Digital First Media is working on paywalls, even though it really doesn’t want to


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

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