Lock Up Your Content... And Have All The Traffic Go To Your Competitors

from the it's-how-it-works dept

Thu, May 21st 2009 10:57pm — Mike Masnick

Kevin Stapp writes in to highlight a simple fact that has been discussed time and time again: that if a newspaper locks up its content behind a paywall, it will lose a ton of traffic beyond just the regular readers who refuse to pay, because the sites that send you links (and traffic and new readers) will simply point elsewhere. As an example, Kevin points out that with Slashdot's post about Craigslist suing Henry McMaster, it initially had a paywall-blocked WSJ link... but quickly added a free link from another news source. This is a key point that old school newspaper folks keep forgetting. They think that their job is to deliver the news, and the readers' job is to read the news. But that's not the way it works anymore. These days, the community helps spread the news -- and by making that more difficult, you decrease your value to everyone, and make it more difficult for readers to help spread the news and promote your paper's coverage.

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Filed Under: competition, content, journalism, paywall

20 Comments

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Windowslogy, 21 May 2009 @ 11:20pm

I wrote somewhere before, presenting an idea that newspapers should offer regular news for free, the way a blog does. But they should put the content that requires a deep analysis behind a paywall or in print versions. That way newspapers can still profit from the Web versions and print ones.
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bowerbird, 22 May 2009 @ 2:32am

aren't you getting bored explaining this over and over and over?

just sit back and let the idiots learn the lesson the hard way, ok?

-bowerbird
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Anonymous Coward, 22 May 2009 @ 2:34am

These guys are beyond idiot, Even an idiot can understand this after it is explained to them numerous times, These guys will never get it. Not even after they are long out of biz, they will continue to blame others for their own misgivens.

They are RETARDED!
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Anonymous Coward, 22 May 2009 @ 3:35am

Here is the funny part about this: If the WSJ happens to sign up one or two new subscribers because of this (before the story is redirected) then they have won as well.

WSJ has defined their news as the scarcity. Not news. Their news. If people are subscribing, they must be correct, no?

It's the difference between dinner and dinner with Josh Freese. They feel that a WSJ story is better than just a story.
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Anonymous Coward, 22 May 2009 @ 4:33am

Re:
Worse than retarded it is Murdoch the poster child for arrogant and stupid.
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Charles (profile), 22 May 2009 @ 4:35am

Value Comparision?
What if a pay newsite had a ad-supported version for free? People would see that they would "save money", and won't mind the massive amounts of ads. You just have to disallow Ad-Block.
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Anonymous Coward, 22 May 2009 @ 6:17am

Re:
That's kind of insulting to retarded people. They would at least try. The ding-dongs at these newspapers don't want to even listen, much less try.

I don't understand why the concept is so alien to them. Scores of websites follow the pattern of "basic stuff for free, pay for the good stuff".

Whole Foods (grocery) has sold me tons of expensive cheese that way.
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Another AC, 22 May 2009 @ 6:27am

Exactly
You reveal a nuance that many seem to miss:

The pool of potential subscribers is not the same as the pool of potential readers (in fact it's a subset). The latter is larger but brings no revenue (outside of advertising and the like). The former is smaller, but will bring in direct revenue, perhaps in addition to advertising.

So locking up content to those who won't pay anyway is not a great loss. They may as well go to the competitors because they aren't customers in the first place. Granted, they represent potential customers, but otherwise don't bring anything to the table. On the other hand, subscribers, even if only a small fraction of the total potential readership, bring something of actual value: money. So those are the people to focus on when making decisions about whether to build a paywall. It doesn't matter if non-payers flock to the competition - they aren't getting any money from them either. They are like non-player characters in a game - essentially irrelevant (except as potential subscribers, but they can be enticed via advertising rather than by giving them the goods).

That said, the real question is (as has been belabored here at Techdirt ad nauseum) whether a paywall and subscribers will bring in more money than some other approach. Even if it is not the best approach, it is still a viable one if the news provider and the subscribers are satisfied with the arrangement. It's still better than no money at all.

Here's a challenge for Techdirt and its readership: Rather than just publishing another story about how stupid it is to require payment before getting access to content along with the requisite head shakes, smirks and eye rolling, how about providing concrete ideas and examples of how news providers can make even more money some other way. Not speculation and theory - actual examples of money making approaches that are better than a subscription model. Because even if the income from the latter is small, it is still much better than the zero income derived from just putting everything online for nothing.
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Someone Smart, 22 May 2009 @ 6:33am

The last man standing...
The smart guy will be the one who continues to offer his content for free until all his competitors who charge are out of business. Then, with no competition, he can put his prices at whatever he wants.

