If People Won't Pay A Monthly Fee For Facebook, Why Would They Pay For Newspapers?
from the simple-questions dept
We've been arguing about the long-term problems with paywalls for quite some time now, but more and more newspapers insist that they're "the answer." Of course, they seem to be asking the wrong question. They may be "the answer" to "doing something" in a desperate attempt to slow down people dropping their paper subscriptions, but they're not a long term solution by any means. Beyond the fact that limiting the ability to share or link people to your content takes away significant value, we've also mentioned that it merely opens up a huge opportunity for others to step into the market and replace you. Newspapers don't seem to think this is a real problem, but they are vastly underestimating the threat.I haven't seen it explained quite as clearly or in such perfect terms as longterm newspaper man John L. Robinson in explaining why paywalls are like "using band aids on a bullet wound (found via Jeff Nolan). Robinson points out that young people today -- such as students -- admit that they're addicted to Facebook, and spend a ridiculous amount of time on the site. But if Facebook put up a paywall of about $10/month (not out of the ordinary for newspapers), they'd find alternatives:
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.Robinson then notes that the exec he told this to was dismissive because his students "aren't our readers anyway". But they are the next generation, and any publication that plans to have a future might want to think about what gets them interested... not what sends them running to find alternatives.
“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.
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Filed Under: elon university, john l. robinson, newspaper, paywall
Companies: facebook
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Yeah it's amazing how many people don't get this point...
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Not that amazing.
"It is difficult to get a man to understand something, when his salary depends on his not understanding it."
-- Upton Sinclair
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Guess that leaves out a lot of the baby-boomers. Granted, that's not a very large demographic.
I'd say their target demographic is "people who are willing to spend money on our paywall." With that kind of demographic you can be dismissive of an awful lot.
Because everybody else aren't their readers anyway.
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Re: Not that amazing.
Really? Required by law NEVER to look at the long-term?
I would normally say such a thing could never become law, but then again, the people crafting SOPA boasted of how ignorant they were as to their bill's effects.
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Re: Re: Not that amazing.
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It also proves that young people don't understand what words mean. If you're not willing to pay for your fix, then you're not addicted. Addicts go broke and beyond for their drug of choice. Is anyone on methadone to battle a FB addiction?
And last I checked, the NYT stock is climbing while the FB stock... well.. you can draw your own conclusions.
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Plus news is fleeting. Unless it's of great historical importance, not too many people will care shortly after they've digested the story. And if some event was of importance, then several sources will carry the details.
Newspapers don't just carry the news, and what's in print is already outdated information in our millisecond world. They continually have to offer other products and services to stay relevant. I wonder how many people just get the Sunday editions for the puzzles, comics and coupons versus buying full subscriptions? Or if people still scrounge up a fresh copy of their local paper to search the employment listings for local businesses.
I don't know if digital subscriptions offer these same services as their print editions. I just know that a Kindle makes a poor substitute for lining a bird cage.
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This is akin to a bunch of alcoholics getting free whiskey for a while then being told they have to pay for it, so they go somewhere else to find free vodka.
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If you think FB isn't valuable to these people, you don't know any young people.
It also proves that young people don't understand what words mean. If you're not willing to pay for your fix, then you're not addicted. Addicts go broke and beyond for their drug of choice. Is anyone on methadone to battle a FB addiction?
I agree that it's not an addiction, but again, I think that's besides the point.
And last I checked, the NYT stock is climbing while the FB stock... well.. you can draw your own conclusions.
Wow. Talk about comparing apples to oranges in a very small sample size.
The NYT is currently valued at approximately $1 billion. Even as FB's stock keeps dropping, it's still valued at more than 60x that). And since FB just came on the market, about the only thing you can conclude from that is that the IPO price was too high. Still, the market values it a LOT more than the NYT. And that's not going to change any time soon.
Besides, if you look at the NYT stock over any significant length of time, you'd know that's a massive downward trend its been spinning in for a long, long time. I wouldn't overvalue a deadcat bounce.
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A lot of people find Facebook incredibly valuable. Apart from the overload of Zynga adverts and games, you can connect with a lot of people in a way that hadn't been offered elsewhere.
The article did demonstrate that the students were willing to pay for FB, but the PRICE didn't exceed a single dollar. Plus I'm sure those students are also aware of other services out there like Google+ and Diaspora which can offer the same value for a lower price: Free - if Facebook were to ever charge for it's services. The VALUE in the service is the convenient social aspect that is offered.
