I've been thinking about charging people to read content online - sparked in part by this post - How publishers can save themselves - by Greg Satell (he's well worth following).
His point I take issue with is this: "Paywalls are rarely profitable once losses in advertising revenue are factored in."
His 'golden rule' which summarises this thinking is "marketers will pay more for consumers than consumers will pay for content." (I don't disagree with the rule). But by extension, the thinking goes that you're better off gaining as wide an audience for your content as you can by making it free - so that you have more opportunities to 'sell' your readers to potential advertisers. (ie more pages to hang advertising off). He's not alone in this thinking of course. Many others seem convinced that free is the only way to go. Just recently the team at Matter who have been championing quality writing online have dropped their paywall. They're witnessing 4, 5 even 6 times as much traffic now by dropping a charge of 99c per article.
So, are paywalls a dumb idea? I don't think we're halfway to knowing yet.
It hacks me off that people are trumpeting the death of the model on the basis of 12 to 24 months of effort. (It’s a couple of years since the New York Times put up its paywall.)
Of course, it works just fine for the big players who aggregate content like Google if everything online is free and available to all. But I feel like the constant message 'free for all is how it should be' is very simplistic.
It is fair to say right now that a broadstream publisher of news like the New York Times in the US and The Times in the UK is quite possibly making less money pursuing a path of charging fairly high subscription fees to access their content. The much reduced traffic that comes with the paywall seriously reduces ad revenue. But it's early days. I hope that not everyone opts for the 'let's just give it away and hope we can make it pay somehow in the future' model.
A few thoughts then about how paywalls might pay-off and why I think they are a good thing.
1) Data. Sure, advertisers want eyeballs. But increasingly they want deeper connections with readers (see 3 below). The old adage that has never been attributed: 'I know 50% of my advertising doesn't work, I wish I knew which half' still holds pretty true. At what point does it become more interesting to a media business to be able to sell the data on say 100,000 highly engaged regular readers that they know all about versus a million that just flit across their pages and leave again? And if a publisher really knows their readers - there are heaps of other things they themselves could start to sell them. Tip of the iceberg. One trend that I do believe in right now is 'own the data'.
2) Quality. I've banged on about the trade-off for the reader when it comes to free content a lot. The advertiser-funded free content model encourages high volume publishing with low editorial resource. The result is large numbers of often poorly researched, low detail pieces. For people who want to be informed, it's often a poor experience. Candidly, it's turning the web into a craphole. It's encouraging short termism in the extreme.
3) Trust. The latest revenue stream 'innovation' in the free content model is called 'native advertising - allowing brands to create editorial-style features themselves. Everyone is getting into it - some are even talking about brand newsrooms. Well, he who pays the piper calls the tune. I challenge anyone to say they honestly believe that this kind of content won't be biased. This is not to say that editorial isn't, but this is way worse. A slippery slope indeed and ultimately readers will get turned off by it. I have been. (But let's face it, the 'proper' editorial on many of these free sites is poor, so who cares anyway?)
4) Technology. The paywall remains a clunky thing. It's not surprising that people bump into paywalls and don't come back. But the big players using paywalls are already looking at hybrid models and there's heaps more to do. For now these 'leaky paywalls' allow people a certain number of free reads a month. I think this is of limited use. I am amazed no one (?) has tried charging a really small amount to read each article. There was much talk of 'micropayments' many years back - but I've yet to see it. (Except perhaps the guys at Matter charging 99c a read - but I wonder if even that was too high?) Think about how often these days you find a news story via a search engine - not a newspaper's home page. We cherry pick our news from multiple sources just like we download single tracks rather than albums from the App Store. Someone needs to figure out a cheap, frictionless way to charge tiny sums for this casual viewing.
If there was an easy way for you to pay say 1 cent or 1 pence to read a feature with a single click - connected to your Paypal account, would you do it? I would. The friction for paywalls is too great right now. 'Sign up, provide heaps of detail, add your credit card info'... Someone needs to make them work better. Someone needs to find a more subtle way to slowly reel a potential subscriber in. Think of those 100s of millions of page views each month. Just a penny a view would be significant income. The Guardian achieves over 400,000,000 monthly page views. Sure, it's a very rough calculation, but 1p a view is 4 million quid a month.
5) Creativity. There are many many ways to slice up content and sell it. Here's just one idea for the travel sector. How about The Times (which has its content locked behind a paywall) does a short term promotion for people to read just its travel content during January when many are trying to choose a summer holiday? There are heaps of smart promotional opportunities that could be tied to the pay-for-content model based on different audience sectors and interests.
But why bother?
It's a subtle, but crucial distinction. The publisher is then being paid for their content, by the reader they exist (in theory) to serve. The alternative model in all its guises will slowly but surely turn publishers into little more than the mouthpieces of brand advertising departments, offering up only the most shallow of editorial to pad it out. This week London's Time Out magazine - which went free relatively recently - ditched its LGBT section in another round of cost cutting. As the Guardian's commentary put it - a 'high price to pay for free'.
I guess advertisers weren't that bothered about advertising in that section. How about a few more top ten lists of dream cars or handy tech gadgets to replace it?
Would you be happy to pay small sums of money to read single articles?