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Summary:

As more newspapers roll out metered paywalls and subscription plans, trying to duplicate the success of the New York Times, some journalists hope that being funded by readers will help stop the ad-driven pageview race and save quality journalism. But this argument is fundamentally flawed.

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Paywalls of all kinds have been popping up at newspapers across North America like mushrooms after a rainstorm, thanks in large part to the adoption of a metered paywall at the New York Times last year. The latest to join the cavalcade are some of the major papers in Canada’s Postmedia chain — including the Ottawa Citizen and the Vancouver Sun — which launched subscription plans for their websites on Wednesday. Postmedia no doubt hopes that the extra revenue will help make up for the continuing decline in print advertising that has hit the entire industry, but one editor at the Citizen has a more specific wish: she hopes the paywall will stop papers like hers from becoming “page-view whores” and thus will help save journalism. But will it?

Melanie Coulson, a senior editor in charge of the online unit of the Ottawa, Ontario paper (and also a former colleague of mine when I worked for the online version of the Globe and Mail in Toronto), writes on her personal blog about how she is worried that newspapers like hers have become too fixated on “competing for page views so that we can gain revenue from advertisers in a pay-per-click business model” and that this is no longer working. Instead of focusing on serious journalism, Coulson says, too many media outlets are chasing eyeballs by using pageview-boosting tactics such as titillating slideshows and celebrity news briefs. As she describes it:

“If a newsroom is working to get a lot of page views, it’s simply a case of posting a lot of photo galleries, and celebrity stories. I can only imagine this is why, last winter, we posted galleries illustrating AquaYoga poses and NHL Cheerleaders.”

Does ad-supported have to mean pageview whoring?

Coulson also talks about how even credible news outlets such as the New York Times and MSNBC can be sucked into publishing questionable or even outright fraudulent stories because of their desire for traffic, and refers to a recent book by former PR flak Ryan Holiday called “Trust Me, I’m Lying: Confessions of a Media Manipulator.” In it, Holiday confesses to working non-news stories into outlets like the Times and ABC News by placing them first in small or medium-sized blogs, reports that would then get picked up by larger players.

The crux of Coulson’s argument for a paywall is that if a newspaper is being supported largely by readers, then it can focus on high-quality journalism instead of having to chase after random eyeballs to generate more advertising revenue. As she puts it in her post:

“Quality local content. That’s exactly what our newsroom is supposed to be focused on – not re-hashing wire stories. I’m not saying that a meter and paywall will solve all revenue problems in a digital newsroom… And I struggle with the concept of building a strong, loyal community while charging for content. But if it means we turn our attention to quality journalism –- and not being page-view whores, posting cheap galleries and the latest celebrity gossip –- I think that’s a good thing.”

sandbags

I think there are a couple of flaws in this argument, and not just because I dislike newspaper paywalls for a number of reasons, as I’ve written before (in fact, the paywall at the Globe and Mail that helped transform me into a blogger was erected when Coulson and I were working there in the mid-2000s). One of the flaws is the idea that a metered subscription plan — which most newspaper executives prefer to the term “paywall,” for obvious reasons — is going to do anything much to help save a paper like the Citizen, or even the Postmedia chain in general (the Globe and Mail is also erecting a new paywall soon).

Walls may save a paper, but they won’t save journalism

If anything, such plans are merely a line of sandbags designed to try and stem the flow of water that is rising faster and faster outside the walls of most newsrooms. Even the New York Times, which has what is arguably one of the most successful paywalls ever introduced by a general-news outlet with more than 500,000 subscribers, is not pulling in enough revenue to make up for the ongoing decline in print advertising revenue, as advertisers search for better ways of reaching their potential customers. The NYT claims that its ad business is fine even after the paywall, but digital ad revenue fell in the most recent quarter as well as print revenue.

But the biggest flaw in Coulson’s reasoning, I think, is the idea that having subscribers means newspapers won’t have to be driven by pageview-based tactics any more, and can just focus on high-quality journalism. This assumes that the readers who subscribe will be radically different creatures than the ones who read the content for free: in other words, they will only be interested in serious journalism and not celebrity news briefs or slideshows, whereas the free reader is driven only by their interest in those sleazy eyeball-grabbing tactics.

I don’t think that’s the case at all. I think most readers who pay will still want just as many of those things, and will only continue subscribing as long as they get them — and without them, the paper’s subscription base may be loyal, but it will also be relatively tiny. This is the flip-side of the transformation that some newspapers like the NYT have already undergone, where the revenue provided by readers now exceeds the revenue provided by advertising. While that may seem like it would provide great freedom to pursue quality, it also means the the paper is even more beholden to a small group of readers, as Clay Shirky has argued.

