Paywalls are not the answer

In the newspaper industry’s quest to restore declining revenues and circulation the concept of erecting paywalls has gathered some steam over the last year or so.  It will not work, on either front.

The logic behind a paywall goes like this:

  • Content creators should get paid for their work, and some readers would pay if the content was not given away for free.
  • By charging for access to online content a newspaper can defend its print edition.  In other words, some of the decline in print circulations is due to the fact that some print readers have decided to consume their newspaper content online for free rather than continuing to pay for the printed version.  Charge for the online content, the thinking goes, and you will reverse, or at least slow, this defection.

On the first point I agree but the point is moot.  The revenues generated would be insignificant relative to the operating costs of supporting a newsroom – consider that the Seattle Post-Intelligencer reduced its newsroom from 165 to 20 people when it went online-only and began charging.  And as for the notion that content creators should be remunerated?  Well, yes they should but the historic monetization for the industry has been 85% from advertising and only 15% or so directly from readers.  Hopes of changing this ratio significantly amidst a backdrop of ever-greater access to free content seem wildly optimistic.

More sophisticated proponents of paywalls, therefore, rest their hopes on the second point – defend your print circulation by removing your readers’ ability to get your content for free online.

Implicit in this argument is the assumption that those who leave the print edition are continuing to access the same newspaper content online.  But they’re not.  Not even close.

There’s a complicated body of imperfect research (see herehere and here) that looks at the time consumers spend with various types of media.  If the implicit assumption – that readers who defect from print to online continue to access the same content - were correct then we’d expect both print and online newspaper readers to spend similar amounts of time with that content.  Reality differs:

Time spent with print vs. online newspaper

Reasonable people can take issue with some of the research methodology but the fundamental conclusion remains the same – readers are walking away from newspaper content entirely, not simply shifting the method by which they consume it.

In other words, the problem with newspapers is that they continue to offer a product whose value is decreasing as attractive alternatives continue to emerge.  The problem is not that they are failing to charge enough for that product.

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3 Responses to Paywalls are not the answer

  1. John:

    Boy, you were knocking it out of the park until this post. An opposing point of view: http://gumpole.blogspot.com/2010/07/information-wants-to-be-expensive.html

    Roger Plothow
    Editor and Publisher
    Post Register
    Idaho Falls, Idaho

    • John Dowd says:

      Roger,
      Thanks for stopping by and for the opposing point of view. I suspect there are a great number of folks who believe as you do. For that reason, and because I’m woefully overdue for another post, I’ll respond later tonight with a full post.

      I hope you’ll drop by again and share your thoughts.

      John

  2. Pingback: Paywalls: Newspapers should make themselves more valuable, not more costly | Evolving Print

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