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Why Raising The Pay Wall May Be An Impossible Dream

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The worsening advertising climate is forcing many publishers, facing only modest online gains after a decade of digital investment, to consider charging for content. *News Corp* is considering a strategy that may involve e-readers, GMG is mulling charging for MediaGuardian.co.uk and doubtless others are wondering how to finally start making real profits from online traffic. But there are risks and challenges – here’s a rundown…

You can’t charge for abundance: First thing’s first – there is still a healthy market for business-critical information. WSJ.com has steadfastly stuck to subscriptions, FT is profiting nicely and there are still dozens of B2B title serving niche communities with premium-access websites – it’s the kind of unique information decision-makers will pay for. But for the raft of general-interest consumer news sites whose stories differ only slightly from the next publication along, the prospects for premium are less rosy. That’s why sites like Times Online, Telegraph.co.uk and others are unlikely to ringfence themselves entirely. Instead, paidcontent will be piecemeal – publishers are looking across their networks to identify which individual sections and features might be chargeable (how about new, value-added services like databases and research?).

The genie can’t go back in its bottle: Web users have enjoyed 15 years of free content. That can’t be reversed easily, and it can’t be changed by any one publisher alone. No-one should want to blink first – any producer of consumer news that erects a pay wall will quickly find its audience migrating to rival sites offering a similar service. That’s why any paidcontent initiative must be an industry-wide effort. Can bitterly opposed newspaper owners, so used to knocking lumps out of each other, join to all jump together? There’s no sign of it – but perhaps increasing industry consolidation will get us to a consensus by default. Or perhaps a joined-up approach would attract dreaded competition scrutiny.

BBC News is the gorilla in the room: Even if publishers manage to raise the pay wall together, they will be competing not just with alternative grassroots sources like bloggers but also with a well-staffed news site that appears to be “free” and enjoys unprecedented brand loyalty. It’s a problem that some publishers have already voiced but, for all their protestation, the notion the BBC’s public service remit should stop at TV just won’t fly, especially with Digital Britain fixed on securing an online public remit. Besides, BBC News already has an invisible pay wall – it’s funded by a £142.50 TV licence.

Advertisers would hate it: Erecting the wall would instantly shut out a significant percentage of current users – in a downturn, perhaps the majority. That’s not good for advertisers who want reach above all, and won’t serve well when advertising is projected to recover late next year. So publishers had better be sure such a move would bring in more money than would be lost in ad sales. In this economy, it probably would. But which is more attractive – the short-term financial uptick, or the ability to inform and influence a mass audience?

E-readers are a white elephant: The continuing belief by some publishing execs that, eventually, some mythical e-reader standard will rescue the business is misguided. In a quest for reach, newspapers have spent the last 10 years divorcing their bits from the shackles of atoms. Now that their intrinsic content is freely available via any number of outlets, there

12 Responses to “Why Raising The Pay Wall May Be An Impossible Dream”

  1. In any industry, it is very hard for a company to convince their clients or their customers for an increase in price. How much more if a company started with free service then eventually be asking for a paid service? Most probably, clients will look for other competitors offering free service.

  2. The challenge for traditional publishers is that they will have to invert their editorial pyramid with news at the base, and instead spend less on news that is available elsewhere, and more on comment and analysis, useful tools, and practical buyers guides and how-tos. Then they have a fighting chance of creating something consumers will pay for. Read my blog on reinventing online content for publishers for more detail at http://www.penmaen-media.co.uk/index.php/2009/05/reinventing-online-content-for-publishers/. Carolyn

  3. The ugly fact is that there is a glut of news in the marketplace that far exceeds the demand for news. The glut means that there is over-production of news, and there is no solution to the problem until supply is brought in line with demand. That means that a lot of people need to find work producing something else, and a bunch of news producers need to go out of business.

  4. I seen blogger and wordpress blog using the third party news using the RSS. When Source website update at the same time Blog website publish same news with or without source link. who care about the copyright rules.

  5. I think Videopoet hints at the evolution of news. Serving editorial as the standard informative model is quickly becoming passe. True interactive news is replacing it with community based follow through on the facts as presented under the old model. What traditional news purveyors should do is build brand loyalty into personal opinion loyalty as that is where content delivery is going and the mega bloggers have shown the way but lack the resources to deliver like the big boys. There is a niche to be had by traditional media if only they posessed the courage to tap the social expertise needed to develop it.

  6. Guest

    Will the public pay for access to these sites as they are ? I wouldn't. I think it will cause a fragmentation of news concentration and superbloggers and sites which develop public debate about news stories will emerge victorious..

  7. 'Advertisers would hate it' is too big a generalisation.

    Those that do pay for digital content are a valuable audience, both in terms of the additional profile data from registrations and the simple fact that they are willing to pay.

    It's expensive to advertise on the FT because of the proven high worth of the subscribers. Facebook has reach, but as the price of its advertising shows, reach isn't everything.

  8. While those with highly differentiated content can continue to charge subscription, I agree that going from free-to-paid is a non-starter for most publishers for the reasons Robert details above.

    The answer lies in a frictionless syndication model that leverages what the web does best while adding some controls to ensure adequate ecpms.

    The Fair Syndication Consortium has a solution for this and can be found at fairsyndication.org

  9. This post smacks it out of the park. Great summary – bring on the comments!

    It's pretty amazing that Murdoch would embrace such apparent folly. It must be a strange feeling for other newspaper groups looking on. For their own sakes they should be willing the strategy to win – against the massive challenges you list. If Murdoch succeeds then it means the paywall might have a general future for ordinary consumer titles. If not, they have the satisfaction of watching a big chunk of News Corp decline. So they win either way!

    I have my doubts. These pay walls have massive holes. With FT for instance, you just change the part of the URL that says Authorised=false.html to Authorised=true.html and delete everything after true.html