No doubt about it, word from CEO John Paton that his Digital First Media will implement paywalls across its portfolio of newspapers is landmark news—at least for all six of us who follow these things closely.
As Robert Levine says: “It’s like the fall of communism — but with consultants.” The irony, of course, is that Paton is putting up walls, though unlike the iron curtain,
he won’t shoot at you you get to cross 10 times or so before the gate shuts.
There have been signs of perestroika over the last year or so.
Clay Shirky, a member of
the FON Politburo DFM’s advisory board (that’s my last Soviet joke, promise!), wrote last year in a back and forth with me that the Washington Post should implement a metered model.
Paton told me last year, amidst DFM’s bankruptcy, that people “will pay, I believe, for something that uses the medium for its strength.”
In February, Paton announced the “Subscription Project,” writing, “I’m a Chief Executive, responsible to my employees and my shareholders. So, I can’t work on theory alone. I have to try paywalls.”
Now, Paton says this:
After a lot research by our team, we believe an All-Access print-digital subscription initiative is necessary to buy us that proverbial gas in the tank. With the rise of digital and the fall of print, we’re at the point where we can launch a working All-Access subscription model.
You have to hand it to Paton for putting pragmatism over ideology. Seriously.
Our argument for paywalls, which goes back nearly half a decade now, has been that selling something with one hand and giving it away with another doesn’t make sense. Print still brings in the vast majority of revenue at every newspaper I know of besides the Financial Times, which gets most of its digital revenue from subscribers.
The paywall argument has always been about applying a tourniquet in the short term to give papers time to figure out the inevitable transition to all-digital. That strategy depends on boring old-economy stuff like getting money from core readers, who are worth exponentially more than marginal clicks.
And so Paton is half-right when he says this:
Let’s be clear, paid digital subscriptions are not a long-term strategy. They don’t transform anything; they tweak. At best, they are a short-term tactic. I have said that often enough in the past.
But it’s a tactic that will help us now.
Paton had better hope they’re part of a medium-to-long-term strategy. His papers need all the revenue streams they can get. Ken Doctor:
Circulation revenue was up 5% in the U.S. last year; I expect it to be up by that amount and more for 2013. Those are meaningful mounds of pennies, amounting to often a half a billion dollars for the industry. That’s why European dailies are now starting to strongly adopt the practice.
Paton likes to call paywalls a “tactic” rather than a strategy. I’m not sure that’s a meaningful distinction. Maybe “paywalls” are a tactic, but reader revenue is a strategy, and it’s one that makes as much philosophical sense as financial. Who better to pay most of the salaries of journalists than the people they write for? Isn’t that better than being largely beholden to more fickle commercial interests?
We’d love nothing more than for news companies to figure out a way to make things work without charging for news. But we’ve known for years now that digital advertising will never support a robust newsgathering organization in every town and city across the country (and that other, non-ad digital revenue sources are a long way from being sufficient). A digital-ad model depends on the kind of scale that not everyone can get and/or the kind of low labor costs that make a newspaper’s survival nonessential.
Lots of newspapers are already to that nonessential point or are awfully close. Better papers will have better paywall results.
What the meter model has shown for more than two years now is that papers can get new incremental revenue from circulation while hanging on to the vast majority of its digital ad revenue.
As I wrote nearly five years ago:
It seems to me that charging online would help newspapers slow their print circulation declines, and perhaps even give them a bit of pricing power on rates. Remember a print reader is still worth about nine times the revenue a (non-paying) online one is…
At the very least, this might give papers some breathing room to survive this economic crash.
It turns out that meters do help papers gain pricing power, though the slowdown of print circulation has been relatively minor, though that’s probably because papers with paywalls have been jacking up their print prices.