Brill Gets More Delusional: Now Thinks 10 to 15% Of Online Newspaper Readers Will Pay

from the good-luck-with-that dept

Tue, Sep 1st 2009 10:26pm — Mike Masnick

Earlier this summer, we noted that it was something of a pipedream by Stephen Brill to believe that 5 to 10% of online newspaper readers would pony up for a subscription to the online site. Having spent time looking at plenty of "free" websites that have tried to charge, the numbers are significantly lower in almost all cases. We're talking 1% tops -- unless there's a really really good reason to pay, and then you're talking 2 to 3%. In many cases, the number is even lower than 1%. At the same time, I pointed out that Brill was making the classic mistake that makes any venture capitalist laugh you out of the room: "if we just get x% of this market, we'll be huge!" But that's top-down thinking, and markets don't work that way. You need to be bottom up and explain not why x% will buy, but why the first person will buy, and the second person will buy and so on.

However, as the Nieman Lab points out, not only is Brill still playing the top down game, he's now increasing the number of "paid" subs he thinks he can get from the "5 to 10%" he was claiming a couple months ago to "10 to 15%" now:

The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion.

They'll be asked, but they won't pay. Brill even tries to go through some numbers, but again, he does it top down, rather than bottom up:

Let's say that a newspaper in a given month has 1 million visitors. It might be that 850,000 of those people just came there casually through a Google News search, came there once or twice, but aren't particularly devoted to, let's say, The Washington Post.

On the other hand, there might 100,000 or 150,000 of those people who absolutely, positively have to see The Washington Post every day. They want to read your column. They want to read the stuff about lobbying.

They want to read the stuff that really makes The Washington Post The Washington Post.

Those people will be asked to pay something, typically getting a big discount if they already have a print subscription.

They'll be asked to pay... but will they? Fat chance. Now we run a website that has content that is viewed by over a million visitors per month (between RSS and the site itself). And, many of our readers are quite loyal and have certainly built a connection with the site. But I'll be the first to admit that the likelihood of 10 to 15% of our visitors agreeing to pay for the content is ludicrous. I'd argue that even thinking that 1% would pay is highly unlikely. There's too much "competition" for attention, and pissing people off with paywall doesn't make them more likely to stick around. Brill is way overestimating the willingness of online readers to pay for certain content.

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Filed Under: journalism, newspapers, paywall, stephen brill
Companies: journalism online

34 Comments

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Drew (profile), 1 Sep 2009 @ 11:49pm

Case in point...
I remember a few years ago I was doing some research for a college paper, I did some searches on Google and seemed to find exactly what I was looking for I clicked on the search result which sent me to a respected newspaper's website and discovered that to actually read the article I would have to become an online member of their site and pay a little. So I had an easy choice, pay for the content or hit the back button and find a different site with the information I needed; I took the second option and after five to ten more minutes of honing my search criteria I found all the information I needed. Now some would say well that's just one example of the 85% (or whatever dream number someone imagines) that wouldn't pay anyway; however not only did I not see the article but my professor did not see the article. In addition I am now less likely to ever visit this newspaper's site again, read their print version, or let alone purchase anything from them in the future; I am more likely to actively point friend's to other sources.

Now what would have happened if this newspaper's paywall was never set up? I would have read the article and more than likely included it as a source for my paper. In the future I would visit the newspaper's site for more research, and more than likely news. I would recommend the site to others and the number of user's would grow; increasing the amount of add revenue they could ask for.

Really are the above concepts that hard to grasp?
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John, 2 Sep 2009 @ 12:02am

Strange reasoning
I found his comment about giving subscribers discounted access even stranger.

Hey. If I was a paying subscriber, I'd pretty much expect automatic access to the web site. After all, why would I pay extra to read the same news in a different format?

About the only advantage would be the timeliness of getting the news as it happens rather than waiting for the next day delivery. But still, for the average subscriber, that's not much of an advantage.

Certainly not enough to pay for.
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Griff (profile), 2 Sep 2009 @ 12:58am

It's about price and convenience.
If the micropayment is near invisible (ie not inconvenient) and the price is tiny, then some people will come. Even if the revenue is initially pitiful, they will still have crossed a line. Over time micropayment will become ubiquitous, while prices will still remain miniscule. Then slowly the cost of "good" news will rise as they start to test what pricing they can get away with, and the market will respond.