Works for Walmart...
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Another AC, 22 May 2009 @ 6:54am

Re: Exactly
I'll answer my own post with an example of one approach that seems to be a good start toward a viable model that draws subscribers while still keeping readership high: Linux Weekly News (http://www.lwn.net). Most of the stories are free, but their weekly summaries and certain articles require a paid subscription to read at publication time. The paid content becomes freely available after a sufficient amount of time has passed (when the news is no longer timely and thus of less value).

This approach could be fine-tuned, because from what I understand it doesn't quite bring in enough to cover all the costs of running the site (or quitting day jobs or whatever), but it still brings in more than zero income, so I'd call it a success in that regard.

As the original post suggested, the value provided is that the paid content is better than mere news, because the value added is the expertise of the editorial staff. Which I suppose are the scarce goods I keep reading about here.

So are there any other examples of similar approaches taken by newspapers or magazines that seems to be working to some extent? That could work better with some refinement?
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Tristin (profile), 22 May 2009 @ 7:11am

Re: Exactly
Here's a challenge to Another AC: bother to understand what this site is about before assuming it and its commentors are ignorant and stupid. In my point of view, the first goal of this site is to point out and explain the realities of the tech industries. The second goal is to offer alternatives to broken business models that don't work in reality.

This post falls mainly under goal one. Specifically, the reality is that a paywall will significantly cut the number of visitors your site will get. The reality is that your site's community will be much smaller and much less diverse. And as has been pointed out time and time again, traditional newspapers were always in the business of selling their community to advertisers, not their content to the community.

You happen to be partially right in this case because the WSJ is a bit of an exception to the rule. They have always charged more and given more in-depth analysis than the average paper. They have a loyal and wealthy subset of readers that value convenience and deep analysis above all and will pay whatever WSJ charges.

But that doesn't excuse making rash generalities and accusations about the readership of Techdirt. Fact is, paywalls will not work for the vast majority of news providers. Paywalls send customers to other sources, and that was the reality this post was meant to convey. It did so brilliantly.

Finally, you (Another AC) challenge us to provide alternatives rather than just talk about what doesn't work. Clearly you are incapable of reading the comments already posted. The very first comment by Windowsology pointed out the idea of giving away the basic stuff for free and putting the high-quality, in-depth analysis behind the paywall or in print. How is that not a good alternative? Or did you just not see it because as soon as you saw the word free your brain shut down?
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Anonymous Coward, 22 May 2009 @ 7:45am

Re: Re: Exactly
you got it. the mistake made is that all news is the same and has not market price anymore, should be free all the time. But there is crappy news written by hacks that don't have a clue, news written by bloggers who slant it like crazy (see techdirt in general), and then there is premium news and information written by professionals with more in depth coverage (see WSJ).

News isn't scarce. Slanted blogs trying to be news aren't scarce. Well written and informative news is still scarce as it comes. Sell the scarcity. Mike just doesn't like it because it disproves his theories of free.
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Anonymous Coward, 22 May 2009 @ 8:45am

Re: Re: Re: Exactly
The problem with your arguement is that it is next to impossible to keep the story behind a paywall without someone copying the story and putting it somewhere else on the web for free.

Most people would probably just read the free version elsewhere (even if it isn't quite as well written as the original).
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Michael, 22 May 2009 @ 8:54am

A newspaper publisher should decide which market their website is serving; lurkers or subscribers. In my business I look at a ton of newspaper websites and haven't come across one that provides any paid subscriber advantages. In fact, if the paper I subscribe shut down their website, wouldn't even notice. Only when newspapers realize the powerful advantages of a hybrid print and online presence will they begin to benefit with a unique value proposition, not just for advertisers, readers as well.
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Another AC, 22 May 2009 @ 10:30am

Re: Re: Exactly
Wow. Thanks for setting me straight, Tristin. And venting some of your bottled up anger. Let it out - it's good for you.

But sarcasm aside, where exactly did I say I considered the commenters ignorant and stupid? Even your post, which I find ranting, condescending and childish still had plenty of merit mixed in with the flaming. I see lots of commenters calling the subjects of the articles ignorant and stupid, which I find tiresome after awhile. Contrary to your attempt to "school" me on what the site is all about, I get it. Even a simpleton could pick up the message after a few days of reading, if that long. So now that I've learned "what the site is all about", I don't get a lot out of reading another article and series of posts describing yet another clueless exemplar of the hated establishment. Hence the interest in raising the bar a bit. As Techdirt itself is fond of pointing out, situations change and successful strategies change with them, so maybe maintaining the interest of readers over the long run would benefit from not stating the (now) obvious over and over again. If I desired, let's say, to approach my local newspaper with a *viable* suggestion for how to successfully update their web presence so myself and others would consider maintaining our subscriptions, I would consider it wonderful if that knowledge came from reading and participating in Techdirt discussions. (Hell, that might even be worth paying for.) I rather think that would be a better outcome than "You're going to charge money to try and stay in business? LOL - that will never work. Join the 21st century and come up with a better business model. Call me when you have one".

