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

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

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.

Filed Under: paywalls
Companies: financial times

If A Blogger Links To The New Paywalled NY Times, And It Leads To A Subscription, Will The NYT Pay The Blogger?

from the questions,-questions... dept

Felix Salmon wrote up a blog post recently that details just how amazingly confused the NY Times appears to be about its new plan for a paywall. Apparently, the paywall will even include the NYTimes' blog sites -- which even the WSJ tends to keep outside of its paywall. As Salmon notes, this could drive some of the NYT's more popular bloggers to go elsewhere. But where it gets really confusing is that the NYT's execs seem to go back and forth over whether or not links into NYT articles from other sites (such as blogs) will count against the "quota" that leads to the paywall. Sometimes they say it won't count, except when they say it will count. Basically, it sounds like they don't know, but they're so afraid of people sneaking in that there will be at least some limit.

But this leads to a rather fascinating question that one of Salmon's readers asks in the comments (unfortunately, it looks like Reuters doesn't let you link directly to comments): if a blog post drives traffic to the NY Times, and that counts against the quota of "free" articles, leading users to eventually sign up for the paywall, will the blogger get a cut of the paywall fee? After all, isn't part of the argument from newspapers upset with aggregators that they're getting some sort of "free ride"? Wouldn't the same apply in reverse? If newspapers, such as the NY Times, are getting direct revenue from an action initiated by a blogger, then by the newspapers' own convoluted logic, don't those newspapers owe money to the bloggers?

Filed Under: blogs, paywalls
Companies: nytimes

NY Times Execs Think People Will Pay $20 To $30 Per Month For The iPad Edition Of The NY Times

from the let-me-introduce-you-to-newsday dept

Wow. Doesn't the NY Times have some of the world's most famous and accomplished economists writing for them at times? You would think that, at some point, as they tried to figure out business model ideas, they would think to actually run some of these ideas by an economist. We've already explained why the NYT's decision to put up a paywall makes little sense from an economic standpoint, but now it's getting even worse. You see, there are still some folks who bizarrely believe that tablet computers -- or, really, just Apple's iPad -- represent the savior for journalism because suddenly people will pay for apps. Already, this suggests a rather tragic misunderstanding of the economics of apps, but apparently it's even worse than that.

Rumors are flying that there's a battle within the NY Times on how to price their app for the iPad. Those on the newspaper side of the house apparently believe that it should be priced at $20 to $30/month to avoid cannibalizing the print product. By the way, if you want a simple tip for how to fail at business, it's to make a decision to avoid cannibalizing your own business. When you do, you've just made it clear that a competitor is going to cannibalize your business for you. The folks on the interactive side of the house think that $10/month makes a lot more sense and believe that pricing it at the $20 to $30 range is suicidal. Of course, if you thought that the management at the NYT's was really crafty, you might believe that this whole story was floated to reset the anchor price, though I have trouble believing that's true.

The problem, of course, is that the NY Times is pricing based not just on trying not to cannibalize the physical product, but without regards to basic economics, and the fact that everyone knows that without a physical product, the costs of the paper actually go down. Yes, of course the costs of all the reporting and editing remain -- no one is denying that. But you no longer have the printing and delivery costs, which are substantial. And reasonable people would expect that, at the very least, the cost of the app will reflect that. Either that, or (more likely), they'll realize that other, more well managed news providers will step in and offer up news for free in order to get the market share that the NY Times once had.

Oh, and one final word for the NY Times. I recognize that you're a better paper, with a much better reputation, than your neighboring competitor, Newsday, but remember what happened when Newsday tried to charge $20+ per month for access to its digital version? It got a grand total of 35 people to sign up. I'm sure more would sign up for a NY Times' app, but how many more?

Filed Under: ipad, paid content, paywalls, pricing, subscirptions
Companies: ny times

Behavioral Economist Dan Ariely Explains The Problem With The NY Times Paywall

from the anchored dept

David alerts us to behavioral economist Dan Ariely's take on the NY Times' plan for a paywall, noting that people are unlikely to pay for what they've been able to get for free in the past:

The main problem of this approach is that over the years of free access, the New York Times has trained its readers for years that the right price (or the Anchor) is $0 -- and since this is the starting point it is very hard to change it....

Because we're not very good at figuring out what we are willing to pay for different products and services, the initial prices that new products are presented with can have a long term effect on how much we are willing to pay for them. We basically can't figure out how much pleasure the New York Times gives us in terms of $ -- so we go back and pay the same price we have paid before. This means that getting people to pay for something that was free for a long time will be very challenging, but it also means that if the New York Times were to offer some new service at the same time that they start charging, they might be more likely to pull it off.

Indeed. It's a point that we've tried to make in the past as well. It's nearly impossible to successfully charge for something that was once free, but it's absolutely possible to charge for something new, something scarce, that is separate from (or perhaps enhanced by) the free stuff. That's why we had hoped the NY Times would be smart enough to set up a business model around offering something else of value, rather than just a paywall, but it chose to go in the other direction.