If a story is $0.001 to read , it's not the cost but the inconvenience that discourages people. I always stop at the NY Times (or whoever) "register for free to see this article" page because it is just a pain in the arse (not because of the cost), whereas if my "Paypal micropayment Firefox addon" toolbar/window popped up saying "This article costs $0.001 to read for the first time. 85% of people reading it who like the same things you like said it was worth the price" (or a briefer graphical version of the same) , and it would only take me 1 click to read the link, I'd probably go for it.

Of course, if it was $0.10 I probably wouldn't.
And herein lies the rub. Micropayment will fail not because it is a bad idea or because "people won't pay" but because the old media barons will get greedy and sink it by asking too much right off the bat.
They should hook us with "so cheap it is almost free" and take the long view.
Having convenient crowdsourced ratings for content would add sufficient value that we'd put up with the extra click, because in the long run it saves our precious time.

The turning point that matters is not when someone is able to say "we make a profit using a micropayment model" but when someone can say "we have micropayment [however paltry] yet we still have tons of traffic". Because prices can always creep up later.

The people who keep my history of content ratings can offer me a personalised news portal, of course, so the rewards for cornering that market are huge.

(BTW I can actually imagine Google doing an excellent job of brokering the prices for links in real time, such that they float according to the actual popularity, within some sort of agreed parameters, like a continuous forward and reverse auction. But can you imagine MS letting you put a google micropayment toolbar onto IE9 ? Hmmmm).
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Yeebok (profile), 2 Sep 2009 @ 1:25am

15% !? Tell 'im 'e's dreamin'
I agree with John - the idea of paying again to read the same content you already pay to get *delivered* is ludicrous. Starting the business model with that premise it's bound to be EPIC .. FAIL.

"The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion. "
Of those who visit regularly what point do people not get asked to subscribe ? That's the level of involvement those users will then have.

Now then let's go the opposite way. I appreciate Mike recognising that frequenting a website does not mean you also want to pay to run it. Now then of all the sites I've visited while I've been using phone lines to get my PC to talk to another (and yes I started with a 300 baud modem), I reckon, there are TWO I have paid money towards. One was a social 8 line chatline (1988) which I was almost always on, and was in hardship so I helped out as did 2 other users. There were 400 users onsite - that means 3 people voluntarily contributed, out of 400, after an emotive plea for help from a FRIEND who ran a BBS. 3/400 = 0.0075, so 3/4 of 1/100th.

The other was a text based MUD game. It was really good, I really got into it. I found if I paid a bit extra I could buy additional skills. That was great. Until there were no more skills to buy, at which point I lost interest. The closest example I could give is cheating yourself god mode in your favourite game, then not enjoying it 'coz the achievement wasn't there. I found a good proportion of that was paid for by users. That said, there were about 8 admins on at any time, plus you had a suite of coders happily programming in some form of LPC, so I imagine the financial gain they got was chewed by overheads.

So that's two sites. I have 1200 separate domains in my bookmarks (excluding history) which goes from whenever Firefox 2 came out.

So in 21 years, with (at least) 1202 sites, I have contributed to 2.

I would respectfully suggest that most net savvy users would be similar. Ergo this guy's got it way wrong.
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Mike Masnick (profile), 2 Sep 2009 @ 1:26am

Re: It's about price and convenience.
If the micropayment is near invisible (ie not inconvenient) and the price is tiny, then some people will come.

Some, but I'd argue not enough. Even at a tiny amount you've now added in mental friction: people ask if it's even worth that tiny amount. Plus, it makes it harder to share or discuss the news when there's a charge for every click, no matter how small or "invisible."
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khyzhyj, 2 Sep 2009 @ 3:15am

Stephen Brill is Delusional
The likelyhood that I would pay for access to any news content is totally ludicrous! Why? There are multiple sources on the web!
For eg - if Techdirt instituted a paywall; I would definitely not subscribe!
As you stated in your article - atleast 99% of the reading audience would support this notion, and not subscribe!

