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Summary:

The Washington Post is one of the few major newspapers left without some kind of digital paywall or subscription model, but despite the financial pressures on the company, publisher Donald Graham says he remains committed to not charging readers for the newspaper’s content online.

The list of major newspapers that haven’t at least experimented with a paywall or subscription option for online content is pretty short, and one of the most prominent abstainers is the Washington Post. While the success of the New York Times metered paywall has sparked a wave of imitators throughout the industry, the Post has remained steadfast in its opposition to that approach — despite the financial pressures the company is under. At a recent technology conference in Colorado, CEO and controlling shareholder Don Graham talked at some length about why the newspaper hasn’t jumped on the paywall bandwagon, and his reasons make for an interesting counterpoint to much of the conventional wisdom in the media industry.

Graham’s comments occurred during an interview with author Walter Isaacson, the author and CEO of the non-profit Aspen Institute, where the conference was held. In addition to the Washington Post publisher, the interview also included his daughter Laura O’Shaughnessy — the CEO of Social Code, a subsidiary of Washington Post Co. that manages social advertising campaigns for companies on Facebook and elsewhere (and recently hired 15 staffers who made up the core of the social-sharing community Digg) — and Graham’s son-in-law Tim O’Shaughnessy, the founder and CEO of the group-buying service LivingSocial.

A digital paywall would have more downside than upside

In response to a question about why the Post remains steadfast in its opposition to paywalls, Graham said that a subscription option like the New York Times or Wall Street Journal offers wouldn’t make sense for the paper for one simple reason: because the vast majority of its digital readership comes from outside the print newspaper’s circulation area, and therefore there isn’t any way to tie an online subscription to the print publication the way most of the Post‘s competitors do. As he put it:

The New York Times or Wall Street Journal… can say we’re going to charge, but we’re not going to charge you if you subscribe to the newspaper. The Washington Post circulates in print only around Washington, D.C., but way over 90 percent — I think over 95 percent of our Internet audience is outside Washington, D.C. We can’t offer you that print or online choice. So, the pay model would work very differently for us.

In that sense, the Post is unlike most other newspapers in a fairly critical way: because of the impact that news coming out of Washington, D.C. has on the rest of the world, the paper’s influence and/or potential readership is much broader than its print distribution. So in print, it seems more like a small or medium-sized metropolitan paper — with about 500,000 readers, according to recent figures from the Audit Bureau of Circulations — but its online audience is about 17 million unique visitors a month.

The other major newspaper that has resisted implementing a paywall, The Guardian newspaper in Britain (see disclosure below) is in a similar situation to the Post in many ways. Its influence, particularly online, is much larger than its print circulation could ever be, and that influence and readership would likely be dramatically reduced if it were to erect a paywall around all of its content — and there would be no corresponding benefit for its print business. So while the NYT meter has boosted its Sunday print circulation, which has an impact on advertising revenue, the Post likely wouldn’t see any boost at all.

Paywalls are backward-looking, not forward-looking

In his comments at the Aspen conference, Graham made it sound as though the Post was more or less thrust into this situation by the nature of its market and its content. As he described it:

Circumstances have made it so we are the one great news site, stemming from a company with a big news room, that’s free at this point, and we’re going to try to make something of that.

That said, however, the rest of the interview makes it fairly obvious that there’s another reason the Post hasn’t jumped on the paywall bandwagon: because the Washington Post CEO’s inclination leans far more towards experimentation with new media formats and platforms than it does towards backwards-looking efforts like paywalls. It’s no coincidence that the Post is probably (next to The Guardian) the newspaper that has tried to innovate the most in digital media, with projects like the Trove news-recommendation service and the Post‘s Facebook social-reader app — or even Social Code itself, which in many ways is a potential alternative to traditional newspaper banner advertising.

As Graham described in an interview with Om last year, the reason why he is interested in experiments like the Facebook reader is because he wants to “go where the readers are” instead of pursuing the traditional media model of trying to convince readers to come and spend all their time at the newspaper’s website. And the Washington Post CEO said at the Aspen conference that he remains committed to doing this despite the fact that Facebook occasionally makes changes that dramatically affect the impact of things like the Post’s social-reading app.

