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Don’t build a paywall, create a velvet rope instead

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As the newspaper industry continues to flounder, paywalls and other subscription models are becoming more common, with everyone trying to imitate the New York Times or the Wall Street Journal. Is there any other other option to putting up a turnstile around the news? We’ve argued before that there are a number of options, and Guardian editor-in-chief Alan Rusbridger described them fairly succinctly during the paper’s recent “open weekend” event: in a nutshell, readers can contribute by providing their time, their information or their money. Ideally, a truly interactive digital-media outlet would make use of all three of these, in order to build relationships with readers that are about more than just a cash grab.

With the possible exception of Media News Group under CEO John Paton and his “digital first” approach, the Guardian (please see disclosure below) has made by far the biggest bet on the benefits of an “open journalism” model, by trying to increase the ways in which its readers can contribute to or become involved in news stories — including opening up its story-assignment schedule to the public for commentary. The Guardian has also made a pretty big bet on the value of alternate distribution methods, with the “open platform” project and also a Facebook social-sharing app that has proven to be fairly successful.

More traffic is great, but that doesn’t solve the revenue problem

According to a Guardian executive, thanks in part to the growth of the Facebook app, social sharing is now close to generating as much traffic to the paper’s website as search does — a fairly incredible statistic, considering that social produced just 2 percent of the traffic to the site as recently as six months ago. The Washington Post has seen similar success with its social-sharing app, and the paper’s ombudsman recently described how the Post sees these kinds of tools as a better short-term response than a paywall: in other words, a way of increasing readership instead of trying to restrict it.

The problem for both the Post and the Guardian is the same as that confronting virtually every other major newspaper: print-advertising revenue, which a majority of papers rely on for the bulk of their income, continues to fall off a very large cliff, and so far online advertising hasn’t even come close to making up the gap. So the fact that their social-sharing apps on Facebook are producing millions of extra pageviews for the Guardian and the Post is great, but monetizing those readers is still problematic. How do these papers survive without putting up a paywall like everyone else?

One answer is to think of the relationship with readers as being about more than just money, and then let the monetization flow out of that relationship, rather than the reverse. So instead of just hitting all users with a request for cash when they consume some artificial number of stories (the NYT recently ratcheted this number down to 10 from 20), why not try the “reverse paywall” method suggested by Jeff Jarvis and former Washington Post managing editor Raju Narisetti? This model avoids the fact that news has become a commodity and sees the interaction with and engagement of readers as the main benefit — but there are arguably just as many revenue-generating opportunities.

Build the relationship first, then let the monetization flow from that

So instead of just hitting a wall after a certain number of stories, readers who contributed comments or moderated the comments of others — or provided other forms of useful data or labor — might get a benefit that others wouldn’t, whether it’s access to certain content or an invitation to a real-world event they might be interested in. In that case, readers might actually volunteer to pay, because it would no longer be seen as a duty but instead would be something useful to them. Among others, The Atlantic and the Texas Tribune have made good use of real-world events as a revenue-generating addition.

As Charlie Beckett of the London School of Economics notes in a blog post, this model is focused on encouraging readers to see themselves as members of an exclusive club that has certain perks or rewards, so it’s a lot more like a velvet rope than a paywall. The outcome is arguably the same as a paywall, but it starts with the benefits instead of starting with the turnstile and a request for money. Would you rather have a relationship with an outlet that is always asking you for money, or with one that sees you as a partner and gives you membership benefits that sometimes involve having you pay for things?

Efforts like the New York Times‘ revamping of its commenting system, which gives “trusted” readers the ability to post comments without moderation, are a small step on the road to this kind of relationship — one that encourages readers to “level up” and provide either more information about themselves or more effort in a variety of ways, and then gives them benefits as a result. But too many papers seem to be ignoring the velvet-rope option and simply throwing up paywalls out of desperation.

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 Brian Snelson and Giuseppe Bognanni

15 Responses to “Don’t build a paywall, create a velvet rope instead”

  1. KN makes an interesting point when stating – If newspapers and magazines would write original content (articles, infographics, videos, etc) that is ONLY available on their website or page, then people would pay.

