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Summary:

Paywalls are all the rage for media companies, but they have the unfortunate effect of penalizing an outlet’s most loyal readers. Why not try to come up with ways to reward those users for their engagement, instead of hitting them with a cash grab?

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Paywalls are all the rage at media outlets now, thanks in part to the widely followed launch of one at the New York Times. But as a number of observers have pointed out, paywalls feel wrong because they penalize a site’s most loyal readers. Is there a better way of monetizing them? Digital-media strategist Jeff Jarvis has proposed what he calls a “reverse paywall,” where the more active users would see their charges reduced but admits this would probably never work in the real world. But what if loyal readers were rewarded in some other way? Their loyalty should be the source of some benefit to them, not the trigger for a penalty like a paywall.

The idea behind a metered wall (or fence, or gate, or whatever term you prefer) like those at the New York Times or the Financial Times  is that you never see them unless you read a certain number of articles per month. In the case of the NYT, that number is 20, while the Financial Times has set the meter at 10 stories before the fence goes up. The New York Times has said most of its readers will never encounter the paywall at all — and it also has a “social media” exemption that allows links from Twitter and blogs to pass through the wall without triggering it (although such links count towards the 20).

Why are you penalizing your most loyal users?

But as many people have pointed out, this approach effectively penalizes your most loyal customers by charging them — while those who engage with your content the least get everything for free. That seems backward in a lot of ways (although the New York Times seems to believe readers should subsidize its journalism, and therefore those who value or use it the most should pay the most). Among those who think it’s backward is Washington Post managing editor Raju Narisetti, who said as much at a recent conference on the future of news:

Jarvis’s idea for a “reverse paywall” is to charge everyone for access to content, then give those who provide value to the media outlet a discount of some kind — for example, a cheaper rate if they view more ads, load more pages, post story links to Twitter or Facebook or a blog, give the NYT more information about themselves, comment on stories, or provide information about a story that helps the paper. As Jarvis says:

My idea for the reverse meter values the engaged reader over the occasional reader — and even rewards greater engagement. And therein lies, I think, the key strategic skill for news businesses online: understanding that all readers are not equal; knowing who your more valuable readers are; getting more of them; and making them more valuable.

Jarvis notes a reverse paywall would never work because most people simply wouldn’t pay, and therefore would never go to the website. But Narisetti’s idea flips that on its head: Why not find ways to provide rewards to the more engaged readers, and then integrate ways of monetizing that relationship? (Narisetti’s presentation, which he gave me permission to upload to Slideshare, is here.) This is not as easy as it sounds, of course — many people will still just read the news they want and move on, and even Facebook has had difficulty building an economy around its Facebook Credits virtual currency. But the focus is the right one, I think, because it’s about benefits instead of penalties.

Build membership rewards instead of penalties

What if instead of a discount, regular readers of the New York Times could gain some kind of credit for their activity and engagement on the site, which they could then redeem for special features? This is how the membership model works on the web community Slashdot, where users get “karma points” for posting comments, flagging negative comments, and other positive behavior. Those with high karma points are then given more responsibility, including the ability to be a moderator and/or award others karma points.

I’ve called this the “levelling up” approach, similar to what a player of online games like World of Warcraft  does with their character. The New York Times has taken some steps towards this kind of model in its comment section, by giving more active and well-behaved readers more features — including inviting them to post comments without moderation. Why not make this just the beginning of a membership platform, with more features for those who get more engaged?

These don’t have to be only online features either. Why couldn’t loyal readers or fans of a writer like Nick Kristof — who has built a huge following through his use of social media — win rewards for their activity and then redeem those points for something special involving the writer, like a personal appearance or invitation-only forum of some kind? Some of this could even be integrated into a Kristof-specific app (one of the things I mentioned in my recent “Five things I would do as CEO of the New York Times” post).

The bottom line is that charging your most loyal readers money to read your content is probably the most regressive approach to monetization imaginable — and the fact that anyone actually pays those monthly fees is a tribute to the brand loyalty that readers have developed to places like the New York Times. So why not try to come up with ways of turning that loyalty into a benefit instead of a penalty?