The Post‘s critics would no doubt argue that the success of these efforts is questionable at best, particularly for a company that has seen the same kind of widespread layoffs and belt-tightening as the rest of the industry, and yet still faces some considerable financial pressures, as Ryan Chittum of the Columbia Journalism Review detailed in a recent piece abut the paper. And it may be that the kind of balance that Graham is trying to strike — with a small-circulation print paper that punches far above its weight in terms of online influence — simply isn’t financially sustainable. But it is fascinating to watch.

Disclosure: Guardian News and Media Ltd., the parent company of the Guardian newspaper, is an investor in the parent company of this blog, Giga Omni Media

Post and thumbnail images courtesy of Flickr users Giuseppe Bognanni and George Kelly

  1. The reason they’ll never have a paywall is that they’re cutting staff so fast, they’re gonna have no content to put behind the wall.
    On another note…did anyone see the figures released by the Guardian, stating how much money their MASSIVE 60m person online audience brings in? Less than 25 million dollars. A car-dealership. Check that… a small car dealership. Meanwhile, the NYT is gonna bring in about 150 million dollars from its paywall. I know I know I know… but then you lose all those precious viewers who make you a massive 40 cents per year. I know.

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    1. Sounds like a going rate of about $7 CPM for page views (60M monthly uniques * 5 pages per month, per unique /1000 = 300k “M”s to sell, at $7 CPM then $300k * $7 = $2.1M per month in revenue or about $25 million per year).

      The *really* scary thing – $7 CPM is a *fantastic* rate for internet page views – there must be a lot of well-heeled, in-bred, lefty Lords handling media buying in negotiations with the Guardian.

      Facebook (with page view targeting out the ying-yang) gets about 40 *cents* per thousand page views.

      Supply simply *crushes* demand on the internet – driving prices very low.

      Why does supply crush demand?

      The cost of entry (a blog) is very low and the cost of incremental supply (an ad-bearing post) is even lower.

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      1. And dont forget that a nice glossy ad in a magazine is sometimes a lovely thing. An internet ad is always annoying. Ergo Lincoln=Annoying, Coke=Annoying, Gucci=Annoying. Advertisers know this.

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  2. I wish more would report on the intentional assault on newspapers begun over 5 years ago by Chris Tolles and Topix. Newspaper corporations can take back what is rightfully theirs, from these new media tyrants who have made such a huge mess of it. They need to do this. What’s stopping them? http://tinyurl.com/6ufcjtz

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  3. The Wahington Post has been “experimenting” (e.g. Digital Ink) since the mid-90s. Almost 20 years later, they still have no clue what to do.

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  4. So, The WP can’t make it work because most of their online readers are outside of their delivery area? That certainly explains why the NYT and WSJ is successful because we all know that their online readers are all in NY.

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    1. Byron,

      Agreed – some of WAPO’s position is double-talk.

      For one, I thought the NYT had a huge number of *digital only* subscribers, behind its picket-fence paywall.

      Isn’t that why the “10 cent CPM” internet media has been weeping in gratitude and singing hallelujah for the past year?

      (Whether or not the NYT has really been hiding the salami on the actual financials of its digital subs is another matter – for one, why so few specifics on churn, special promotions, etc?)

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  5. Quick note – in today’s dying MSM environment, 500k in hardcopy circulation does not make WAPO a small or medium metro paper.

    It makes them one of the remaining “biggies” – check out the circ stats yourself.

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    1. That’s a good point — you are quite right about that. Not long ago, that would have been the average for a medium-sized metro, but now it is larger than most. Thanks for the comment.

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  6. I am one of those not-in-DC online readers of the Washington Post. I appreciate having free access, but I would be willing to pay for it – especially if keeping it free threatens the paper’s existence. We NEED papers like the Washington Post to keep our democracy strong.

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