Meanwhile, doing what we do, we’ve become the news source that everybody in town reads and have convinced some 130 local businesses to support by assigning to us a portion of their advertising budget. Perhaps the Church of Journalism folk will continue to sneer at this level of success, but I think it’s pretty good, and shows what can be done with the right combination of a free CMS, cheap hosting, hard work, and a content strategy that appeals to a local audience.

The real model, however, that should scare paywall publishers is Newzjunky.com. This Watertown, NY-based site put one paid-content site in its grave in 2008.

The scenario went like this: The Watertown Daily Times erected a paywall. A former employee started an aggregation site much along the lines of The Drudge Report. By 2008, his site was dominating online traffic and online advertising for the Watertown coverage area. The Daily Times was forced to drop its paywall to compete. (By all appearances it has come a long way and now competes very well as a non-subscriber site; an executive with the Johnson Newspapers, the paper’s parent company, has said on Twitter that it has no intention of changing its current strategy).

In Simon’s analysis, if all newspapers and wire services would just put their content behind a paywall, then a site like Newzjunky wouldn’t be possible. The problem with this analysis is that Newzjunky didn’t feed off any of the news sources (at least for local news) that Simon’s plan would wall off. Newzjunky became an indispensable clearinghouse for local headlines relying primarily on broadcast outlets.

In metro areas, there are also increasing numbers of independent, hyperlocal publishers producing original content, often based on high-caliber reporting. None of these examples competes directly with a major metro, nor would they individually pose a threat to a digital paywall. But in a world where 1,000 tiny cuts matters, each of these blades diminishes the ability of a major metro to subsidize expensive journalism with a packaged bundle.

8. The wrong people are pushing paywalls.

There are reasons to distrust the motivations of paywall advocates. David Simon considers any argument that looks at the people behind the movement as ad hominem, but at times you can’t separate the people from the statements and still make an honest assessment of the issue.

While there are people I know and respect involved in the paywall business, on the whole, a lot of the push for paywalls is being driven by old-school journalists and executives with publicly traded newspaper chains.

The irony is that these two traditional rivals have come together in a conspiracy to, in reality, kill newspapers.

Most of the paywall advocates I see and read around the Web are the same people in the late 1990s who proclaimed the Web to be a fad. They’re the same people who throughout my online newspaper career didn’t want to break news online, didn’t want to carry a video camera, didn’t want to feature current local news on the homepage, didn’t want to engage with online readers—they pretty much either worked actively or passively to sabotage every attempt at online innovation.

This same group of people are the ones who, even before the Digital Age, stood around the water coolers and decried the “bean counters” (I know, I used to be one of them, in every respect).

But paywalls are nothing but a bean-counter strategy to slow the bleeding.
Philip Meyer, in his landmark book The Vanishing Newspaper, wrote about how corporate interests will “harvest” their properties.

This is the “take-the-money-and-run” plan. Because newspaper customers are such creatures of habit, it could be quite seductive. It means raising prices, reducing quality, and taking as much money of the firm as possible.

No newspaper company is instituting paywalls to protect journalism. They’re doing it to protect profits, or at least slow the bleed out.

Look at the list of publicly traded companies with paywall plans (via Media Wire): A.H. Belo, E.W. Scripps, Gannett, GateHouse Media, Journal Communications, Lee Enterprises, Media General, MediaNews, McClatchy, The New York Times Co., Tribune Co.

That should be a clue to what’s really going on here. Shareholders demand profits, not good journalism. The failure of newspapers to build online news businesses that meet shareholder expectations have forced CEOs to try to find another revenue stream.* It doesn’t even, at this stage, need to be a terribly robust revenue stream, so long as it can be spun into a pretty lie for corporate boards and the shareholders who hold their proxies.

Howard Owens is publisher of The Batavian, an online-only news site serving Genesee County, NY. He has been an online executive with the Ventura County Star, Bakersfield Californian and GateHouse Media.