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Summary:

John Paton, the CEO of the Digital First Media chain, says that he doesn’t believe paywalls or subscription models are the solution to the industry’s problems, but he is experimenting with them anyway.

Plenty of newspapers have been jumping headlong into the paywall business recently, and many of them claim that the introduction of subscription plans has been the best thing that ever happened to them. Not everyone is quite as enthusiastic, however: Digital First Media CEO John Paton, for example, makes it abundantly clear in a blog post announcing his chain’s new strategy that he would rather be doing just about anything else than tinkering with paywalls, but he is doing so anyway.

Paton, who took over Digital First Media in 2011 and has published a number of manifestos about the need to put the web first — both at DFM and in his previous job at the Journal Register Co., a unit of DFM that recently filed for bankruptcy for the second time in 4 years — starts his announcement by saying he doesn’t like paywalls and thinks most publishers are implementing them incorrectly (Note: We are going to be discussing paywalls and other forms of monetization at our paidContent Live conference on April 17 in New York). As Paton puts it in his post:

“I think they can be a dangerous management distraction to the real job of adapting a legacy business to the realities of an Internet world… you don’t transform from a broken model by tweaking it – you build something else. I think paywalls, meters if you like, are exercises in tweaking not transforming. Most paywalls in the US are simply initiatives in subscription price hikes – bundling digital with print with no clear plan for sustainable growth.”

That said, Paton admits that since he is the CEO of a company that needs to find new sources of revenue, he is experimenting with paywalls, or what he calls “the Subscription Project.” Part of this involves trying to fix the existing paywalls or subscriptions plans at some of the chain’s newspapers — paywalls that Paton inherited when he took the job of CEO (when paidContent’s Staci Kramer interviewed him about what he planned to do with them, he said they would remain until he figured out whether they worked).

Digital First is experimenting with a Google survey

Newspaper paywall

Paton says in his post that the performance of these paywalls at 22 of the company’s newspapers was “abysmal.” After watching them for a year, he says they had brought in just $300,000 in revenues — not enough to make a difference at a company whose annual revenues are close to $1 billion. Paton says this failure is now internally referred to as “Paywall 1.0.” The second version of this effort is coming soon, the Digital First CEO said, after doing some research with paywall operator PressPlus into best practices around charging subscribers for digital content.

Meanwhile, Paton said the company is also experimenting with a different kind of wall around some of its content — namely, a “survey wall” operated in partnership with Google and its consumer survey unit. At all 75 newspapers belonging to DFM’s MediaNews Group unit, a group that includes the Detroit News and the Denver Post, readers will be asked to fill out a short survey after reading a certain amount of content. Google has been promoting this idea as an alternative to traditional paywalls.

According to Paton, the Google survey experiment is beating the paywall experiment in terms of revenue growth, although he adds that both “cause traffic issues.” And he said Digital First Media is planning a future test that will combine digital subscriptions for some of the chain’s print products and mobile apps with Google’s survey wall. In the end, he says:

“It is too soon to say what will work and what won’t. But I think we can say that emotional arguments over what something is worth in a market economy is a near worthless waste of time at the expense of finding real solutions to the problem.”

With Digital First Media now experimenting with paywalls, and the Washington Post — another prominent holdout on the idea — reportedly considering a subscription wall as well, it looks like the only major players who remain steadfastly against the trend are The Guardian in Britain and USA Today, where publisher Larry Kramer has confessed that the paper simply isn’t unique enough to convince people they should pay money for it.

Post and thumbnail images courtesy of Shutterstock users Daniilantiq and Voronin76

  1. oldnewspaperman Tuesday, February 5, 2013

    Have to believe Paton is on a short clock to turn things around. His “stacking digital dimes” mantra was a fantasy. Now even his Thunderdome consultants are hedging their bets.

    http://pressthink.org/2013/02/look-youre-right-okay-but-youre-also-wrong/

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    1. Really? I’m hedging my bets? I did not know that, “oldnewspaperman.” But I am open to persuasion. Which bets did you have in mind?

      Had I placed a bet that “editing by click rate” was wise, ethically sound and would lead to success? Where did I do so? Because I cannot recall saying anything like that. Had I bet that online advertising would equal the lost revenues from the decline of print? I can’t recall ever saying — or believing — that so you’ll have to help me with where I placed that bet. Got a link or something? Had I somewhere signed on to the proposition that you CAN “cut your way to the future?” If so, I am not aware it. Did I claim that bloggers and citizen journalists CAN fill the gap when there are fewer journalists at the capital or city hall watching what goes on? I’m quite sure I never made that claim, but if you say I did… any evidence?

      If these are not the bets I made that I am now, according to you, hedging, which ones did you have in mind, “oldnewspaperman.”

      Sincerely
      Jay Rosen
      http://pressthink.org

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      1. Oldnewspaperman, is Rosen really hedging anything? I think he writes an accurate account of what’s going on. I particularly like this quote: “Digitally, the original sin wasn’t failing to charge when the first news sites came online; it was re-purposing the old platform’s material.”

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  2. Dale A. Duncan Tuesday, February 5, 2013

    He doesn’t want to do it because he knows his content is terrible and he will have to pay money to improve it to be successful with a metered model.

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  3. So John Paton is investing time, resources and credibility into something he doesn’t believe in and says doesn’t work. Genius.

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  4. I still believe that John Paton and many others have clung to the “newspapers are dead” mantra so long that they are bent on making it a self-fulfilling prophesy.

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