I enjoy reading your posts!
Look forward to them each am!
khyzhyj
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Lisae Boucher (profile), 2 Sep 2009 @ 3:31am

Just wondering...
I wonder... Techdirt also offers a paid subscription. I know, I have one. ;-) But how many subscriptions does this site already have, and how much does the average visitor pay for their membership? Are they all cheapskates like me, who pay the minimum, just to have the funny icon next to my name?

But Techdirt does show how to make paid subscriptions work. All visitors get the same information, but paid members are given a feeling they're more special than others. You hear that, guys? I'm more special! I've paid! :-)
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Elaine Normandy (profile), 2 Sep 2009 @ 4:02am

I amazed how many people who are trying to sell paid subscriptions to online manage to overlook the fact that people already pay quite a lot to get to their "free" websites. We live in a rural neighborhood with no cable, DSL, or ISDN access. For our broadband access, we have a wireless antenna on our house which points down the valley to a wireless transmitter on someone's house. Speed is acceptable, but not stellar. Reliability isn't too bad, considering. This is $50 a month. My husband is a video-phile, so he pays a subscription for his big dish satellite receiver. ($?? / month.) He also has a Netflix subscription and loves his Roka box. ($25 / month). By the time we add in the landline phone service ($40) and our cell phone fees ($30), we're paying close to $200 a month for "free."

Although we occasionally discuss ditching the landline, we like the redundancy in case of emergencies.
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Tim L (profile), 2 Sep 2009 @ 4:20am

I'd like to say that all this is true in a general sense I believe that in certain specific instances it is true. For example the Financial Times is a pay for subscription service to allow unlimited access to their archives. It's just mostly read by people in the financial industry but we all subscribed to the actual paper and got the services and we tended to use them. Does that count? This is purely anecdotal of course. But really the people I knew who didn't pay for it were in the minority.
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fogbugzd, 2 Sep 2009 @ 5:03am

Marginally Loyal
Let's assume that 10%-15% of a site are "loyal readers." How many of them are "marginally loyal" as opposed to "loyal enough to pay?" More important, what happens if you drive away the marginally loyal with a paywall?

There is probably a reason those marginally loyal come to the site. Perhaps they are local. Perhaps they enjoy the political slant of the publication, or they have interests similar to those covered at the site. Their common interest makes those people the most valuable to advertisers. By definition, those are also people who visit the site a lot. So, the ultimate question that should be asked before erecting a paywall is, "How many of the marginally loyal will we drive away?" Those marginally loyal are far from worthless. They are quite likely the core of what the advertisers on that site are looking for. Bye-bye eyeballs. Bye-bye advertising revenue.
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zaven (profile), 2 Sep 2009 @ 5:06am

"The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion."

I'm pretty sure the people that most frequent the site do so to avoid paying for the print edition. I know I read the paper online most days. If the washington post forced me to pay to read online, I never would.
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Danny (profile), 2 Sep 2009 @ 5:38am

I'm not paying
"Those people will be asked to pay something, typically getting a big discount if they already have a print subscription"

I love newspapers; I read two to three every day on dead trees; I studied journalism in college.

Right now my only paid subscription is to the Chicago Tribune. If the Trib required me to pay *extra* for access to their website when I am already one of the dwindling few giving them a regular subscriber revenue stream, that would be the end of my subscription.

As much as I love features in the Trib, there are way too many similar options for free on the web. As much as I love several of the regular writers in the Trib, if they shut me off from those writers on the web, I know of many more I like I just don't have time to read right now. As much as I love to have paper in my hands on the train and in the coffeehouse, I have a printer at my PC to print out some puzzles - and my Blackberry news/RSS/games options are getting better all the time.

The one thing a full universe of paid newspaper subscriptions (if they can pull it off without some papers leaking) MIGHT do is drive me to buy a Kindle.
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Danny (profile), 2 Sep 2009 @ 5:41am

Re: Re: It's about price and convenience.
It isn't the penny that's the mental friction (for me); it's the half dozen extra keystrokes to invoke the micropayment.

