Clay Shirky, a leading paywall skeptic, deserves credit for grappling with what is now generally conceded to be the clear success of The New York Times’s digital pay model.
Shirky makes the counterintuitive argument that NYT’s success, coupled with the supposed failure of the Times of London own paywall, “are a blow to the idea that online news can be treated as a simple product for sale, as the physical newspaper was.”, He argues that the failure of the London paper’s rigid paywall (no free stories; readers have to pay to see anything) shows that selling online news is not a “simple product” transaction.
Further, he argues that even a successful leaky paywall (readers get to see some stories but pay for unlimited access) will push newspapers like the NYT to focus on the niche interests of its subscribers at the expense of its mass readership.
He makes some interesting points, once they are translated, but what stands out immediately is that a leading future of news (FON) thinker, faced with evidence contradicting a cornerstone of the theory—that people won’t pay for news online—is still working to show that even when people are paying for news online they aren’t, well, you know.
Can we agree, at least theoretically, that when people do pay for news online, that that would be a good thing? It’s okay to disagree, but it seems to me the FON side of the debate needs to clarify its position on the matter: Is charging for journalism merely impractical or is it wholly undesirable?
Starting with the Times of London’s paywall, Shirky presents it as a flat failure and proof that online news payments are not “simple product” transactions.
One early sign of this shift was the 2010 launch of paywalls for the London Times and Sunday Times. These involved no new strategy; however, the newspaper world was finally willing to regard them as real test of whether general-interest papers could induce a critical mass of readers to pay. (Nope.)
Much as I think the Times of London went wrong installing a rigid paywall rather than a leaky one, to judge its merits fairly we need to look at better data than Shirky gives us via a speculative story written a year and a half ago, three weeks after the paper put up its paywall. That story reported that the Times’s web visitors plummeted 90 percent after the paywall and guessed that it had just 15,000 online subscribers.
More recent reports have said that Times traffic in the UK, the audience most of its advertisers want to reach, was actually down 42 percent (lots of people still visit the home page, apparently). And in October, News Corp. said that the Times of London now has more than 111,000 paying digital subscribers, up 41 percent in six months. I might not call that “critical mass,” and we don’t have ad numbers, but it’s nothing to scoff at for a paper with the daily print circulation of The Arizona Republic.
While the Times of London case is more nuanced than Shirky would have us believe, I’ll leave it to readers to decide whether even a total failure would show that buying news online is not a simple transaction.
Now anti-paywallists are presented with a harder case, a bigger “problem,” if you will: The New York Times.
Here, Shirky argues that readers in that case are paying $16 a month not because they necessarily want or need journalism, but because they want to support the journalistic cause:
When a paper abandons the standard paywall strategy, it gives up on selling news as a simple transaction. Instead, it must also appeal to its readers’ non-financial and non-transactional motivations: loyalty, gratitude, dedication to the mission, a sense of identification with the paper, an urge to preserve it as an institution rather than a business.
Shirky argues that, like donors contributing to NPR, New York Times subscribers pay $16 a month out of a sense of civic obligation (“support the cause”) rather than as an exchange of value (“you’ve got what I want and I’ll pay you for it.”)
A few comments.
Re: "About 14 percent of NYT readers online account for 75 percent of its pageviews, so it's just not helpful to think of the vast majority of online readers as potential customers. In reality, if you read just one or five pages, you're almost certainly not going to pay. But if you read more than twenty NYT articles a month, you have to pay, unless you're willing to cheat the system (and while many people, unfortunately, are, even more aren’t or don’t bother)."
Why can't the vast majority of online readers be potential customers? This is stated as a fact, but there is no evidence offered that makes this true.
And saying that many people are willing to cheat the system, or just don't bother to read the NYTimes anymore is hardly a reason to cheer.
Furthermore - some important facts about the subscribers have not been revealed e.g. 1) average age and age distribution, 2) subscription type distribution - digital only or print + digital, 3) subscription offer - special free (Lincoln) or $1 offers vs. fully paid digital prices, 4) geography, 5) income level.
While paywalls may seem this year to be a success, the more there are, the more unsuccessful they will be. I wrote blog post about this:
Paywall math: Why The Times results cannot be generalized – economics of decreasing returns!.
Additionally, by limiting the paying customers to those who can afford the very high prices, the NYTimes removes itself from much of the rest of the world, especially the developing world such as China, India, Brazil. News sites, especially those in English, have the opportunity to become world newspapers, but only if the whole world has access -- real access not just a handful of articles of month. The Guardian, Washington Post, and Mailonline are in a whole different level of competition to become the English language of the world, while the greatest level the NYTimes can achieve is to be the English language news site for the richer people in the richer countries.
