FT Claims Paywalls Are Morally Necessary... And Then Shows How Immoral The FT Is

from the that's-not-how-it-works dept

Thu, Aug 5th 2010 11:11am — Mike Masnick

A few folks have sent over the thorough debunking, done by Boing Boing's Rob Beschizza, of the CEO of the Financial Times, John Ridding's recent interview about paywalls (amusingly done with staunchly paywall-free The Guardian). Most of Beschizza's debunking focuses on Ridding's slapping around the old "information wants to be free" strawman, which isn't the argument anyone is making. Yes, Stewart Brand said it a long time ago as a part of a much longer and more complex concept, but there are serious economic and business model discussions held by lots of people that think paywalls are a bad idea, and none of it has anything to do with "Information wants to be free."

But what's even more ridiculous is Ridding's claim that paywalls are morally necessary. Seriously:

There is a moral dimension too, as he makes clear by drawing on the views of Henry Luce, a co-founder of Time magazine.

Luce, quoted in a Time article by Walter Isaacson last February, could not stomach the idea of papers and magazines relying solely on advertising revenue.

He called the formula "morally abhorrent" and "economically self-defeating." A publication's primary duty was to readers rather than advertisers. The advertising-only revenue model is self-defeating, because, eventually, it weakens the bond between publication and reader.

Now, to be clear, the pronoun choices in those sentences are a little ambiguous, so it's not entirely clear if it's Ridding, Luce or Isaacson who specifically said advertising only was "morally abhorrent" and "economically self-defeating." But, either way, it does seem like all three share that general sense. There are a few problems with this, logically. First, it assumes that there are two and only two revenue streams available: advertising and subscription. That is not the case at all.

Second, if it's morally abhorrent to rely on advertising, then pretty much every major publication is morally abhorrent -- including the Financial Times, in getting a pretty good chunk of their revenue from advertising. Historically, if you look at publications, subscription revenue hasn't even covered printing and delivery costs -- meaning that subscriptions were effectively meaningless in terms of actually mattering to a paper's bottom line.

But, the biggest point that disproves Ridding is given by Ridding himself (and highlighted by Beschizza). Apparently, in an interview just a few months ago, Ridding talked up how the subscriptions were useful in getting advertisers to pay more:

"If you have an audience that is paying for your journalism they are engaged and that is an important message for advertisers."

Remember, this is the guy who was just saying that if a publications primary duty was to advertisers rather than readers, it was morally abhorrent. But, even here he admits that the subscriptions are driven by... advertisers. If this was really about getting the influence of advertisers away from newspapers, why is he playing up the increased ad revenue due to the paywall?

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Filed Under: morality, paywalls
Companies: financial times

20 Comments

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Dark Helmet (profile), 5 Aug 2010 @ 11:27am

Just do the math...
All you have to do is figure out how much income is generated by ad revenue and how much is generated by subscriptions. If the increase in needed revenue from ads to make up for loss of subscriptions is insignificant, then this needs to STFU, and possibly get electroshock therapy....
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Nate (profile), 5 Aug 2010 @ 11:38am

paywalls
Mike,what's your opinion on paywalls in general?
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Berenerd (profile), 5 Aug 2010 @ 11:41am

Re: Just do the math...
only possibly?
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Matt, 5 Aug 2010 @ 11:45am

abhorrent to charge twice?
One thing that wasn't discussed (unless I missed it) is that it's also abhorrent to charge a reader twice. Supposing I pay to get past the paywall (it could happen), why are they showing me ads after that?

Seeing advertisements is a form a payment, you're paying with your eyeballs. I'm already paying *money* and then they expect me to pay *again*?

(The cable TV and magazine argument is obvious here -- why do I pay $100 a month for cable TV only to be shown ads on TV? Frankly, I consider that morally reprehensible too considering the financial reports from the majour pay-tv providers show that they make enough money from subscriber fees to fund their operations and the Ad revenue is pure gravy to them.)
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Anonymous Coward, 5 Aug 2010 @ 11:59am

Re: abhorrent to charge twice?
"Why do I pay $100 a month for cable TV only to be shown ads on TV? Frankly, I consider that morally reprehensible too considering the financial reports from the majour pay-tv providers show that they make enough money from subscriber fees to fund their operations and the Ad revenue is pure gravy to them."

You're actually subsidizing a new business model where content distribution is vertically aligned to own the creative process.

It's very likely that the next iteration will be something like Fox/NewsCorp applying Comcast ideology and buy a cable company or something, to push forward an end-to-end right-leaning content company.
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Anonymous Coward, 5 Aug 2010 @ 12:08pm

Re: abhorrent to charge twice?
Ads on TV are for the Network and program funding.

Your $100 a month is for the cable provider.

Obviously not comparable to the newspaper, which provides the service and the content, but still.
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Alimas (profile), 5 Aug 2010 @ 12:35pm

I Think hes talking about something else...
Just the excerpt you have there reads to me as him addressing the fact that the more a magazine or newspaper relies on advertising, the more it's content is going to be controlled by the advertisers.
If the magazine has a great story it knows would cause major advertisers to pull from it's magazine in protest and they are the magazines only income, it's probably not going to publish the story.
However, the more a magazine or newspaper relies on pay directly from readers, the bigger the risks it can on it's advertisers. If its story is really good and results in more readership and thus more income the readers regularly it can take bigger risks on stories for the benefit of the readers.
It leaves the magazine more in control of the moral compass of it's own content as well as better able to react to what the reader's want. Thus, a better paper all around.