Damn that Amazon one click patent! :-)
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Monarch, 2 Sep 2009 @ 5:59am

His numbers should be more like out of the 10%-15% of the loyal readers of the online site, approximately 2%-5% would consider paying for it.
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Bradley Stewart, 2 Sep 2009 @ 6:11am

Less Than Five Years Ago
before I even owned my first computer I subscribed to a dozen magazines. Now If I am interested in reading about something I just look it up on the Internet. I now have no magazine subscriptions. Sure I miss the magazines. Even though now magazine subscriptions are less expensive than ever and I do realize that getting the information for the cost of my Internet connection is putting a lot of interested people on subjects that I enjoy learning about and are great writers out of business I just don't have a lot of money to throw around anymore. As an aside even though I do know where my next meal is coming from things are a little tough financially. I really don't expect things getting better for me soon and for most people in the World I believe things are even more grim.
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New Mexico Mark, 2 Sep 2009 @ 6:35am

Re: Re: It's about price and convenience.
To make micropayments easy, an account would have to be set up and accumulated charges billed periodically. However, this replaces inconvenience with uncertainty. How many people chafe at phone plans where they just have to guess what their monthly bill will be because of "micropayments" for things like minutes or messages beyond their plan?

Who cares if the charges are small and I "only" get extra charges of a dollar or two? The bottom line is that this adds uncertainty to my budget. For that reason I have phone plans that are fixed prices, even though I might save a few dollars if I never exceeded a more restricted plan.

Is it time to revive the phrase "nickel and dime someone to death"? What about "death by a thousand cuts"? (Only in this case, it is the inflicter who ultimately suffers because people who feel those little cuts tend to learn from them and move to more pleasant venues.)
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Jeff, 2 Sep 2009 @ 6:37am

Why make us pay to read Tech Dirt?
I mean, I counted 4-5 advertisements on this page alone. :p I would figure the ads get plenty of viewing = $$$
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AdamB (profile), 2 Sep 2009 @ 7:08am

I'm willing to pay for special features, e.g. the New York Times Crossword Puzzles, but it's a yearly subscription. While I'm there at the NYT site, I read the opinion pages for free. If they change that to a subscription, however, I'll stop reading the rest of the paper even though I cannot get the paper where I live.
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Arf Arf, 2 Sep 2009 @ 7:21am

Idiots...
When I search for information, if even get to a site that requires me to REGISTER for news I hit the back button.

Their fatal flaw is believing we can't live without news. While true for some business folk, the VAST majority of us can happily live without so much as a peep from news.

And if they aren't going to syndicate their news with RSS feeds to other organizations, then their traffic will go down the tubes as well.

Good bye news media.

R.I.P.
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Anonymous Coward, 2 Sep 2009 @ 7:27am

The idea that a customer who already has a paid subscription would pay even one cent for online access to that subscription, even with a "big discount", is absurd.
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David, 2 Sep 2009 @ 7:54am

Have the newspapers even bothered to study how the average user reads online news? I know personally that I can visit 20 different news sites on any given day. I might get to some of the sites through google, digg, rss feeds or any number of places. They would need a big paywall to contain all that content. I have never sat down at one news site in the morning and read it from "cover to cover" not even my local paper. And if all they want is .001 cent, it seem like this could be easily covered by the four or five annoying ads that obscure the text of the article when I accidently roll over them with my pointer. Will my news be ad-free when I have paid my subscription? Unlikely. Most of the articles online that they want to so heavily protect are of so little value initially that they feel threatened by an aggregator passing on the headline and a short description because that IS the article.

So, go ahead and put up your paywalls, Newspapers. I will sit back and laugh while you die.
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nasch (profile), 2 Sep 2009 @ 8:01am

Re: It's about price and convenience.
I always stop at the NY Times (or whoever) "register for free to see this article" page because it is just a pain in the arse (not because of the cost), whereas if my "Paypal micropayment Firefox addon" toolbar/window popped up saying...

You're claiming (in the same sentence) that you won't sign up for free for the NYT, but you would be willing to sign up for a micropayment system in order to pay to read? Because when it starts out, you won't have the Paypal micropayment addon. So you'll have to install that. Once you have that, some time you'll want to read something that uses Google Checkout Micropayments instead and you'll have to read the terms of service and install that in order to read those articles. And then later on you'll have to sign up for SuperPay, then PayItNow... you see my point. By the time they're standardized, the idea will be dead already.
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Ben, 2 Sep 2009 @ 8:45am

Not just delusional
If you tell your top 10-15% of your readers that they need to pay, as in...