That may be a good thing or it may not, we don’t really know yet. But one thing is for sure: while metered paywalls may help to save specific newspapers, they aren’t going to save journalism — if by “journalism” you mean the process of informing as many people as you can about news that is important to their lives. By definition, paywalls restrict the reach of a newspaper and that has very real implications for the social aspects of journalism as opposed to the business of one specific newspaper. In the end, we have to answer the question: What is journalism for?

Post and thumbnail images courtesy of Flickr users Giuseppe Bognanni and The U.S. Army

  1. i find it ironic that this article comes from a blog that has a paywall for certain articles. #hilarious #truestory #fail

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    1. Thanks, Chris — I get that a lot. But our GigaOM Pro content is a totally separate operation, based on proprietary research that clients pay us for. The journalism part you are reading is always free.

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      1. So here’s a more difficult question for you… how do keep good journalism alive? It sounds like digital cpm/cpc advertising failed, and you seem to think paywalls won’t work. I mean, let’s be honest, we’ve all seen how most free sites have degenerated into view-whoring rags. And the only site I’ve even considered paying for in the last couple years is Ars Technica. Who’s going to do the hard work?

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  2. Hmmm …

    The UK’s Guardian newspaper loses 70M a year and is free to view online. It couldn’t be a better product but …. I read it for free each day.

    The FT is online is also behind a paywall and both are thriving. Circulation for both has never been better. It charges £23 per month, which is a lot of money! But at least it’s profitable and therefore has a future.

    The analysis bit?

    Andrew Neill, publisher of the Spectator, makes the point that newspapers aren’t been read by fewer people but by more, and around the world. It’s just that the industry has to work out how to get them to pay for the product.

    I don’t have a problem with paywalls per se. Newspaper teams need to merge online and hard copy coverage. One product supports the other. I regularly retweet or send on my expensive FT.Com analysis – it’s top quality stuff after all. So like hard copy, it’s not just read by those who buy. It’s just that how it’s read has TOTALLY changed. And maybe it’s that which pisses of the hacks.

    The highest viewed website of all is the Daily Mail – which I’m told has bikini girls down the right hand side. So a different product online to hard copy. But not for me.

    My punchline?

    Why should I get to read The Guardian for free? The Editor Alan Rusbridger needs to move with the times and understand that free products will mean his business goes bust – and then I don’t get to read anything at all.

    Donald@wildflowervc.com

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    1. A few global newspapers and magazine brands will prevail and perhaps even make a profit, and with greatly expanded readership will replace the dozens of others that used to fill the space.

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    2. William P. Davis Sunday, August 26, 2012

      Donald,
      The two papers you’re comparing are very different beasts. One is a general-interest publication and one is focused at a particular audience. Trade publications have, for a long time, cost considerably more than regular papers, and I’d argue the FT falls under that category. The reason is that many of their subscribers — I might even argue a majority — are billing the cost to their company. It’s very much the same reason properties like GigaOm Pro can survive — they’re targeting businesses, not individuals.

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      1. That’s a great point, William — thanks for the comment.

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  3. Mathew, there are studies showing that 50% of people will pay for content on the internet. The other 50% are philosophically opposed to paying, so what’s the point of trying to persuade these people? Newspapers, rightly, are concentrating on the 50% of people who will pay.

    I would be surprised if in 10 years there are any newspapers left that you can read for free anywhere on the net. Just because the industry made a massive mistake in 1995 when the NYT and others went with the ad-supported internet model, doesn’t mean it will always be like that. I tend to think what happened prior to 1995 will be the model papers revert to, but it will be a paperless model so that online advertising revenue, combined with subscription revenue, will cover the cost of production and then some.

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    1. David, I’d be interested to see those stats on 50 percent of people wanting to pay for content — that sounds outrageously high from what I’ve seen. And I don’t think a failure to charge in the 1990s was a mistake at all. That’s a popular theory, but I don’t think most papers would be better off if they had done that, and might even be significantly worse off than they already are.

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      1. Greg Golebiewski Thursday, August 23, 2012

        Mathew, I think David’s 50-50 was “philosophical.”
        A more interesting question is: How do those who declare are willing to pay want to pay for access?

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  4. Greg Golebiewski Thursday, August 23, 2012

    A good piece, Mathew.
    I understand the publishers’ fixation on paywalls — it is a familiar concept, and it has been already (somewhat) proven by the NYT and other publications with similar long-tern sub plans.

    But there are other content monatization models that seem to be working much better than paywalls — they generate higher conversion rates, more user engagement (also from young users) and more rewards for good journalism.