Post and thumbnail photos courtesy of Flickr users Giuseppe Bognanni and jphilipg

  1. I believe in paywalls, because i see no other way… Until this. This is a great idea and news sources should run with this. After all, for all its hand waving, the internet has yet to form real communities. Anthropological studies have shown that facebook users are intensely tribal, not community. This would be a great way to form the communities that the internet aspires to.

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    1. Thanks a lot for the comment, Stephen — I agree.

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      1. I agree with the sentiments in this article– it would be great to reward good behavior, rather than punish it. However, NYT does need to turn a profit. Without paywall, how could they turn their active audience into paying customers?

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  2. This would guarantee that I would stop visiting any site that implemented it. If I cannot view the content of a site over time to gauge its value to me, there is no chance I will ever subscribe, plus they lose any potential ad views.

    This also shows the downside and danger of moving to electronic media. Right not a printed newspaper, magazine, book, or whatever can be shared with several people. That is already impossible with e-books (yes, I know you can lend some e-books, but I can give away printed books when I’m done reading them)and will only get worse. Go into any diner at breakfast and notice the copies of newspapers that other people bought and then left behind.

    I dread the future of the culture we are becoming.

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    1. I agree completely about the dangers of a fully digital world. But know that there are people fighting against that lockdown control of content, I am one of them. As an author, I refuse to use DRM of any sort on my materials, or engage in any exclusivity to any one particular closed-circle platform like Amazon or Apple. I argue fiercely for the rights of consumers to trade, share and resell any digital content on the same conditions we’ve always enjoyed with physical media. I believe whole-heartedly in the concept of an after-market and that the steps being taken by some corporate entities to do away with that is anti-consumer and ultimately self destructive. I openly encourage anyone to freely share my books just as if it were a print version, and I look forward to the platforms of the future that respect and encourage these long-standing ideals. Don’t expect them to come from corporate media, however. Independents will ultimately craft the future as a collaborative relationship between creators and consumers, not a one-sided one where the corporation exploits both the creators and consumers like what we’ve had in recent history.

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  3. I discovered an another pay wall annoyance this morning when returning to The Australian.

    My browser and the LassPass plug-in are unable to save the password. This means rooting around looking for it rather than leaping straight into a story.

    Not an incentive to pay up when the free trial finishes. At the risk of sounding like a shill, here’s my longer post on the problem: http://wp.me/p4JSG-2EE

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  4. ” Karma Points” is a good idea .. reverse meter might not be that effective … just the status of a ” star commentator” next to my name in my comments on one of the blogs i actively pursue has been a great reward and motivation to participate actively, productively and responsibly !! .. Kaur Rami

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  5. The NYT paywall is way too expensive. I would be willing to pay $5 for a year’s membership, not $20 a month. That’s more expensive than a Netflix subscription.

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    1. Netflix vs news???? Yours is no a serious comment.

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  6. Sounds good but there’s no mention of the fact that newspapers for now get most of their revenue from their print product. What underlies this discussion is the assumption that a newspaper can make the switch from print to digital while remaining financially viable as the print product withers and disappears. Few will be able to do this.

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  7. Greg Golebiewski Wednesday, December 21, 2011

    It is like banging my head against a wall (a paywall, in this case). First was John Paxton, now Jeff Jarvis and even you Mathew — making a discovery of what already exists and has been practiced successfully by others for years.

    Check out Znak it!, for example (http://www.znakit.com) an award-winning digital content monetization platform that focuses on users’ free choice and supports small on-demand payments (or donations) for what seems to be of interest or value to each user. And, yes, users can pay or earn access to desired content, of any type and format, with two mouse clicks, free of repeated registration, even anonymously, if they want.

    You guys seem to be closed in an echo chamber, read only one another, and forget that if something can or should be done, in most cases it’s already done.

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    1. …and done well. I doff my cap to you, sir.

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  8. Passive Observer Thursday, December 22, 2011

    So paying for something is now a “penalty”? It used to be that reasonable people didn’t expect to get something for nothing..

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  9. When I hit a paywall, I leave the site and don’t return. Period. Most information can be found somewhere on Internet for free.

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