The Audit

The Audit — November 26, 2012 10:00 AM

The Washington Post needs a paywall—now

A strategic error needs to be reversed, stat

By Dean Starkman

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Please....Matt Ingram, Howard Owens, Jay Rosen, anyone. Please explain to me how the New York Times and other papers could do better with digital advertising, when The Guardian, the third largest news site in the world and the ONLY one who releases hard numbers admits that their digital newspaper ads only bring in about 26M dollars. No. I don't want percentages. What hard numbers support the fact-free argument that digital ad-supported news orgs can support large news-gathering operations? What are the John Patons of the world hiding from us with endless ratios and percentages? What do you got, fellas? There are two types...show-ers and grow-ers. One I can see with my own eyes. The other one I have to endure hearing you talk about.

#1 Posted by Stephen, CJR on Mon 26 Nov 2012 at 02:20 PM

I'll bite: Even the Guardian would admit that it needs to do better with digital advertising -- heck, even Facebook isn't doing that well with advertising, primarily because that business is being disrupted by the very same factors that are disrupting the media industry. Can digital advertising support a large news-gathering operation? I have no idea, but I am pretty certain that reader subscriptions alone can't do so either.

#2 Posted by Mathew Ingram, CJR on Mon 26 Nov 2012 at 05:19 PM

Sorry, I'm not a "fella." Do you have to have XY chromosomes to participate in such discussions? If not ...

I am an old-media veteran, running a micro-news org.

I don't have access to the Post's P/L, staffing lineup, etc.

But I can tell you one problem big media in general has not conquered yet - bloated middle management.

I quit a six-figure middle-management job in a big-city TV newsroom five years ago. I will unhumbly say I was very good at what I did - but I was NOT needed. Reporters were supervised by newscast producers, who in turn were supervised by an executive producer or two, in turn supervised by a managing editor and/or assistant news director (me), in turn supervised by the news director (department head) - ridiculous to have more than one layer between the reporters and the department head. If you have reporters who know what they are doing, they need minimal supervision. Sure, you have the projects for which you need to call in the legal department. Otherwise - until you tell me that middle-management layer has been slashed, you can't tell me a news organization of any size is operating at maximum efficiency. Unfortunately, they are the ones who usually fight hardest to keep their jobs, while low-hanging fruit like young reporters are last hired/first fired. If someone someday shows that there are NOT millions of dollars in savings to be had by dramatically trimming the management layer ... I will rest this case.

#3 Posted by Tracy @ WSB, CJR on Mon 26 Nov 2012 at 05:20 PM

The problem with paywalls is they help your bottom line only if the content is exclusive AND worth paying for, BUT they hurt your reputation if you are seen as being proprietary with something that the public interest demands be freely available.

Paywalls are good for things like features, minor editorials, and local- or special-interest columns. They are also good for "hot" financial news. "Novelty" items like obituary-related services beyond simple death notices and obituaries of public figures are another way for a paper to make money.

They are horrible for non-"hot" news, because you can't keep that exclusive for long. If I can't get it free from you, I'll get it from somewhere else. If I can't get it free from somewhere else, it must not be that important.

Paywalls are also bad for "major" editorials where the newspaper is trying to sway public opinion. You WANT these to get out to everyone with zero boundaries.

The future of most paid news-content is going to be on a syndicate basis, much like music-licensing in churches or NetFlix and Hulu for video entertainment. I'm not really ready to pay $100+ a year for access to my local paper's exclusive content, but I am ready to pay $100 a year for access to ALL non-niche content from ALL major newspapers, with the money presumably divvied up on some kind of proportional-use basis.

#4 Posted by davidwr, CJR on Mon 26 Nov 2012 at 05:47 PM

The solution is finding revenue streams that focus on experiments or digital initiatives that work and not traditional legacy models or even traditional web models news organizations have implemented (banner ads, for instance). So if your live blogs are producing great engagement, hits, or targeted traffic, you can make money by making the advertisers the 'subscribers' or sponsors of a particular line of content, and not with CPMs, but with premiums to let an engaged community view your content while exposing them to nonintrusive ads (charging a fixed amount to advertise to a targeted liveblog audience, for instance). This, or paywalls, for that matter, will not make up for loss print advertising. Costs are going to have to be cut, and it's going to be painful.

#5 Posted by Ivan Lajara, CJR on Mon 26 Nov 2012 at 08:46 PM

Dean: Do you really think that Don Graham and Katharine Weymouth (disclosure: I used to work at the Post and have known both for many years) haven't run the numbers on a paywall six ways to Sunday? Could it be that, rather than relying on religious zeal in making their decision (as you do in making your underreported argument), they have considerable internal data and market research informing their reasons not to move the Post to a subscription model? Believe me, to paywall or not to paywall is not a decision made lightly by any newspaper, including the Post--your beliefs and opinion on the matter notwithstanding.