    Here is a whitepaper on that: http://bit.ly/N2v1jC

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    1. I agree that micro-payments have to be the answer. If you can set payments (after the introductory paragraph which should be available free for search) sites should be able to ask for a small payment (maybe 50p or less) to read the rest. This requires a ubiquitous, simple, payment system that doesn’t require laborious time consuming and privacy-breaching sign-ups. The banks should be enabling this by allowing all customers to have an ‘e-wallet’ which you can fill from time to time and just use while browsing. If the only barrier between you and the end of a really well written interesting piece of writing is a red button that you have to click-to-pay then people will do it.

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      1. Greg Golebiewski Sunday, August 26, 2012

        @apmfp. Well, this is exacetly what Znak it! does, and more… For example, with Znak it!, users can opt to pay using their e-wallet or “earn” free access to paid content by interacting with targeted ads. The latter doesn’t even require any register — just one click-and-a glance at a sponsoring ad, and you are “free” to read or download any otherwise paid content, anonymously. This optoin can be used in social networks, with Twitter, etc.

        Anyone can try it here: http://bit.ly/PzXGej The link is to the whitepaper I mentioned above, only now the document is behind a paywall, which you can bypass with two mouse-clicks using Znak it!

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  5. True… except this isn’t journalism. This is an editorial. Opinion. Speculation.

    Ad-driven journalism is an odd, flawed concept in my opinion. If advertising is the primary source of revenue, the advertisers’ interests come first. They have to, and that means the reader and the journalism are secondary/incidental to the advertising profit model.

    Journalism got stabbed in the back the day newspapers made it about ads. Now an entire culture is trained on this model, and moving beyond it is a tough row to hoe.

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    1. Glenn Fannick Friday, August 24, 2012

      It’s always been *partially* about ads. Print ads, classified ads, real estate ads, death notices. The 25 cents you paid for the daily paper never covered the costs. But the web made it have to be 100% ad supported and we’ve found that is not enough to cover the costs.

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  6. I live in Ottawa and sometimes read articles on the Ottawa Citizen website. I really don’t think I’ll pull out my charge card and sign up when there are so many other alternative news sources.

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  7. Let’s turn this on its head for a moment, Matthew, because I think it’s entirely too easy to pontificate on “what won’t save journalism” and considerably harder to discuss what will (or might).

    Pretend you’re a publisher, with all the attendant problems — professional staff that produces great reporting, print ad revenues declining year-over-year, a bunch of online readers whose eyeballs don’t cover your costs, etc. What, concretely do you do?

    I don’t think the issue is paywalls, per se. One can argue that none of the big publishers have figured out a truly thoughtful way to structure them, but it’s not at all unreasonable to think that journalism, in the Internet age, can be amply supported by people paying for quality content. Both personally and from my professional perspective, I think the pendulum is starting to swing back from “free” to “pay for things of value.”

    Assuming that “free” is a broken model — that the virtual infinity of online ad inventory and lack of scarcity is going to keep ad rates depressed and challenge organizations to find different monetization models — what are the alternatives, in your mind? I’d be really interested to see you take up that topic. What *will* save journalism (and while you’re at it, what, exactly, is being saved)?

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  8. We need to get past the argument that paywalls won’t make up for the loss in print advertising. Of course they won’t. Who ever suggested they would? That’s huge money. But paywalls can be part of a multi-faceted strategy to find new revenue while smartly cutting costs. The hope is we’ll find a point where revenues and expenses are again at an acceptable level. Paywalls are just one aspect of a broad strategy.

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  9. The assumption is that once a “sufficient level” of money is obtained, a company will focus on quality instead of increasing profits. That’s never true. Companies ALWAYS want more profit. Paywall or no paywall.

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    1. Scott W. Angus Thursday, August 23, 2012

      I understand where you’re coming from, James, but that’s not true of all companies. Some, including mine, are doing their best to hold onto their resources and keep their quality high. At this point, we’re not interested in more profit. We’re interested in any profit that will allow us to restore pay and benefits to our employees and continue to produce strong web and print products. We’re family owned and in the minority, but we’re out here, and we’re not alone.

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  10. I can not understand why there is the constant attack on “paywalls” – paying for online content. When I go to a newspaper stand, there is a “pay man” that requires me to pay to read a newspaper, but no one complains on that model. So the newspaper industry made a mistake when they allowed free access to their online content back in the day. Revenue from online advertising, though growing, is no where near the declining revenue from the print product. If the newspapers go belly up, so will all the “aggregators” that steal the content from newspapers, and only then the reader will identify the value of online content.

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    1. Yes, but your payman is not surrounded by others willing to give the news away. Papers don’t have a monopoly on information anymore.

