While some of the raw numbers attributed to early adopters of paywalls might seem impressive, there are two things not being fully disclosed by publishers: the percentage of bundled packages with primarily print-minded subscribers and the churn rate for digital subscriptions. The higher the churn rate, the slower growth publishers will see over time and the higher the cost of customer acquisition.
The Strib’s paywall got those 20,000 subscribers in less than six months. Roughly half of those subscribers are new digital-only readers, who pay $2 a week for access, Strib publisher Michael Klingensmith tells me in an email. Another 25 percent were existing Sunday-only subscribers who now pay $1 a week to access the website. And the final 25 percent are the best yet: new digital subscribers who added a subscription to the Sunday paper—by far the most lucrative edition for newspapers. There’s been virtually no churn: 95 percent have stayed on past the intro pricing period.
So we can back into some numbers here. That means the paper has already gotten a new annual revenue stream of about $1.6 million in digital subscriptions. Adding in the new Sunday print circulation revenue brings it to well over $2 million a year (and it’s worth noting, helped keep Sunday print circ flat from a year ago).
This, of course, is hardly enough money to return to the salad days of newspapers, which will never return. But this incremental revenue stream is still new and it’s still fast-growing. It’s unclear where it could end up in three or five or ten years. Even if it stopped growing tomorrow, it’s money that Owens & Co. would have newspapers leave on the table for no apparent reason.
The anti-paywallites tend to make a big conceptual error in not accounting for the fact that large websites almost never sell their ad inventory out. So if you put up a paywall and pageviews fall by even 25 percent, your digital ad revenue will decline by much less than that, since remnant ads pay so poorly.
“The ratio of new digital consumer revenue to lost digital ad revenue is at least 20 to 1,” says Klingensmith of the Strib’s experience.
Unsurprisingly, he says, “I am intensely ‘pro-meter.’”
4. “Paywalls are too easy to defeat on the open Web and the technology is costly.”
This overestimates the technological abilities of the vast majority of computer users, much less their willingness to cheat. You have to wonder why those nearly half a million people are forking over $15 a month or more for The New York Times. Anyway, this can also be a feature, not a bug.
But it doesn’t take $25 million to launch a paywall. Press+, for instance, which now has 350 publications as clients, sets it up for you and charges 20 percent of revenue.
Owens also points out that the Morning News plans to spend $4 million in the next year marketing online subscriptions. I’m glad to see a media company investing in its paper, but that money would be better spent beefing up the paper’s news staff. As Klingensmith tells me, “You don’t have to spend any money “marketing a meter” - people just bump into it as they are browsing your site.”
5. “It takes a packaged bundle to sell good journalism to the masses.”
Who’s talking about unbundling that package? And what does “Paywall schemes disaggregate content and remove it from its traditional package” mean? Because you’re online now you can’t have sports and crime news and politics and entertainment and classifieds and coupons and comics and opinion columns? Huh?
But it really gets my goat when the anti-paywall types break out the old canard, as they seem to always do, that “readers never paid for news.” Owens:
As one of my heroes, Walter Lippman, pointed out in 1920, “Nobody thinks for a moment that he ought to pay for his newspaper.”
Yes, I ought not have to pay for my daily bread, but if the baker charges me, I’ll fork it over. This is very simple: I want to read your newspaper. You charge me for it. I pay, grumbling about that two-bit newsstand increase you just soaked customers for. Transaction closed.
Very few readers buy the paper for the fish wrap. They buy it because of what’s printed on it, (including, in some cases, the ads).
One of Owens’s points about how readers don’t really pay for news is that 85 percent of newspaper subscribers say they buy it for local news. “That means 15 percent of the buyers didn’t care about local news.” All righty, then.
6. “There are numerous free alternatives in every metro market for news, which will greatly reduce the adoption and retention rate of paid digital subscribers.”