their 20s are going to pay to see what’s behind the newspaper paywall. If it is important, they can see it free on television or on some free website. So, maybe newspapers can gather some pennies now — I don’t see it terms of millions for most papers — but what is the longer term strategy?

  12. Don’t mention it John! Believe it or not you are actually executing the secret weapon of news media-“engagement”. The one thing that most news organizations overlook is the importance of engagement in driving ad revenue. News media companies must drive engagement by evoking conversation via social media. There aren’t many Directors of Engagement right now, but keep your eyes on these types of positions in the future. News media companies must become more like social media-only newspapers already have the revenue piece figured out. By driving engagement news organizations increase their inventory of meaningful digital impressions from loyal readers, thus driving targetable ad revenue. One major hurdle however is convincing big media companies that they can no longer rely on their top 20 advertisers for 80 percent of the revenue, because of the natural shrinkage of ad dollars as they move from print to digital. I believe successful media companies will figure out low cost methods of reaching more customers. Once they figure that out the digital dimes will begin add up to major dollars.
    Finally, most newspapers are still too large and inefficient to support the current flow of ad dollars, so look for smaller news organizations, fewer printed newspapers, and more consolidations in the future. With a greater focus on relevant content and reader engagement, newspapers can remain attractive to the next generation of readers. The paywall conversation is just background noise. It’s a done deal. Who would have thought you could make millions from text messaging? Which is another example of people paying for what they want.

  13. Pingback: If People Won’t Pay A Monthly Fee For Facebook, Why Would They Pay For Newspapers? | Share Blog

  14. Putting up a paywall shows a complete lack of understanding of the business a newspaper is in. The paywall assumes that it’s the news that is valuable, and the business is one of selling the news to readers. This is not, and probably never has been the case. The news is merely bait to attract the attention of readers. The newspaper business is selling access to that attention to advertisers. The problem is that for a long time the newspapers had a near monopoly on both access to the news, and advertising. Now, online sites like Craigslist have taken away a big chunk of that advertising at the same time as a plethora of web sites have provided alternative sources for news. Newspapers now have to work hard to keep that attention, and at the same time they need to work hard to draw in advertising. They really don’t like that change, but they’re going to have to either get used to it, or go out of business.

  15. I think paywalls are 1 degree off a full solution. They are a part of the solution. More specifically metered technology is the facilitator to monetary planning. Following Chicago tribunes plan of paywalls g specific content then using other alternative for generic content is the way to go. You only really have this type of setup (efficiently that is) if you have an underlying meter/workflow system that determines which monetary method to use.

  16. There are a couple of stages to this that aren’t being addressed very well.

    A. Many in the <35 demographic increasingly have no trust for news outlets. We get this mainly from television, but since everything being fed to us 24/7 is subjective interpretation of events (except for, in some cases, the BBC) it's increasingly unclear whether going to papers is going to get us better input. Most newspapers are owned, after all, by the same companies making those news broadcasts. So we can't trust the feed.

    B. Since news (and most other media sources) have married themselves to advertising sources, their model runs almost completely contrary to the web. There are numerous articles every day on how we are training people with the iphone to demand .99 or less for games, which is not a sustainable business model. People want access to whichever songs they want, for as little as they can get it, and are willing to pay very little for online books, etc.

    But newspapers want to bring their models and their culture into an online culture (which is, after all, only about 20 years old) and expect those models to transition… but they don't.

    If people want news from a newspaper, they'll probably subscribe to one. For reasons other than coupons.

    But I grew up in a household where my father read the paper every day, and I never picked up the interest. If I can find the odd story on the internet that's interesting, I'll read it, but otherwise, there are other things I can better spend my time on. The few times I do see something that looks like it might be interesting to read…oh, it's behind a paywall.

    It's like being slapped on the wrist for developing an interest. Sadly, my response, like many others, is Pavlovian. Mind you, I won't even install facebook news apps for papers either.

    But I read sites like The Register and Ars Technica daily, and I've even thought about subscribing to them. I already subscribe to Wired. These are tech focused, but they have access and content available in a method which speaks to me, and their added content is more than just "oh, no ads for you then".

    C. which leads me to this…most online papers seem to want people to pay for something that they get free elsewhere. Whatever content you add, whatever that value is, it has to be something that they would come to you for, that is something that really speaks to the user, something new. So long as you want people to pay for the 'same old', they won't.

    As for the poster who said "this idea that only young people of this generation won't go for newspapers…" if this was true, newspaper circulation wouldn't be dropping, right?

  17. This is spot on. Paywalls won’t work for general news because there are simply too many other free options. I’ve asked my students similar questions. The only ones who pay for content online are those looking for specific content, like ESPN Insider or business news from The Wall Street Journal — content they can’t necessarily get of that quality other places.