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      1. Paul,
        From your statement, I take it you do not live/work in New York City. Besides the “free” AM New York and Metro New York, New York Press and The Onion, you can pick up the Village Voice on any street corner in Manhattan. I have not included the “Penny Pincher” or other advertising-driven information pubs.
        I do agree that newspapers no longer have a monopoly on information anymore, but let’s factor in credibility and integrity and the number of those sources rapidly decline.

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  11. Yes, in hindsight, the 90′s decision by papers and magazines to go with an ad-supported, no-subscription model appears to have been a poor one. But radio, then television, had built a successful ads-only model, so why not web publications. Printed media’s web mistake may have not been in posting free web sites, but initially seeing these sites as only supplements to its “real” hard copy business, and charging correspondingly lower ad rates. These lower rates are now entrenched, but aren’t enough to support the dying (but still costly) hard copy side of the business and the stock earnings and executive salaries that side once supported and are still expected. What I would like to see is an analysis of how sites like CNET or the free side of GigaOm have offered extensive free content, including even video, from their beginnings and have been successful with just ads.

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  12. Glenn Fannick Friday, August 24, 2012

    The answer has to be a mix of revenue streams. If you change from discussing “journalism” — which takes us into a Fourth Estate / public service conversation — to discussing written “content” we can then compare this to TV. We pay for satellite or cable TV or internet access yet we still have ads intermixed with the content the user is seeking. Why is this different? Producers of written content must get revenue from both advertisers and consumers.

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  13. Paywalls are nothing new. What’s a print subscription if not a paywall? So I don’t get the argument about “restricting the reach” of journalism.

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  14. What are print subscriptions if not paywalls? Or buying a paper on a newsstand for that matter. So I don’t understand the argument about “restricting reach.”

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  15. Patrick O'Brien Monday, August 27, 2012

    It’s important to consider the perspective here, your story is making a huge assumption and that is that publishers expect and are hoping to use paywalls as a means to recoup all the losses from advertising.

    I don’t know one publisher who thinks a paywall will generate even a fraction of what classifieds and display use to for print. They are hoping some sort of paywall (done well) will generate enough revenue that with multiple other streams will help to keep their newspapers operating. Paywalls are only one niche to an ever expanding niche of small revenue streams.

    Of course the newspaper business is hurting, badly. I’ve said it before in these comments Mathew, the way you’re writing these posts appears again to be simply beating a dead horse. Put the right perspective and ACTUALLY ASK publishers what they expect out of paywalls, THEN do the “reporting” if you will.

    It’s also quite well known that newspapers aren’t now, nor have they even been strictly about “journalism.” Newspapers are a business, they don’t exists merely to hire reporters and write “quality” journalism. Who thinks this crazy notion? It’s utterly absurd. For generations newspapers have published Ann Landers, horoscopes, classifieds and sports scores. Which of those things is “quality journalism?”

    Building page views can also be seen as a way to increase total audience. Some folks just want to look at photo galleries from Friday night football or girls volleyball, they don’t want to read about city hall or spend 10 minutes reading an investigative piece that took weeks to put together. What is wrong with that? Nothing, we’re humans.

    There sure are some weird notions out there in the “journalism” industry, it’s no wonder so many newsrooms are out of touch with their readers.

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  16. Patrick O'Brien Monday, August 27, 2012

    Also, it wasn’t just a mistake in the adoption of crappy business models early on by newspapers, it was tragically the lack of ANY innovation in our industry. The lack of innovation has been and will continue to be a large part of our continue slide into obscurity.

    Our industry sucks at innovation. I challenge anybody to prove differently.

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  17. It seems like one of the biggest concerns for online publications is the balancing act between retaining readers and earning revenue. Pushing readers too hard for an online subscription could mean a loss in traffic for those outlets that don’t have the same readership as an established outlet like the New York Times. But are the options for revenue generation as narrow as pay-per-click advertising, paywalls and digital subscriptions? For some publications, the answer may be as simple as affiliate marketing avenues, such as content locking where an advertiser sponsors something like a survey, quiz or game that the reader then interacts with to see the desired content. These are often overlooked, but can provide a non-intrusive method to keep advertisers and readers alike happy, while still generating a positive ROI.

    - Peter Tarr, CEO, CPAlead

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  18. The problem is we are not seeing the newspaper industry respond to the situation correctly yet. They are still seeing their business as print products or digital products rather than a whole spectrum of information. They are responding to what has happened and not looking ahead at what will be. If they were, they’d be setting up relevant channels of delivery and developing potential new channels that no one ever thought of. Basically … there’s no R&D taking place in most media companies. Rather they are still playing “Whack A Mole” on the hull of a rotten ship to keep it from sinking rather than building a new ship. So, you’re right. Pay walls aren’t the answer. R&D will be … but that’s not something media companies are good at.

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