FT Boss: Positive Thinking And Balls Are The Secrets To A Successful Paywall

from the good-luck-with-that-strategy dept

Wed, Mar 10th 2010 9:16am — Mike Masnick

It's no secret that I'm pretty skeptical of the longterm viability of just about any newspaper paywall. Among the "success stories," however, many people point to the Financial Times, which has a policy of only letting unregistered users see a single story per month before locking them out. If you register (still free) you get ten stories per month. After that you have to pay (or you erase your cookies, or use Google searches, since you can get access if you come via Google). This has resulted in about 126,000 customers, which isn't bad, though I still question if it can last (I'll explain my reasons at the end of the post).

However, in an interview, Rob Grimshaw, the managing director of the Financial Times, suggests that lots of others can do well with a paywall if they just had "balls" and "put their mind to it." Really:

"Publishers should have more balls, they should have more confidence about what they're doing," is how Rob Grimshaw, managing director of FT.com put it.

"If they put their mind to it then they can produce compelling products online which people will pay for."

You would think that someone working for a savvy business publication, like the FT, would offer a bit more in the way of strategic detail. Confidence alone doesn't change the market position. I agree that if they put their mind to it, others can come up with compelling products that people will pay for -- but these have to be products of scarce value. The FT has mostly been able to do this with good financial/business content, but that may not be sustainable. It's really a huge opportunity for someone else to step in and offer top financial and business content for free and pick up the readers that don't want to pay for either the FT or the WSJ.

And that group of people is growing. The younger generation (that's rapidly hitting the business world) has never paid for a newspaper subscription and see no reason to start now. None. So, the papers with the paywalls are limiting themselves to an audience that will die off. That's dangerous. Furthermore, as we keep pointing out, news consumers today aren't there to just read, but to share the news. In other words, the very act of putting up this paywall makes the newspaper less valuable to the current news consumer, because they can't freely share the content with others.

There are strategies for alternative revenue streams for publications, but locking up your content and hoping people will just pay to access it is an attempt to set up artificial scarcities in a world of abundance. It's a strategy that's hard to make last for very long.

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Filed Under: paywalls
Companies: financial times

24 Comments

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Anonymous Coward, 10 Mar 2010 @ 9:26am

"but locking up your content and hoping people will just pay to access it is an attempt to set up artificial scarcities in a world of abundance. It's a strategy that's hard to make last for very long. "

and lobbying the government for unfair granted monopoly power (ie: patents, copyrights, and communication infrastructure monopolies) isnt going to work as well anymore as the population is becoming increasingly aware of this atrocity and the fact that it only harms innovation and infringes on our freedoms.
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NAMELESS.ONE, 10 Mar 2010 @ 9:32am

does he watch teh WWE
This reminds me of a backwater nit wit thats 8 feet tall and muscle bound yapping in front of a camera how if his opponent had BALLS he'd fight him.

takes no balls at all to run away and hide behind a wall does it?
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:Lobo Santo (profile), 10 Mar 2010 @ 9:34am

Re: Freedoms
On the other hand...
It could be argued that the only freedoms you really have are those which you can take; i.e. somebody can say "you are free to breathe" but if you're unable to take a breath, then you're not really free to breathe, are you?
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John Riley, 10 Mar 2010 @ 9:34am

FT Boss: Positive Thinking and Balls
Grimshaw's comments seems to me a bit of competitive posturing, although I like his willingness to share some stories with registered visitors at no charge. The Financial Times, like all newspapers and magazines have a large overhead that has to be paid for and that means they have to sell their product (news) to get the necessary revenues. Because the FT has been profitable, they can afford to offer some lost leaders at no cost to attract paying members. There are still several publications fighting to survive and losing money every day. I wouldn't expect them to offer much in the way of freebes.
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Anonymous Coward, 10 Mar 2010 @ 9:35am

So, you need to be male? Or perhaps a hermaphrodite?

If he puts a glass ceiling on top of his paywalls, he might get a house! ;)
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fogbugzd (profile), 10 Mar 2010 @ 10:13am

RtB
>>If they put their mind to it then they can produce compelling products online which people will pay for.

Lots of people wanting to put up paywalls forget about the part of the formula that says, "If...they can produce compelling products online."

The formula a lot of newspapers seem to be using is "let's do what we are doing now and put a paywall around it." That is not a compelling reason when what they are doing now is available for free elsewhere. At a minimum there has to be a Reason to Buy.
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Anonymous Coward, 10 Mar 2010 @ 10:16am

No one really pays for the FT or the WSJ they just put it on their business account which only works for financial publications.
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Aaron Martin-Colby (profile), 10 Mar 2010 @ 10:17am

RIP Financial Times
The market, in its current situation, has provided 146,000 subscribers with an estimate of about $30mil in revenue.