    • Aaron, you stated a problem, and, incidentally…. provided a solution: people will pay for what they are interested in: specific, high-quality content, on demand.

      In other words, the question should not be whether people (or young people, if you like) would pay to “get through a newspaper paywall” or how much they would pay for a monthly subs. Rather — the publishers (and JLR) should be asking which content is salable online, how to sell it, and — from the reader’s point of view — which payment method can make theirf paying for and receiving access to online content as frictionless as possible, given the above mentioned preferences: specific, high-quality content available from many sources on demand.

      If you think about it, paywall is the worst. least reader-friendly solution. Still, it does not mean that people are not willing to pay for content, or that publishers cannot sell it and make profit.

      • Well, of course, that’s the question. My point was simply that people weren’t willing to pay to get through a paywall. Personally, I don’t think that young people are willing to pay for news on a regular basis…at least, there is no evidence that they will, but I suppose we’ll see.

        • John, this is the problem: we assume that young people are not willing to pay for news on a regular basis… This assumption, however, includes another assumption — that the only or the best way to sell news is via a paywall, or at least it has to be some sort of subscription (on a “regular basis”).

          There is some strong evidence showing that young people use online news differently, in most cases, as they surf the net. Or, as the 2007 Harvard Young People and the News survey showed, 65% of teenagers and 48% of young adults “just happen to come across” online news, as compared to 40% adults who encounter Internet-based news in this manner. The majority (55%) of adults “seek out the news.” On the other hand 54% adults — a majority, you see — never or hardly ever use internet news, and only 32% of teenagers and 45% of young adults belong to this non-user category.

          The facts are different then: young people are a lot more likely to access news on the internet than adults are, but they access it in a different way, on-demand, as they go. Paywalls are a wrong tool for news content monetization with young people. That is why, when asked a young person if he/she would pay for news on a regular basis, the answer is usually “no.” But ask if they would be willing to pay for access to a single article or better yet video news, and pay on demand, the proportion of positive answers will be a lot bigger.

          How much bigger? Unfortunately, hardly anyone asks this question; again, assuming (wrongly, I’d say) that on-demand, small payments do not work. A whole generation of publishers has now been conditioned to believe that micropayments would never work, despite the facts from the music and gaming industries where small payments, often in the form of credits or virtual tokens, are the preferred payment method. And who are the buyers of those tokens, if not our “young people”? Give them a payment option that fits their way of using news and the new media in general, and the results will surprised you.

  18. Pingback: Če ne plačajo za Facebook, kdo bo plačal za časopise? | Hapax Legomena

  19. Pingback: This Week in Review – Nieman Journalism Lab | journalism blog

  20. Pingback: This Week in Review – Nieman Journalism Lab | The Journalism

  21. Pingback: Newspapers Digital First News Summary-06/08/12 | digitalfirstnewspapers

  22. Pingback: Why does Bill Keller write about Facebook without trying to understand it? « The Buttry Diary

  23. The idea that anyone starts reading the paper as they get older is a hard-to-kill myth. In 2005 the Readership Institute had a presentation showing decades of readership data, and it showed that in 1967 among people 18-24, 71 percent read a newspaper; and in 2003, when those people were in the 55-64 age group, 64 percent did.– not only not an increase but a decrease. In 1967, 73 percent of 25- to 34-year-olds read a newspaper; in 2003, among that same group (by then over 65 years old), only 70 percent did. The reading habit isn’t like gray hair, it doesn’t show up as you age. Among those who were under 25 in 2003, only 40 percent were reading newspapers. If the figures didn’t grow for their grandparents’ generation, I wouldn’t want to stake my future on it growing for them.

  24. Pingback: How David Simon is wrong about paywalls | Best Daily Deal Aggregator

  25. We’ve turned the subscription newspaper vs. free internet model upside down by providing our weekly newspapers to our target market for free and charging for full access to our online eEdition. Our newspapers are full of local news you won’t get anywhere else (other than our paid eEdition) and our newspaper readership has remained very high.

    Our target audience is not college students. It’s home owners with families and a vested interest in what happens in their community.

    Exclusive, professionally written local content is key. Everything else you can read on the internet for free. Digital ad revenues will never equal print revenues because there are more digital ad options than local print options.

    As for the future, there may be a day when your paid news subscription is delivered on a tablet with little or no advertising. As for your survey, if you took a survey today of how many people want to pay $25 to have a checked bag with their airline the answer would be zero. And thousands pay it every day.

    Provide any product that people want or need and can’t get anywhere else and they’ll pay to get it. Or, in our case, they’ll pick it up for free on their driveway.

    P.S. And kids do read our newspapers – high school kids. We cover all the local high school sports like no one else.

  26. Pingback: Can Local Publishers Successfully Charge for Online? | Street Fight

  27. Pingback: Martin Belam on Media Business Models: Try to Make Money And Your Audience Turns on You

Comments are closed.