Knowledge Bridge

//Kevin Anderson /July 4 / 2012

‘Beyond paywall 1.0’: Paid content gets more nuanced

The early discussions about paid content was overly simplistic and ideological. Leading voices in the industry portrayed the choice as “free” versus “paid”, with the even more ideological formulation of “open” versus “closed”. I pepper these descriptions with sneer quotes because the entire discussion was needlessly binary. Free content online or in freesheets might have been free to the user, but the content was still paid for by advertisers. Even in print, while people might have paid for a newspaper at the newsstand or via subscription, most papers made their profit through advertising not through people paying for a copy. The proceeds of subscriptions and newsstand sales paid for the platform of print, the cost of paper, ink and distribution. They didn’t cover the cost of the content and journalists’ salaries.

Spanish newspaper expert Juan Señor was recently interviewed by The Economist’s Intelligent Life magazine about the free versus paid battle, which is often read in the West through the prism of Rupert Murdoch’s Times of London, which was put behind a paywall in 2010 but is still losing money, and Alan Rusbridger’s Guardian, which remains free on the web but is haemorrhaging money. Señor criticised both Murdoch and Rusbridger:

There are Talibans on each side and that’s what is hurting the industry. Both extremes are wrong because they do not make money – The Times with its paywall and The Guardian being free. The truth is somewhere in the middle.

Up until recently, we had very few news groups exploring that middle, and the primary example, the Financial Times, many in the newspaper industry felt was a unique case because the FT deals in time-sensitive business information, not to mention the fact that the subscription price is often written-off by business people as an expense. With the New York Times following the FT in setting up a metered paywall last year, we now have more examples. A metered paywall allows casual readers to read a number of stories a month before being asked to pay. A metered paywall, as opposed to the fortress paywall around the Times of London, doesn’t cut off a site from the open web, from search engines and social sharing. Proponents of metered paywalls say that the strategy allows sites to continue to attract large enough audiences to make them attractive to advertisers while also asking loyal readers to pay for access to a wider range of the publication’s digital content.

Analyst Ken Doctor looked at some of these new, more sophisticated paid content models in his most recent Newsonomics post. The New York Times has recently struck a deal with the tablet content app Flipboard. Flipboard takes websites and re-formats them in a visually stunning style, and users can add sections to the Flipboard app that highlight content their friends are sharing on Twitter and Facebook. The New York Times struck a deal with Flipboard to allow paid subscribers to sign in and see Times’ content “via the Flipboard experience”, Doctor said.

Meanwhile, the Wall Street Journal launched another strategy, allowing users to pay either 99 cents US a month for 15-20 articles using the Flipboard competitor Pulse in a package call the WSJ Water Cooler, or US $3.99  for either tech or political packages or some 30 articles a day.

As Doctor says:

The deals seemed out of the blue, but both represent a maturation in digital circulation thinking. We’re moving beyond Paywalls 1.0, to a more nuanced world of digital circulation. … These strategies are a logical extension of digital circulation. It’s a recognition that the relationship between a publisher and a reader, while paramount, can be fulfilled on sites or apps other than a publisher’s.

Furthermore, these deals show that in 2012, the only metric that really matters is money. We can talk about unique users, returns versus new visitors, time on site or the number of followers on Facebook or Twitter, but at the end of the day, you have to capture some value, some money, from those digital audiences.

Dmitry Shevelenko, head of monetization for Pulse, also nails it when he says:

Both [ad and circulation] revenue models are critical to the future sustainability of news, but both are in desperate need of innovation and simplification.

It’s not “free” versus “paid”, but rather a mix of advertising, circulation and other revenue models that deliver a number of revenue streams to sustain your journalism. We’ll be looking at different revenue models in the July edition of the Digital Briefing and how to get the mix right.

Article by Kevin Anderson