And last I checked, when Amazon.com was first offered as an IPO in 1997, their stock stumbled (for example). After 10 years and being worth 5,000% their initial offering...well...you can draw your own conclusions.
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Not really free...
There is a value-balance that is being fulfilled between the user and FB. The user brings content and their friends to FB that takes their stories, puts it into a giant database (that can be mined in the background), and deliver's the users' content to the world (if you didn't set up your security settings correctly). I would argue there isn't any "free" going on between the user and FB. I would say that there is a tenuous symbiotic relationship between the user and FB. There is a balance of value between the two. If FB starts becoming parasitic and taking from the user (by devaluing privacy, having data breaches, making ads obnoxious and flashing all over the place (like MySpace)), then the user may not value the relationship as much and will move on to another service that allows communication between themselves and friends in a media-rich and convenient way on the internet.
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Shortsighted history repeating itself
Microsoft: We want to license the disk OS to you, and also other people.
IBM: Well, the money is in our hardware anyway. Software isn't important anyway.
Because, you know, that attitude worked out SO well for IBM.
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Newspapers were NEVER popular
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The next point is that newspapers are local. This is where the readership is, is in what is happening around the neighborhood. Beyond that, there are too many sources of news to worry about paywalls.
One site I go to once in a while is Drudge Retort, which has the habit of pasting news article sources to the New York Times to the paywall. Once you arrive there, all you see is the paywall. My answer to that is to merely take the topic matter, paste it into the search engine and come up with an alternative source. What the paywall did for them, was deny them my eyes. I'm ok with that but if they are looking for readership, they missed out.
Because I am not local to NY, I don't care what the weather is, don't care what their ads are about, and don't care what is happening locally. Put up any sort of barrier, I'll move right along to some other source without issue.
So yeah that paywall worked out really well for them. They don't have the market cornered on news nor on it's availability. There is certainly nothing in the NYT I'll pay for.
Nor is there anything in the local papers I'll pay for as I can find that out on the net too. The paywall is a solution looking for a problem to fix and low income isn't the problem it is hunting for.
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Re: Shortsighted history repeating itself
IBM wasn't dismissive of software when the MS/IBM split occurred. Over simplified they both wanted control of the hardware platform that Windows or OS/2 ran on. MS, having learned very, very well about how to be the alpha predator came out on top of that one.
Yeah, MS came out on top of that one though not for the reasons you outline.
Which brings us back to paywalls and why people aren't buying into them for newspapers. Newspapers overvalue their content which is freely available elsewhere, particularly their rewrites or cut and paste inserts of content from news wires line AP, Reuters, CP and others, television, cable and other sources.
This example illustrates that there's a price where compulsive Facebook users will no longer stay if they have to pay it to get there. In this case it was a choice between $1 and $10 at the higher number a lot of them said "not me!". That seems the price where Facebook's content is overvalued.
For newspapers that price is much, much lower. Unless you're the WSJ, maybe the NYT and can trade on a specialized audience, a past reputation as a paper of record or something as important. Most papers are neither. Some used to be. Before consolidation in the 70's through 90s gutted editorial staff to pay for mergers that never paid for themselves.
I don't see Facebook going the paywall route if, for no other reason, than the data mining about their users to support apps and ads is far too valuable as it stands without going a route known to reduce traffic. Even if the data collected is 100% unlinkable to a specific user.
The students are quite clear that they value Facebook content over newspaper and news media content by saying they'd pay $1 month "membership" fee there while they are doing no such things at news media sites.
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Reminds me...
http://9gag.com/gag/2823591
A man can only dream :P
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Re: Re: Re: Not that amazing.
That's not true as a blanket statement. A corporation is required by contract to adhere to the corporate charter, which may or may not be all about short-term profit.
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Re: Reminds me...
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It's the Advertising, Stupid.
The newspapers' problems have to do with advertisers who have bailed out with the transition to the internet. Part of this is that the advertisers never believed in the advertising value of news in the first place, and certainly not that of local news. To a degree, the advertisers always believed that someone who was disposed to buy things would make a collection of relevant advertising material, from any readily available source, and would throw out old material when new material arrived. The advertiser was only willing to deal with the newspaper because the newspaper had a monopoly on distribution. Now, the local newspaper has a special edition for non-subscribers, which arrives through the mail, once a week or so. This week's copy contains inserts for two furniture stores, one auto dealer, Family Dollar, Rite Aid drug store, Lowe's home improvement, K Mart, and two supermarkets, Krogers and Giant Eagle. I made the list while throwing them, one after the other, into the wastepaper basket under my desk. The "newspaper part" of this edition contains classified ads, and a few small display ads, but zero local hard news, being little more than a mailing wrapper for the various inserts. Of course there are other competing advertising bundlers, and Wal-Mart prefers to send out its own circulars under separate cover. The advertiser does not need a newspaper. A considerable element in the decline of the local newspaper is improved computerized postal sorting machines, which enable the Post Office to quote deeper and deeper discounts on junk mail.