Cynthia Typaldos
Founder, Kachingle
(note - I am the anti paywall revolutionista and this comment totally reflects my biased viewpoint!)
#1 Posted by Cynthia Typaldos, CJR on Tue 17 Jan 2012 at 05:23 PM
It's always seemed to me that Shirky, probably more than any of the FON faction, has the most agile mind, and if you're interested in the business of news is someone worth paying attention to.
On the other hand, he's not always right, and an interesting point of debate is his inclination to channel Paul Graham and say "Consumers never really were paying for content, and publishers weren’t really selling it either..." This is mostly true in the strict sense of the advertising versus subscription revenue split, but it's not necessarily true in the perception of readers.
Anyone who has ever worked for a small-town newspaper has probably noticed a curious thing: Get something wrong in a story, and the earful that comes back isn't directed at the fact that readers feel cheated out of a nickel at a newsrack, it's instead because they see the problem as being one of you messing with the quality of their paper. Something that sort of shoots down the idea that content has no value.
The Paton "about zero" comment makes for a good pullquote, but Paton's actual position in all this seems to be more nuanced. In an LA Times story on Sunday, James Rainey noted the clarification of, "(Paton) said he meant only that the ability to present stories immediately online 'makes it very difficult to say that stories in the morning paper about, say, what the mayor said last night, have any real value.'" Meaning, one assumes, that if what the mayor said has already shown up someplace online, the value of the same thing on paper tends to be less.
Yet another question in the paywall debate is that although the New York Times recently sold its 16-paper Regional Media Group, it still has control of the Boston Globe which recently went through a redesign including a new paywall. Under the Globe model, the paper now has separate paid and unpaid online sites. What's interesting is why, if the NYT paywall model has been a success, the choice would be made to not select the same model in Boston.
#2 Posted by Perry Gaskill, CJR on Wed 18 Jan 2012 at 02:32 AM
the payers merely "support the cause."
Translation: "they don't begrudge paying."
This is a huge monkey wrench in the FoN clockwork.
#3 Posted by Edward Ericson Jr., CJR on Wed 18 Jan 2012 at 02:21 PM
Mr. Ericson is is very right in his "they don't begrudge paying". Like many things in our consumer based society, we prefer to pay an amount to have something available if and when we use it and to have it we must pay. Also the amount for having it online is much cheaper than doing it with the full paper. I still prefer the total paper for the convenience of sitting in something more comfortable that a straight hard chair as I do for this and for the NY Times but I also see and read many more articles in the paper than I do online. They are just there and I don't have to look for them and gain much more information than I would if I limited myself to the computer. My eye doctor (at 35) and a few college students--50 year younger than I-- also prefer the paper to the online version. So it's not just my old age and crankiness that makes me prefer the paper. Online readers may pay $16.00 for online access, I pay about $70 for full access and convenience on paper and online. As I mentioned months ago, getting something free is fun for awhile, but one starts to wonder if he is really getting all he is supposed, so when the same item is sold at an acceptable cost, he/she will pay for it. Then if what they receive isn't up to their standards, they can either complain about it or drop their payments for the future.
#4 Posted by trish, CJR on Wed 18 Jan 2012 at 02:57 PM
Nice article - but I'm WAY over the "FON" thing. It was cute at first. Now it's just annoying. CJR is doing itself a disservice by trying to create a kind of divide in journalism. Those who you call "FON" and those who are "anti-FON" are on the same team. Please don't turn into a FOX News of media criticism and start writing articles (like this one) inspired by some kind of false divide in the media world.
#5 Posted by Digidave, CJR on Wed 18 Jan 2012 at 04:46 PM
So the Times has 424,000 digital subscribers. How much is each one worth, in total? I'm told the average print subscriber is worth $800 a year to the Times, including what they pay for a subscription and what advertisers collectively pay to reach them. And the Times has about a million of those.
If its 30 million occasional readers digitally are basically worth nothing to advertisers, how much more are the paying digital readers worth. I'm guessing not much. So that leaves the little bit that these folks are willing to pay for digital access, and, again, that isn't much either. Of course, production costs are lower for digital, but they're not nothing.
So why is the paywall considered a success? I'd say a true evaluation of that depends on the endgame. If the Times hopes to go all digital, it may find that its value drops sharply once the paper product disappears. After all, it will go from being one of 1,400 geographically dispersed U.S. daily newspapers to being one of 100 million or so websites available on any screen.
