Paywalls: Newspapers should make themselves more valuable, not more costly

A thoughtful reader has taken issue with my last post, which argued that paywalls are a poor solution to the newspaper industry’s twin troubles of declining circulation and declining revenue.  You can read his defense of paywalls in his well-written blog here.

Meanwhile I’ll take another stab at making the case against them.  But before I begin let me articulate two beliefs I share with paywall advocates:

  • Journalists and editors create great value for society and play a vital role in a well-functioning democracy.
  • Many readers value content enough to pay for it.  Indeed, that is the norm in print, and, while less common, there are oft-cited examples online as well (e.g. and

On to the disagreement.  Paywall advocates put a great deal of stock in a seemingly common-sense economic argument: quality content is valued, therefore it will be purchased if not freely available.  This analysis is incomplete.

First, the fact that a product is valued and can attract a paying audience is no guarantee that it will be purchased at prices and quantities sufficient to cover the costs of its production and distribution, to say nothing of the provision of an economic return to the providers of its capital. The recent fate of The Seattle Post-Intelligencer is an apt if unfortunate case study: still unprofitable at last report despite having laid off 90% of its journalists.

Second, and more importantly, paywalls send exactly the wrong message to the industry.

They say, “the problem with our industry is that we are insufficiently expensive, not insufficiently valuable.”

This is insanity.  For 400 years newspapers have provided their readers with a one-size-fits-all information product whose content was selected by an editor based on some  weighting of what the editor felt his audience needed to know and what he thought the larger pluralities within it might enjoy.  But today, unlike the first 380 years of industry history, I have myriad alternatives to get at the content I enjoy.  And an increasing number of those alternatives are personalized to me, not some fictitious average of me and 200,000 other people; they include more of what I’m interested in than my newspaper does (an RSS feed on voting reforms, for example) and – importantly – less of what I don’t (I don’t have to navigate around obituaries or Paris Hilton on my Flipboard app or my personalized Yahoo! home page).  In other words, if I invest my limited discretionary time in a personalized news medium I will get a much better return on my attention than with today’s newspaper, online or in print.

The rational, if challenging, response to these wonderful new competitors is to improve the return on attention that the newspaper offers by offering personalized content along with the editor’s choices.  As I’ve argued before, the print edition is a feature, not a bug, of the newspaper experience.  Google, Yahoo!, Facebook, Flipboard, etc will never compete with us to put a hunk of paper in a reader’s driveway – we monopolize that channel.  That is an enviable position that we need to leverage by re-imagining what’s possible in print.  Variable Data Printing and QR Codes are transformative technologies that have already changed whole industries, but have yet to be embraced by newspapers.

They will be adopted eventually, but paywalls, like other urgency-sapping placebos, serve only to distract from this urgently needed transformation while generating – at best – trivially small incremental revenues (and at worst an evisceration of the paper’s online readership).

I believe firmly that the newspaper industry will be in a much better place in five years, but it will be because they made themselves more valuable, not more expensive.

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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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Content is Culprit

Many observers, inside and outside the industry, blame the paper delivery format for the newspaper industry’s sustained declines in circulation. In earlier posts I’ve tried to suggest that this view is at odds with the tremendous continuing success of print in domains outside of metro daily newspapers. But if print isn’t the problem then what explains the ongoing decline in newspaper circulation?

Content is Culprit

Readers interested in this question would be well served to read Vin Crosbie’s answers (here and here). Vin is perhaps the most articulate proponent of the view that content is culprit – people are subscribing to the print newspaper in ever-diminishing numbers because they find the content less and less valuable.

Think about it – newspapers have been around for perhaps 400 years. For the vast majority of that time they were your only option for learning about the world. The advent of radio and TV brought new options, but neither was a great substitute for written text. The explosion of content – especially written content – on the web in the last 10 years, however, has brought the first adequate substitute for meeting the needs historically met only by newspapers.

In this environment of rapidly expanding content choices newspapers have responded by, well, not really responding at all.

The problem is this: newspapers offer a one-size-fits-all package of the “leading” stories of the day, where “leading” is defined by editors trying to appease a wildly diverse set of readers. The diversity of readers combined with the enormous set of content options forces compromises – I’m not interested in Paris Hilton nor the obituaries yet they give me both because some plurality of readers in my market is interested in them. Further, the same constraints that force editors to give me Paris Hilton also prevent them from giving me other content in which I am intensely interested. Vin has used the example of professional soccer – there are 600,000 soccer fans in the greater NYC area, yet the NY Times will only cover soccer during the World Cup, if at all.

The web requires neither of these compromises. I can easily satisfy my curiosity on almost any subject and avoid all the subjects in which I have no interest. In short, reading on the web offers me a higher Return on Attention (ROA) – with less investment of time and attention I can satisfy more of my information interests.