Of course, there are other, related changed going on. Small businesses are being driven out of the business of selling things, that is, mass-produced manufactured goods. When everything is made in China, a kind of "get big or get out" logic prevails. You are either big enough to employ someone who can speak Mandarin or Cantonese, or you are not big enough to be in the game. Some people shop at Wal-Mart, some at Target, and some online at Amazon, but it all comes out about the same in the end. The big players sell a wide enough range of stuff that they can put together economic mail shipments of advertising matter, up to and including something like the old Sears catalogs (perhaps with QR codes), and they don't need a newspaper to do it.
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Sure. But same goes for *any* site online. So, not sure your point. Other than that you're agreeing that paywalls are a really stupid idea since they open up anyone who tries them to competition.
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As these people always do. They seem literally unable to understand that these are 2 different words with totally different concepts. Yet, they seem to value this particular free service to use to attack others. Hmmm...
"A lot of people find Facebook incredibly valuable."
...and a lot of people used to find MySpace useful and Altavista invaluable. Then better alternatives came along.
If Facebook really messes up and manages to make its product less valuable than its competition, they will leave. Many users of Facebook are dissatisfied with parts of the service, but stick with it either because their social circle is still there or because the benefits outweigh the problems. If they're given impetus to move to a quality competitor for the services they want, they will move. The competitor being free while Facebook charges is just one potential impetus.
Of course, the mental midgets who post as ACs here won't see this reality and will try to spin the whole thing into some kind of moral failing of users, or to use to try and attack the tech companies they blame for their own failings.
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Come to think of it, the same argument could be said about the internet. So what was your point again?
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That put aside, I do believe it's a paper ship ready to sink anytime. I would never buy FB stocks because they lack coverage (I'm not sure which word to use, I mean to say here they don't have any assets that serve as base for their said value like a physical industry).
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Maybe I had a small stroke or large brainfart, but I think it demonstrates how far removed from the traditional newspaper culture my daily routine is.
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Re: Reminds me...
The wonders of FireFox =DDD
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I think that you are missing a point here Mike, one that is very important: Facebook content doesn't cost anything to make (the users make it), but a newspaper / media outlet has costs related to generating content.
It's a huge logical jump to draw the sort of conclusion you are trying to draw. The types of media are very different, the methods are very different. To draw a parallel is flawed.
It should also be noted that paywall news sites appear to be doing fairly well these days (last report from the NYT seemed positive), and as more and more of that media tries to focus it's delivery online, you will see more and more sites doing the same thing. There really isn't enough advertising revenue online to pay for these news organizations to exist, the cost to provide the service exceeds what can be taken in.
It's simple economics. You remember those, don't you?
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Ah, NoScript.
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First off, I'd suggest that the NYT setup is not actually a paywall, since anyone can see any of the content. I've never paid for the NYT and I've never run into any paywall. It's really a donation system which they pretend is a paywall.
Second, I don't think you can usefully compare the NYT, WSJ or FT to any other paper. Most newspapers are local. Those three are international papers that have a much bigger audience and are often considered "required" reading.
Third, I've seen no evidence that the paywalls are actually that effective. They make some money -- even the NYT/WSJ/FT ones -- but the amount is pretty tiny compared to what they make elsewhere. And, there are some pretty clear indications that the stricter paywalls (FT/WSJ) hurt their long term ability to find and attract readers.
Paywalls are a dumb idea by companies ceding the future to more innovative upstarts.
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"paywalls" (aka subscription services, when you stop trying to slay the idea) seems to be a given in the future. How will you deal with it when you can't get most of the news online except via people's tweets?
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Satisficing
The real question is are there enough people willing (and able) to pay for optimal information to keep a few papers like the NYT afloat? I think there might be. That said, the public good is getting lost in the transition. Perhaps the NYT and others can no longer afford to be deeply ethical. Murrow would be sad.
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not worth paying at all
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