It seems to me you're both right, in that advertising can/does control too much of the content of most of our media, to it's detriment and that magazines/newspapers/etc could try to stick their necks out and come up with new ways of getting revenue that don't involve just the two options he spoke of.
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Alimas (profile), 5 Aug 2010 @ 12:37pm

Re: I Think hes talking about something else...
Whats the likelihood of an "edit" function appearing on this blog? My comment there needs it badly... :P
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Anonymous Coward, 5 Aug 2010 @ 12:37pm

My Problem is that when I pay for a subscription 9 times out of 10 I would not like to see ads. I hate them. I also am slightly annoyed now that apple has put adds in games, pandora, and news apps.
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Grant, 5 Aug 2010 @ 12:37pm

Morally Abhorrent? Well, actually yes!
Actually, it is morally abhorrent for newspapers, who are supposed to be unbiased, to rely on advertising from big business in order to survive. What happens in that situation is what we have now - fake news, and news that favors the agenda of the advertisers (big business). News that overlooks the foibles of the big business.

Advertising supported news is news that biased towards the advertisers, case closed. Now, if paywalls arent the answer, then how about donations?
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Lyle, 5 Aug 2010 @ 12:39pm

Re: Re: abhorrent to charge twice?
Actually not totally the case, both on Cable and on Satellite TV you can tell when the ads are put in for the service provider and when they are part of the network program, note in some cases the rough cut aways involved where on commercial plays for 2 seconds and then another starts. Commercials pay everyone on TV. (Over the air there are commercials for the local station else it would never carry the network program also, it has to make its money too.
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Lyle, 5 Aug 2010 @ 12:46pm

Back to the future with Media
Newspapers in the early 19th century were political rags with a little news thrown in on the side. Their prime purpose was to get someones (typically the Federalists or the Democrats) political position out. Today cable tv is reverting to this as well as the web based media. It is not totally surprising since the barriers to entry of media are lower than 100 years ago. 200 years ago setting up a newspaper took not much more than a wagon load of type press and the like. Then came the steam press, and suddenly it cost a lot more to start a newspaper, so ads had to be invented to pay for it, along with taking a more "balanced" approach. The peak of barriers to entry was the 1945-1985 period when there were 3 main news providers operating effectively under a government license. Then cable tv and the web came along, with cable tv you still had to persuade a cable provider to carry the channel, but there was not a hard limit. Then add the web when you could set up a site for little money. Media will gradually revert back to being primarily political mouthpieces as they were thus the back to the future theme.
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CommonSense (profile), 5 Aug 2010 @ 1:01pm

Re: Re: abhorrent to charge twice?
"You're actually subsidizing a new business model where content distribution is vertically aligned to own the creative process."

I just hope that when they finally make it there, there is some kind of anti-trust, or whatever is applicable there, brought down on them to prevent that type of thing catching on, and I hope it's quick. I think a lot of people will not be fooled by it, but I think that enough people will that it would be very dangerous (a single company controlling what you watch from start to finish, yikes...).
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dave, 5 Aug 2010 @ 1:32pm

Is it at all possible that all these journos & commentators will shut up with all this whining about the need for paywalls, that publishers/proprietors will stop fannying about & just either put up bloody paywalls if they want to or stay 'free' if that's their preference.

When did this become a moral issue? Charge or don't charge, pee or get off the pot. I won't pay for news. No point whining, no point arguing, no point appealing to my 'better nature'. I'M NOT LISTENING. Just put up the paywall if you want & I'll leave you to get up to whatever you want behind your closed doors. One reason I hate Murdoch is that he not only wants to rip me off, he wants me to feel sorry for him for 'having to do it'.
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Bubba Gump (profile), 5 Aug 2010 @ 2:52pm

Re: Re: Just do the math...
up the voltage!
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Anonymous Coward, 5 Aug 2010 @ 2:52pm

Why even argue with these people? Let them put up their stupid paywalls and then watch them fail. Eff them.
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TtfnJohn (profile), 5 Aug 2010 @ 3:26pm

Re:
You don't understand, dave, that's why Murdoch wants you to feel sorry for him and you should. In fact you MUST.

It's not only his sad moral obligation to put everything behind a pay wall it's his duty do to so as he must protect the culture, protect starving artists such as Paul Williams and, most importantly "Protect The Children".

Don't you see what a sacrifice this is for Murdoch? What stress he's under as he does all this for not just his but all our posteriors.....ahhh posterity?
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abc gum, 5 Aug 2010 @ 6:41pm

"Paywalls Are Morally Necessary"

Spoken by someone who doesn't understand what the word "moral" means.
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Lawrence D'Oliveiro, 5 Aug 2010 @ 11:58pm

Re: abhorrent to charge twice?
You're actually subsidizing a new business model where content distribution is vertically aligned to own the creative process.

Wow, that kind of market-speak should earn anyone an instant place on the B-Ark.
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Griff, 12 Aug 2010 @ 8:40am

The B Ark
Wow, it's a long time since I've seen a reference to the Golgafrinchans.
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