"The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion."

He is saying the other 85-90% wont be asked for cash. I think your top 10-15% will suddenly consider themselves in the majority group.
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DanOfSoCal, 2 Sep 2009 @ 9:16am

Paying for subscription
I'm not an expert on this topic, so I'll just go with an instinctive observation . . .

I would think that the 25 cents you pay for a paper barely covers the cost of printing the paper and delivering it to your doorstep. The content itself is, I thought, covered by advertising.

So when distributing on the web, there is no ink-and-paper, and thus no printing and delivery costs. This leaves advertisement to pay for the content, as it always has.

True, Craigslist has probably taken a big bite out of classified advertisement revenues, but still, I wonder if classic advertising won't cover the cost of creating the content. Maybe someone can enlighten me on this.

I don't subscribe to online newspapers that charge a fee because I always believed (perhaps wrongfully so) that their printing and distribution cost is zero, and they still advertise, which should cover the cost of producing content. And yes, I occasionally do look at the ads, especially if they're local. Especially if they advertise discounts on a new set of tires I need for my car. :-)
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Anonymous Coward, 2 Sep 2009 @ 9:27am

Why don't they STFU and just do it already? Fucking do it and just see what happens.

Except they don't want to actually do it, cause they know what will happen.
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The Infamous Joe (profile), 2 Sep 2009 @ 9:40am

Re: Just wondering...
A sucker is born every minute.

:P
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The Infamous Joe (profile), 2 Sep 2009 @ 9:45am

Re: Idiots...
Their fatal flaw is believing we can't live without news.

No, their flaw is thinking we can't get it elsewhere.
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The Infamous Joe (profile), 2 Sep 2009 @ 9:49am

Re: Paying for subscription
I'm not an expert on this topic..

I would think that the 25 cents you pay for a paper barely covers the cost of printing the paper and delivering it to your doorstep. The content itself is, I thought, covered by advertising.

Funny, it sounds to me like you're better prepared to run a news organization than anyone currently doing so.
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ChurchHatesTucker (profile), 2 Sep 2009 @ 9:49am

Re:
"Why don't they STFU and just do it already? Fucking do it and just see what happens."

As you no doubt deduced, if one holds out, that one wins. And they know it.

I think it was the Guardian that was cheerleading this effort while maintaining that they'll remain free.
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PrometheeFeu (profile), 2 Sep 2009 @ 12:57pm

Run an experiement Mike... For a week or a month, put the site, or portions of it behind a paywall and see what happens...
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Griff (profile), 2 Sep 2009 @ 2:06pm

micropayment does not discourage sharing
If the person passing the link gets a slice of the next visitor's micropayment, then there will be plenty of incentive to link to micropaid stories.
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Griff (profile), 2 Sep 2009 @ 2:21pm

Re: Re: It's about price and convenience.
I won't sign up for free for the NYT just to read a story because it could take minutes. I expect micropayment in use to take perhaps a second.

As you say, signing up for a micropayment scheme at the start is itself a hassle. If I needed many different ones to read all news sites it would as you say be a disaster. It would be better if someone designed a standard interface so that Paypal OR Google OR any other standard micropayment system worked with any compliant website.

(There are many different credit cards and many different vendors yet my one credit card allows me to buy things anywhere.)

If the micropayment scheme came as a browser toolbar (perhaps preloaded when I bought the PC) then it would just be case of entering billing details once.
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CrushU, 2 Sep 2009 @ 2:33pm

Curiosity
What IS the percentage of techdirt unique hits that have a corresponding subscription or even just a one-time payment through the CwF+RtB experiment?

Just curious.
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Azrael (profile), 2 Sep 2009 @ 11:17pm

Re: Case in point...
Unfortunately yes. When you are staring at what you can get NOW, usually you totally miss what you can get tommorow. And since the Reagan debacle i don't know many that are capable of looking beyond what is just in front of their eyes.
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