But I digress. Once again, sir, I thank you for pointing out my mistakes. One day I aspire to be as wise and knowledgable as you. Eloquent? Not so much. You need to work on that a bit more. Keep it up - you'll get there.
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Another AC, 22 May 2009 @ 10:42am

Re: Re: Re: Re: Exactly
The problem with your counter argument is that you forget that the ability to get something for free is irrelevant if paying subscribers have enough incentive to do so. There have been enough stories here about Stardock and catering to one's customers and ignoring the rest who don't pay but rather torrent what they want. It's not about the content, it's about the relationship one builds with those who want to support you. Yeah, it's a shock to actually have to work harder to provide value in order to sustain a smaller but still viable business when you'd rather keep shoveling slop at a captive audience with no other choice. In the long run it may result in a better, more balanced approach to communicating the news, though. And that can't be so bad.
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Another AC, 22 May 2009 @ 10:46am

Re:
The question is how to help them realize this. I can't really accept the scorched earth "let them die and allow better alternatives to grow from the fertilizer they leave behind" approach. If they won't listen, though, then I suppose that is what has to happen.
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YouAreWrong, 22 May 2009 @ 12:09pm

what i don't get
what i don't get is why slashdot didn't just link to the craigslist blog posts, one of which include the complaint:

http://blog.craigslist.org/2009/05/cl-sues-sc-ag-for-declaratory-relief/

http://blo g.craigslist.org/2009/05/sc-ag-federal-court-filings/

the problem with all online news is the shady sourcing that goes on (and sometimes, the total lack of sourcing). as everyone here knows, the AP doesn't post their sources at all. these new media guys are also realizing that if you give up your source, your site just gets labeled as blogspam. this especially holds with court/agency filings, where sites just copy the filing from the other guys who dug it up first, host it on their own site, and don't bother to link out. they don't lose pagerank for linking to someone else, and they don't get labeled as blogspam, but they certainly didn't locate the filing. and as you look through mass aggregators, you realize that dozens of sites usually cover the same stories. the ones who win the traffic are usually not the ones who are the most factually correct, but instead the ones who write linkbait/sensationalist crap.
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Anonymous Coward, 23 May 2009 @ 10:58am

Re: Re: Re: Exactly
Another AC, you are victim of the typical blind followers that Mike seems to attract. I would call them dittoheads, but Rush "the pillhead" Limbaugh has that term all locked up, trademarked, and whatnot.

Basically, if it ain't free, it ain't worth a f--k. That is what the typical sheep gets out of this site. They don't think past the ends of their noses to realize that what the WSJ is doing is setting itself apart from the freebie ad supported masses by not just slapping up what the deride as a "paywall", but rather by creating good enough and unique enough content that people are more than willing to pay. the WSJ staff isn't having to whore out their time playing miniputt with readers, having dinner with them, or offering up confernces or whatever to make subscribing a valid investment,they just have to write informative, well researched articles that people really want to read.

Sometimes, I think this whole free thing is just a cover up for crappy, amateurish, pap news sites who's only original contribution is a unique stylesheet.
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Geo, 27 May 2009 @ 4:49pm

Exactly
Here's the way I see it.
Newspapers are giving away all their content for free. Therefore they receive no revenue for that.

Local newspapers also produce local stories. Nobody else produces them. The local bloggers, for the most part, comment about stories that the newspaper wrote about. So if the paper didn't write about the local story to begin with, the local blogger would have less to write about. Maybe even nothing to write about.

Therefore, the scarce product -- not the commodity -- is the *local* news that a paid reporter dug up and wrote about.

So suppose a newspaper began charging for that LOCAL content? Where else would you find it?

Would you find those local, exclusive stories on a blog? No -- not unless the blog copied it from the newspaper.
Is it a commodity? No.
Is it scarce? Yes.
Does it have a price? Yes.

Therefore, the producer can charge for it. What that price is, the market will determine.

Right now, newspapers get nothing for their stories. By charging for their stories, they will get something. If the experiment flops, they will be back where they started -- getting nothing.

But until you attempt to determine the market price for a scarce item, you can't actually generate any revenue.

To make it simple: You still have zero dollars when you give it away for free. You get zero plus X dollars when you charge for it.

See how easy that is?
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