Filed Under: anchor prices, behavioral economics, dan ariely, economics, paywalls, value
Companies: ny times

Massive Disconnect: Paywall Analysis Claims It's Reasonable To Expect 66% Of Readers To Pay

from the good-luck-with-that dept

And we were amazed by reports that Stephen Brill actually expected 10% to 15% of newspaper readers to pay up for the paywall he's building for various newspapers (still none confirmed, as far as we know). A reporter over at Slate seems to have taken things to a new level. John points us to the back of the envelope analysis/calculation of the NY Times' decision to put up a paywall that appears to have some highly questionable assumptions. The biggest one is that 66% of readers will pay. Yes, 66%. Oddly, this statement comes right after the reporter's claim that, "a large percentage" of readers probably wouldn't pay -- but he seems to assume that "large percentage" is just 33%:

First of all, a large percentage of these readers land on these sites though search engines, and therefore are not likely to consume a lot of pages. Such visitors, about a third of the total audience, must be removed from the pool of readers likely to pay for content.

How much would people pay? According to a Boston Consulting Group survey, readers would agree to pay $3 per month on average. Interestingly enough, the BCG found the upper limit to be $6 for the "heavy print consumers" category.

Coming back to the Washington Post, using the remaining 66 percent of total users likely to pay for content (7.34 million unique views/month), the expected revenue could be considerable.

I'd argue that getting even 5% to pay, as one recent study suggested, may be wildly optimistic. 66% is downright delusional. While the pricing is clearly much higher, you would think that the recent example of Newsday getting a grand total of 35 subscribers to its paywall would be telling. So, it's difficult to take the rest of the analysis seriously, when it kicks off with such a bizarre assumption.

Filed Under: journalism, paywalls

Guardian Editor Details Why Paywalls Harm Journalism

from the others-should-listen dept

While lots of newspapers have been talking up the idea of putting up a paywall (even as early results look really, really bad), the Guardian has been one publication that has been pretty adamant that paywalls for online news make no sense. This view was put forth again, quite eloquently, as Editor Alan Rusbridger detailed why it makes little sense not just from a business perspective, but from a journalism perspective:

It removes you from the way people the world over now connect with each other. You cannot control distribution or create scarcity without becoming isolated from this new networked world.

At the same time, he points out how paywalls also try to position papers as an "authority" rather than being involved in a wider story:

The second issue it raises is the one of 'authority' versus 'involvement'. Or, more crudely, 'Us versus Them'. Again, this is similar to the other two forks in the road, but not quite the same. Here the tension is between a world in which journalists considered themselves -- and were perhaps considered by others -- special figures of authority. We had the information and the access; you didn't. You trusted us filter news and information and to prioritise it -- and to pass it on accurately, fairly, readably and quickly. That state of affairs is now in tension with a world in which many (but not all) readers want to have the ability to make their own judgments; express their own priorities; create their own content; articulate their own views; learn from peers as much as from traditional sources of authority. Journalists may remain one source of authority, but people may also be less interested to receive journalism in an inert context -- ie which can't be responded to, challenged, or knitted in with other sources. It intersects with the pay question in an obvious way: does our journalism carry sufficient authority for people to pay -- both online (where it competes in an open market of information) and print?

Putting up a paywall is really just newspapers pretending they can go back to being "authority" figures without realizing that this is not what people look to them to be, nor is it what they want them to be. And this actually brings up a really important point. Beyond the business model issues, paywalls impact journalism in the connected age:

As an editor, I worry about how a universal pay wall would change the way we do our journalism. We have taken 10 or more years to learn how to tell stories in different media -- ie not simply text and still pictures. Some stories are told most effectively by a combination of print and web. That's how we now plan our journalism. As my colleague Emily Bell is fond of saying we want it to be linked in with the web -- be "of the web", not simply be on the web.

Some stories can be told in one sentence plus a link. Some journalists are fascinated by the potential of the running, linked blog. Andrew Sparrow's minute by minute blog of Alastair Campbell's appearance before the Chilcott inquiry was a dazzling example of this new form of reporting, which relies on the ability to link out to sources and other media, including original documents and even (in the lunch break) Campbell's own Twitter feed....

This, journalistically, is immensely challenging and rich. Journalists have never before been able to tell stories so effectively, bouncing off each other, linking to each other (as the most generous and open-minded do), linking out, citing sources, allowing response -- harnessing the best qualities of text, print, data, sound and visual media. If ever there was a route to building audience, trust and relevance, it is by embracing all the capabilities of this new world, not walling yourself away from them.

As he notes, this open linking and sharing policy leads to better journalism, and that could be hurt in a paywall world. Not only that, but it would cut off the one part of the business that is actually growing and improving:

In an industry in which we get used to every trend line pointing to the floor, the growth of newspapers' digital audience should be a beacon of hope. During the last three months of 2009 the Guardian was being read by 40% more people than during the same period in 2008. That's right, a mainstream media company -- you know, the ones that should admit the game's up because they are so irrelevant and don't know what they are doing in this new media landscape -- has grown its audience by 40% in a year. More Americans are now reading the Guardian than read the Los Angeles Times. This readership has found us, rather than the other way round. Our total marketing spend in America in the past 10 years has been $34,000.