One final point: While it's true that people may be willing to pay for exclusive content, news is different. News is close enough to being a commodity that the medium it comes in accounts for a larger share of what people are paying for than the content itself. Just a hunch.
#6 Posted by pelham, CJR on Wed 18 Jan 2012 at 08:14 PM
The FON people are not acknowledging the new reality. Back in their day, people didn't pay for news, as it was generally widely available from many ad-hoc websites. As demand for quality increased, people paid. FON people are like dinosaures in a new epoch. Hehehe... I just wanted to try on a smarmy, know-it-all attitude for once. OK...look- paywalls work. The NYT has 420k paying subscribers and will soon have over 500k. Look at page 22 of their latest 10q
http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDA3MTY5MS0xMS0wMDAwMTIvZG9jL1RoZU5ld1lvcmtUaW1lc0NvbXBhbnlfMTBRXzIwMTExMTAzLnBkZiZ0eXBlPTImZm49VGhlTmV3WW9ya1RpbWVzQ29tcGFueV8xMFFfMjAxMTExMDMucGRm
You will see that the flagship paper is now growing revenue... And the growth is ALL coming from 'circulation'... The paywall. What more, good Lord, do you people want? I don't want vague theories or 'interconnectedness' arguments. I want numbers. The paywall is working.
Furthermore, Shirky's claim that paywalls will make sites more partisan is absurd on its face. FREE media makes sites more partisan, or that is the historical trend. Paying newspapers always have to be ecumenical, to attract a large audience. Free papers (Out, Village Voice, Independents) are always very liberal. Free radio is dominated by Rush Limbaugh and a million other far-right hosts. People who just want their prejudices reinforced choose free. People who want the information..pay.
#7 Posted by Stephen, CJR on Thu 19 Jan 2012 at 10:20 AM
Interesting, but the CJR is still grappling with the leap from thinking of ‘news’ as a commodity to ‘news’ indicating a discursive territory that consumers rent access to.
For example the NYT delineates/produces a niche (‘niche’ in a relative sense compared to ‘general’, where the NYT although might produce ‘general news’, does so from a singular NYT institutional perspective like a kind of institutional monad only lighting up those aspects of the wider world that are ‘news worthy’ for the particular niche market being catered to) market and what consumers pay for is not the commodity of the news, but participation in this niche market (and correlative intellectual, cultural, social, industrial, etc scene).
I am following the many post-marxists who have argued that the creative industries now operate according to a rentier market model rather than a commodity-based model. Consumers ‘rent’ participation in the niche market or series of niche markets. It gets very interesting when concepts like ‘participatory journalism’ and ‘citizen journalism’ are incorporated. A very good example of this general notion are the scholarly creative industries, where by way of rents paid by university libraries to academic publishers for access to journal databases, scholars consume the commodities produced by their our own creative and intellectual labour. We don’t pay for journal articles, but rent access/participation to a particular scholarly scene.
The NYT leaking paywall is interesting as it is designed to enable casual participants in the scene to participate, and this enabling of casual participation serves a different function. Casual participants can still read the odd story and discuss it through word of mouth or more commonly through social media. This reproduces the importance of the NYT as something worth discussing, through ‘conversation’ the NYT institutional POV (ie institutional monad) is valorized as producing news-commodities that are worthy of being discussed. In a sense the limited paywall enables the conversation to happen beyond the ‘already converted’, thus potentially ‘converting’ more consumers.
#8 Posted by Glen Fuller, CJR on Fri 20 Jan 2012 at 07:19 PM
point of interest on the Times of London numbers, unless things have changed 'digital subscriptions' refers to anything with a digital sub attached to it and therefore includes the device apps as well as the paywall. It is a small point, but one which leads to a larger point; there is very little transparent data offered by any company as to the real success of digital subscriptions. Probably of all organisations the NYT has been the most transparent.
Shared data might help clarify the picture. It is not intrinsically competitive information in the same way that non-rate card advertising deals might be, so why not share it?
#9 Posted by Emily Bell, CJR on Fri 8 Jun 2012 at 04:59 PM
Shirky is an idiot, period. The more time you waste countering arguments by that dimbulb, the more time you waste. He made a hilariously dumb argument against micropayments a decade ago and has been sticking to it ever since, trying to knock down even paywalls because they're related. One day, the whole "information has to be free" crowd will be laughed at like we do at the luddites today, but we won't really ever talk about how they held back progress with their deep stupidity. I suppose you can't just blame them, as the blame really lies with all the silly people who listen to Shirky and his ilk.
#10 Posted by Ajay, CJR on Tue 10 Jul 2012 at 10:08 PM