#6 Posted by Mark Potts, CJR on Mon 26 Nov 2012 at 09:24 PM

Mark: Dean provides a lot more data in his rant than you provide in yours. you have enormous faith in the Grahams, but the financials don't justify that faith. And why is the Washington market so different than just about everywhere else? Why do you assume that the Grahams are so much smarter than everyone else? They are just a couple steps behind the times (Times) in a rapidly chaining industry.

#7 Posted by jon, CJR on Mon 26 Nov 2012 at 09:55 PM

Anyone who has read the story of how Don Graham was about to buy 10% of Facebook and then let Zuckerberg weasel out of it by literally crying, should pretty much have no doubt as to Graham's business acumen. He's a rich, spoilt man of a certain age. The word is 'callow'

#8 Posted by Stephen , CJR on Tue 27 Nov 2012 at 01:29 AM

In the era of the omniscient Google, no news is exclusive for longer than an hour, may be two.
People do not read on a site for exclusivity but for authenticity, depth and quality of coverage. If they are convinced that you are giving good stuff, they keep coming back for more. Cheaper, the better. Free, the best.
Advertisers flock to such sites with ease. This is a market Mr Writer. And the Post needs to reinvent itself along the lines of its nimbler, crisper rival NYT. The money will come.
Funny, the article is negating the very principle that runs the CJR site and millions of other, successful, internet-based businesses.

#9 Posted by The Contrarian, CJR on Tue 27 Nov 2012 at 01:54 AM

There isn't any way a paywall will work at the Post as long as they have such a wretched website!
There's no single page view for articles that are idiotically stretched out over two or more pages.
Articles & columns are often buried & impossible to find without doing a keyword search. Just read Lisa DeMoraes weekly chat where there's always a complaint about how difficult it is to find her columns & articles on TV. Even finding the chat can be a challenge!
The previous online incarnation had a simple "Print View" that gave you all that day's print stories.

#10 Posted by Becca, CJR on Tue 27 Nov 2012 at 10:28 AM

I wonder if the Grahams know or have been told by their market researchers that instituting a pay wall would cause a significant number of their on-line readers to shift to the New York Times. I would never pay for the WaPo on-line in its current form. The quality is really mediocre and the site itself is very unfriendly to readers. If I didn't have the free alternative of the WaPo, I would have long ago bitten the bullet and bought access to NYT.com. If the WaPo went behind a pall wal it would not even be a close call in my house. My hunch is the Grahams know this already, which is why the WaPo continues to remain pay wall-free.

The state of the WaPo is very sad. I grew up reading the paper and felt that it played a big role in my education. I have since moved away and hadn't seen the physical paper in several years. Last month I was in Washington and I was shocked at the state of it. It was like a small town paper, hardly any stories, lots of recycled blog items. I think I finished reading it in about 10 minutes.

#11 Posted by Francis Urquhart, CJR on Tue 27 Nov 2012 at 12:48 PM

Marty Baron. "No institution can spend more money than it has" On his lunch break he should walk down the street to Congress and the White House and make that quote.

#12 Posted by Gallens, CJR on Wed 28 Nov 2012 at 12:23 AM

Let's make this simple. As a practical matter, paywalls have not proven the optimal strategy anymore (and probably less) than digital ads. It is a small slice of the industry.

However, the idea of engaging readers to pay at some point for some service makes lots of sense. The question is- when to ask who for money and in exchange for what.

Trying another failing strategy that reduces audience size and goodwill is likely not the best move. But asking your biggest fans to help you continue important work in exchange for scarce value might be a good start.

#13 Posted by Ben Ilfeld (@benilfeld), CJR on Wed 28 Nov 2012 at 02:02 PM

One more bit about that "dead parrot"

The online ad industry is doing quite well, thanks. The fact that some traditional news creating institutions have not been able to grow with it speaks more to their un-willingness to innovate in that space.

There are very few technology resources at these media companies dedicated to advertising innovation especially compared to the CMS's and editorial related concepts.

There are structural problems that underlie these decisions. And there is fear that no matter what, RTB ad systems will eventually just take everything over. But if you are passionate about the quality of your product, then you should be equally passionate about providing value to the clients (mostly advertisers) who support it. And you must innovate beyond your competition in order to deliver ever increasing value for your clients.

#14 Posted by Ben Ilfeld (@benilfeld), CJR on Wed 28 Nov 2012 at 02:15 PM

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