He also effectively points out that the argument shouldn't be about "new media" vs. "old media," but about how the two work together:

We are edging away from the binary sterility of the debate between mainstream media and new forms which were supposed to replace us. We feel as if we are edging towards a new world in which we bring important things to the table -- editing; reporting; areas of expertise; access; a title, or brand, that people trust; ethical professional standards and an extremely large community of readers. The members of that community could not hope to aspire to anything like that audience or reach on their own; they bring us a rich diversity, specialist expertise and on the ground reporting that we couldn't possibly hope to achieve without including them in what we do.

There is a mutualised interest here. We are reaching towards the idea of a mutualised news organisation.

The whole speech is much, much longer and well worth reading. But it adds a rather important element to the debate. Most of the argument has really focused on the business question, and whether or not paywalls would even work (or if they would just hasten the decline of newspapers). But this speech points out how paywalls also seem to get in the way of doing the type of journalism that the world now craves, and which the technology now allows.

Filed Under: alan rusbridger, journalism, paywalls
Companies: the guardian

We Think Open Access To Research Is Important... But The Reasons Why Are Behind This Paywall

from the wait,-what? dept

Via James Boyle, we're pointed to an editorial that supposedly is all about improving access to research via open access policies for the public -- and just so happens to be locked up behind a paywall itself. Apparently, the publisher doesn't necessarily agree with the authors' conclusions.

Filed Under: open access, paywalls

Flexible Or Paradoxical? Why The NY Times' Plan Is Inherently Self-Limiting

from the putting-business-lines-in-conflict dept

The New York Times has followed up on their initial coverage of the choice to go metered with a column by David Carr discussing the move. It's worth reading, and though there are a lot of points he makes that I can't really speak to, there's one section that I think highlights the flaw in the plan:

"The decision announced Wednesday morning represents a hedge, an operating model that puts maximum flexibility in the hands of the leadership of the newspaper. As the digital czar Martin Nisenholtz said over and over in a meeting about the decision on Tuesday, "the idea is to maximize revenue" with an eye toward the cyclical state of the advertising business. With Times Select, The New York Times lost eyeballs at precisely the time when sheer tonnage of readers became the defining metric in advertising. By building a metered system, the executives have installed a dial on the huge, heaving content machine of The New York Times. Access can be gradually ramped up or down depending on macro trends in the market. Given the dynamic state of the advertising business and how quickly things change on the Web, not so dumb when you think about it."

Sounds great, right? Except that where they see flexibility, I see conflict. They've saddled themselves with two opposing business models: the old one, where the audience is the product and the advertisers are the customers, and the new one, where news is the product and the audience is the customer. The "dial" is going to become a tug-of-war between an advertising team that wants more eyeballs to sell and a subscription team that wants more walled-up content to sell. It will be virtually impossible to make business decisions that are good for both sides, and by trying to have the best of both worlds they may end up with no growth for either.

One could argue that this conflict has always existed in news organizations, but it's never been as charged as it's about to become at the Times. In the past, readers were readers, and increasing circulation was always the number one goal. But a newspaper that sacrifices casual readers, challenges the loyalty of dedicated readers and reduces its value to advertisers, all in one fell swoop, and succeeds? I'll believe it when I see it.

Filed Under: advertising, conflict, paywalls, subscribers
Companies: ny times

China Plans To Scan Text Messages For Unhealthy Content... Five Years After Announcing The Same Thing

from the it's-winter-reruns-everyone... dept

Apparently, it's time for reruns. The NY Times is reporting that China is now planning to start scanning text messages for "unhealthy content," which is defined as including any of various (secret) keywords supplied by the police. Now, given the recent ramp up in attention paid to China's censorship efforts, this might be interesting... if it hadn't been announced five years ago. This is what the NY Times wants us to pay for? I guess if they block off their content behind a paywall, no one would be able to search the archives of the NY Times to find out that that great paper had covered the story five years ago itself (though, a couple months after we wrote about it).

Filed Under: china, paywalls, reporting, scanning, text messages

If You Make A Mistake With A Paywall, It Can Linger For A Long Time

from the psychological,-not-navigational dept

Scott Rosenberg has a column up at The Guardian where he discusses Salon's experience with a paywall back at the beginning of the decade, highlighting how the damage from a paywall can be a lot more troubling than many people take into account. He points out that Salon's various paywall experiments did bring in some revenue, but they then limited Salon's growth potential, first by confusing users on how they could get access to Salon content, and then with the psychological belief that Salon couldn't be read without paying:

More important, by this point the public was, understandably, thoroughly confused about how to get to read Salon content. It took many years for our traffic to begin to grow again. Paywalls are psychological as much as navigational, and it's a lot easier to put them up than to take them down. Once web users get it in their head that your site is "closed" to them, if you ever change your mind and want them to come back, it's extremely difficult to get that word out.

Indeed. As an early reader of Salon, I used to read it all the time -- and link to it. But as I got more and more confused over whether or not anyone reading Techdirt could read the links, I was less and less inclined to ever write about Salon stories -- and eventually that resulted in me dropping Salon as a source I read as well.

Filed Under: paywalls, psychology, salon