If we assume that the content on the internet will simply get wider and MORE diverse, that means that they're already near the peak of the subscriber numbers that they are likely to get.

So he thinks that he can run a top-tier newspaper with $30mil per year. And if we assume that he's monetized the 1.9mil registered users to the tune of $.03 per user per day (based on my previous experiences with online advertising), that works out to another $20mil per year. So he's saying that he can run a top-flight newspaper on $50mil per year.

Considering that the NY Times newsroom is a $200mil per year expense, I find that claim dubious.
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Nastybutler77 (profile), 10 Mar 2010 @ 10:26am

I'm surprised Mr. Grimshaw could become the managing director for a financial publication without understanding basic economic principles like marginal cost. Seems like that's a key piece of information to have in that position.
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Anonymous Coward, 10 Mar 2010 @ 10:30am

Re: Re: Freedoms
I have read some bull crap about "natural rights," but the only "natural right" I recall ever having seen in action is eat or be eaten. If your ultimate desire is no government interference in life, it will literally be every person for themselves; i.e., anarchy. Experience has shown us that people almost always choose to be governed, and that choice automatically comes with some measure of restriction.

On the other hand, you can go live in the jungles of the Amazon or the mountains and follow the "eat or be eaten" rule. It does work...
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Hephaestus (profile), 10 Mar 2010 @ 10:31am

What has been said here for a long time ...
"He says newspapers need to think about the huge amount of traffic they get from Google and how they can better extract value from it."

"Of course there is a way of getting through the paywall at FT.com using Google - but unlike many in the newspaper world Rob Grimshaw isn't going to war with the search giant:"

Smart man maybe Rupert Murdoch should take a hint ...
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Anonymous Coward, 10 Mar 2010 @ 10:32am

Re:
lol...I was looking to see whether anyone was going to make a comment about the Wall Street Journal.

One of the things I have found humorous at the last two companies I worked is that it seems like all the young executive wannabe's all have subscriptions to the WSJ. Not the old guys, who either do not have time to read or read other publications, but the young guys. Maybe the WSJ format will continue to work for a while longer.
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Mike Masnick (profile), 10 Mar 2010 @ 10:42am

Re: FT Boss: Positive Thinking and Balls
Grimshaw's comments seems to me a bit of competitive posturing, although I like his willingness to share some stories with registered visitors at no charge.

As opposed to nearly all of his competitors who share *all* of their stories to visitors (even without registration) at no charge?

The Financial Times, like all newspapers and magazines have a large overhead that has to be paid for and that means they have to sell their product (news) to get the necessary revenues.

Except that newspapers have *never* made their money from selling news. If you look, historically, subscription fees have always brought in less than the cost of printing and delivery. Money is made from selling attention -- via ads.

Because the FT has been profitable, they can afford to offer some lost leaders at no cost to attract paying members. There are still several publications fighting to survive and losing money every day. I wouldn't expect them to offer much in the way of freebes.

Have you checked out the internet lately? :)
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Sneeje (profile), 10 Mar 2010 @ 10:54am

Re: FT Boss: Positive Thinking and Balls
News is not their product. News exists whether the FT delivers it or not. They have to sell SOMETHING to make necessary revenues, and it has to be something people VALUE.

News is a commodity.
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Anonymous Coward, 10 Mar 2010 @ 11:32am

Re: Re: FT Boss: Positive Thinking and Balls
I often disagree with Mike for a variety of reasons (like, it is fun to disagree sometimes - especially when he is wrong), but he is correct in this case.

Newspapers have never "sold" the news, they sell, just like Google or television news, attention for their advertisers. It is this very attention that gets [fill in the blank - newspapers, most magazines, Olympics coverage, etc.] advertisers to pay more money for advertising time, which sponsors the news, stories, etc.

Newspapers do try to charge enough to recoup delivery and production costs, and some are quite successful. But profits come from advertisers.
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NAMELESS.ONE, 10 Mar 2010 @ 12:03pm

@:Lobo Santo
no your dead and thus free of life itself
with no air.....

and freedom is as much a word as it is a state of mind too.
I am free wiht all thsi pirated stuff to create and do anyhting i want.

I am actually free to pick up a bat goto your house and wait for you and smack you silly.