    The challenge in providing original content is on par with the challenge of being being a primary source authority. When news outlets try as they may to be authoritative i.e when fulfilling public service announcement as part of their licensing – or selling the poli sci 201 lie that the media is the 4th Branch of Government – when the real goal is to sell avertising space that results in thier exposing themselves as tertiary or third level sourcing authority at best.

  2. Original content will always draw a pay audience. Because a general interest story (for example: an article about the debt ceiling limit) can be found on many websites, newspapers, and blogs, there is no need to pay one outlet for the story, when it is easily found elsewhere for free. If newspapers and magazines would write original content (articles, infographics, videos, etc) that is ONLY available on their website or page, then people would pay. But with the proliferation of RT’s and re-use/republishing of articles, there is no incentive to pay. Create original content – get monitized!

  3. As I’ve said from the beginning: Where the NYT has started in its paywall won’t be where it ends. It either needs to morph into a true paywall or into a membership program. I personally think a membership program is much more appealing. But that’s just IMHO

  4. Ranjan Roy

    You’ve completely nailed it: monetize the engagement, not the traffic or content. Newspapers never really monetized content, but only the purported eyeballs from circulation to advertisers, and other than the HuffPos, will never build the digital ad sales teams and low-cost bases to compete. They are sitting on massive, engaged, lucrative audiences yet are still trying to replicate print monetization models on the “new” medium of the web. (An unconventional take on this short-sightedness:

  5. Arvin Alba

    Also, I really don’t see why digital ads are not as expensive as print ads. Is it because of limited screen space? But then, your HP ad takes tons of screen space, it’s very noticeable, and it did not annoy me as most animated flash ads would. That’s effective advertising, probably more effective than a print ad, which I would have glossed over, too, just like any ad.

    • It’s because digital ad space if virtually unlimited. There is no scarcity to digital advertising, especially the way it is served (indiscriminately across multiple brands and platforms simultaneously). Obviously, no scarcity = low prices.

  6. Arvin Alba

    That’d be great for special focus blogs, but traditional media won’t survive on that model. Community is very difficult to attain. In the end, much of traditional journalism will probably collapse. But in the end, this is good. Much of traditional media survived on bland content and reposts anyways. The rise of the web ensures that only quality content is monetizable.

    Also, this does not completely mean that traditional media will die. People are still OK with paying for high quality content. Personally, I don’t see anything wrong with a paywall – if the content is good enough, I’ll bite.

    • “Exactly Ian Kennedy…that’s EXACTLY what I want to be true so it will be easier for me to keep my job in the future!” -Matthew Ingram

      Why do Asians have such a hankering to oversimplify the world? (I really think this has to do with people thinking Buddhism is cool nowadays which I don’t understand!)

      Anyway the fact that a few loyal leftists are gonna pay party dues by contributing to the NYT doesn’t really impress me any more than the fact that housewives love Pinterest. Yea it’s cool..those things will continue to exist.

      Guess what, McDonalds is going to keep existing too. I don’t try to whip myself into a hype that McDonalds is somehow reinventing the food industry with its new extra value meal by surviving.

      Most of this hub bub is boomers who are bitter that their world is dying and that it looks extremely unlikely that there’s going to be another New York Times that people respect the way that older people respect that rag.

      I for one am glad. I was born before digital news and I am now far more informed than I ever was (and that will stand even if all the MSM websites put up paywalls)!

  7. “A way of increasing readership instead of trying to restrict it.”

    This seems so logical and right. Why aren’t more newspapers pursuing it? Are they lacking imagination?

  8. Greg Golebiewski

    I applaud Mathew for his continues efforts to point out to content monetization methods alternative to (now, traditional) paywalls. And once again, would like to refer his readers, but more importantly, content creators and publishers to a very poignant discussion during the Paywall Startegies 2012 conference in London last month. There are better ways to engaged users and generate revenue than the metered approach. Check out this from Znak it!

  9. Robert Tyson

    All the newspapers were completely insane not to build their own proprietary email lists, and allow advertisers to mail them. The Telegraph in the UK has finally caught on, but had they done this 15 years ago they wouldn’t be in the situation they are now.