The ROA gap between newspapers and the web continues to widen as technologies like RSS readers, personalized homepages, twitter streams and the like proliferate.

The economic principle here is opportunity cost. When there were few alternatives newspapers were a miraculously useful source of information. As more personally relevant alternatives have multiplied, and newspapers have remained one-size-fits-all, the opportunity cost of spending my limited reading time with a newspaper has become harder to justify.

The good news for newspapers, who rely on print for perhaps 90% of their revenues, is that print competes well with the web (see previous posts) when the content is personally relevant. The editor of a college newspaper or The Economist has a sufficiently homogeneous (at least in terms of information interests) audience that their one-size-fits-all print products still work very well. But the editor of a metro daily newspaper is not blessed with serving an audience of such uniform interests.

For that reason I believe that newspapers must begin personalizing their content. Readers will continue to seek ever higher returns on their investment of their ever more divided attention. Newspapers can meet those evolving needs with personalization or they can continue to hemorrhage subscribers.

Talk of personalization inevitably prompts many objections. I’ll come back to them in future posts but for now I’ll merely suggest that there are very satisfactory answers to all of them. Here is a partial list of objections I’ve encountered (and felt myself) over the years:

  • What happens to serendipity in a world of personalization?
  • As an editor my duty is not just to give readers what they want, but also to give them their “Brussels sprouts”.
  • It is too costly to personalize print newspapers.
  • Even if you can produce personalized newspapers, delivery would be impossible.
  • You can already do this on the web, why bother with print?
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More answers to “Why Print?”

Before leaving the Why Print theme I want to toss out a couple of additional data points that suggest that the widely held wisdom that Print Is Dead is off the mark.

Consider The Economist, my favorite magazine.  Though serving higher-income readers with above-average penetration rates of both smart phones (judging by how frequently the iPhone is advertised on the back cover) and broadband internet the magazine has managed to double its print circulation over the last six years.  Here’s the chart:

That’s quite remarkable, isn’t it?  Across a recession and in spite of the introduction of Facebook, iPhones, YouTube, etc here is a print publication that can’t stop growing!

Oh, and lest you conclude that The Economist has been boosting sales by catering to gray hairs among us, consider that the average age of its readers is 39 years old – younger than that of any other major news magazine (source).

One more interesting data point is worth mentioning.  The Radio and Television News Director’s Foundation took the simple approach and just asked people whether they prefer to read in print or online (full report here).  Intentionally or not they very usefully (for my purposes) asked the question in a manner that isolates the impact of the media – print vs. online – without clouding the issue by considering the differing content each offers.  Here’s what they found:

Notably, the answer from the 18-34 year old cohort was remarkably similar to that of older respondents: 76.5% of the former group preferred print to 77.5% of the latter.

This data suggests that the culprit behind the unambiguous shift from print newspaper reading to online reading (of principally non-newspaper sites) is not the paper on which the newspaper is printed but rather the content which it includes.

The idea that content is king (or culprit) explains why some print (The Economist and college newspapers) continue to thrive while others, despite the reader’s preference for print, do not.

But more on that in a later post.

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Why print?

A blog on print?  Really?  Wasn’t there a memo…something about online killing print?

Yup, heard all that before.  But the truth is print retains a lot vitality, despite the rumors of its impending demise.  I hope to share some of that story in this blog, along with my own thoughts on how print ought to evolve so that the rumors remain just that.

Entry #1 on the “why print” ledger comes from what should be ground zero for the death of print – the college campus.  “Ground zero” because college campuses have all the ingredients that are allegedly connected to print’s death at the hands of the internet:

  • Young people
  • Free WiFI
  • Ubiquitous laptops and smart phones

So, what do you get when you mix those nasty ingredients and stir?  Well, Alloy Marketing+Media did some research on 550 campuses to find out – their results may surprise you.

If the link is too much reading here’s my handy graph of the key findings:

That’s right, the printed edition gets more traction in a single day than the online edition gets in a month! (30% read print daily, 20% read online monthly)

Both are free and have identical content.  The online edition is probably more available given that students have their laptops and smartphones with them at all times.

Hmmm…so much for the perfect storm, right?

Now don’t get me wrong.  Newspapers have a huge problem.   In fact, they have two.  The first is declining ad sales.  Left unresolved this will lead to dramatically lower profits (and under-staffed newsrooms and other follow on effects).  The second and larger problem is declining circulation, especially among younger readers.  Left unresolved this will lead not to lower profits but rather to oblivion for the industry.

My concern is that the industry is misdiagnosing the first problem and largely ignoring the second (or at least not treating it as the burning platform that it really is).

The problem, however, is not print, as the campus newspaper illustrates.  In fact, in a future post I’ll elaborate how – in the parlance of web developers – print is actually a feature, not a bug, of the current model.

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