I may later lose some freedom in your thought but ill be saying i am free for you for a while for sure and make freer world of YOU.
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Chris (profile), 10 Mar 2010 @ 12:57pm

wow ... it's an interesting business model (give a free teaser, encourage "free" registration and charge for more than 10 stories a month. Perhaps if the content were more compelling it could be successful, but I think an ad-"sponsored" viewing of a story (sort of like Salon where you see an intermediate advertisement page before moving on to the full story) for reading the 11th story in a month may be more effective than erecting a paywall.
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vivaelamor (profile), 10 Mar 2010 @ 1:44pm

Re: Re: Re: Freedoms
"I have read some bull crap about "natural rights," but the only "natural right" I recall ever having seen in action is eat or be eaten. If your ultimate desire is no government interference in life, it will literally be every person for themselves; i.e., anarchy. Experience has shown us that people almost always choose to be governed, and that choice automatically comes with some measure of restriction."

To use property as an example: I am unaware of any proven system for dealing with scarce resources that doesn't involve ownership. On that basis you could consider property rights to be a natural right. In contrast, the main function of copyright is at best a social contract as it is not based on any proven necessity.

If you consider the so called moral rights of copyright however, which are distinct from the economic function, those could be considered natural rights because the issue of authorship is naturally limited and confers the necessity of truthful attribution.
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Anonymous Coward, 10 Mar 2010 @ 7:45pm

not for me
I consume a lot of news everyday through the web; on this website (for example), on my iphone and i do not pay for any of it.
Whenever i see links to the wsf or the ft now, i just ignore them and move on.
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Anonymous Coward, 10 Mar 2010 @ 9:54pm

Re: Re: Re: Freedoms
"I have read some bull crap about "natural rights," but the only "natural right" I recall ever having seen in action is eat or be eaten."

So then you admit that you have no right to any monopoly power on anything. Good, then lets remove your monopoly power.

Just look at the audacity of these control freaks. They don't think that things like free speech and such are natural rights. Then they turn around and claim to be free market capitalists, but it's all a lie.

"If your ultimate desire is no government interference in life"

No one said this. My desire is for the government not to take away rights that it has no business taking away.

"it will literally be every person for themselves; i.e., anarchy."

But you are building a strawman, intentionally so. Stop being dishonest.

"and that choice automatically comes with some measure of restriction"

But taking away rights that the government has no business taking away is not a restriction that I want.
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BreakthePaywall, 11 Mar 2010 @ 4:42am

BreakthePaywall add-on
BreakthePaywall! is an add-on for Internet Explorer (Firefox coming soon!) that simplifies using the various methods for circumventing website paywall restrictions.
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Anonymous Coward, 11 Mar 2010 @ 6:01am

Re: Re: Re: Re: Freedoms
""I have read some bull crap about "natural rights," but the only "natural right" I recall ever having seen in action is eat or be eaten."

So then you admit that you have no right to any monopoly power on anything. Good, then lets remove your monopoly power."

Actually, I admitted no such thing. Stop making things up that do not exist. All I said was I do not believe "natural rights" exist. I do believe that the Constitution of the United States guarantees certain rights, but I do not recall having seen "natural rights" enumerated among them.

"Just look at the audacity of these control freaks. They don't think that things like free speech and such are natural rights. Then they turn around and claim to be free market capitalists, but it's all a lie."

You are spinning out into what? Free speech, with practical limitations, is a CONSTITUTIONAL right.

As an aside, in nature, "free speech" could get you eaten. If you make noises predators will find you and eat you.

""If your ultimate desire is no government interference in life"

No one said this. My desire is for the government not to take away rights that it has no business taking away."

On the flip side, the government should assist in enforcing the rights guaranteed by the Constitution. Sometimes, that means that one person's rights are superior to another person's rights.

""it will literally be every person for themselves; i.e., anarchy."

But you are building a strawman, intentionally so. Stop being dishonest."

Strawman my ass. If the government fails to assist in enforcing Constitutional rights, then people will do whatever they wish, including trampling on the rights of others. We see these actions every day by people who have no respect for the rights of others. Without a government, it just happends more often; back to "eat or be eaten" or survival of the fittest.

""and that choice automatically comes with some measure of restriction"

But taking away rights that the government has no business taking away is not a restriction that I want."

But, when you trample my rights then perhaps yours should be taken away.
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jsf (profile), 11 Mar 2010 @ 6:52am

I think Mr. Grimshaw pretty much has it right.

He definitely does say that you have to produce something that people are willing to pay for if you want a pay wall to work. It doesn't really matter who pays for it, individuals or businesses. What matters is that enough people think there is enough value to pay for it.

As for the balls statement I think he is right here as well. If the people complaining actually believe that pay walls are better then why don't they do it? Because they don't have the balls to believe that the content they are publishing is worth paying for. The real problem is that most of them are not really creating any content. Most of the content is parroted from wire services or re-reporting something that has already been published in a dozen other places.

As for being able to run a top notch newspaper for a quarter or third of the NY Times budget. Yes you probably can, if you focus your coverage instead of trying to be very broad.
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Anonymous Coward, 23 Aug 2010 @ 9:36am

you stinck
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