Building the wall

First of all, (Eric Schmidt and) I don't think that paywalls are the solution to the financial problems at news organizations. Subscriptions have never been the main revenue source for newspapers... it has always been advertising. Steve Yelvington claimed at a recent University of Minnesota Conference on New Economic Models for News, that "journalism never had a business model of its own." (pg 9) Linking businesses and customers was the real revenue generator; "journalism" attracted the customers, and customers attracted the money. My thoughts are that news organizations will either need to become better at linking businesses and customers, or find another value proposition to latch onto.

But since there is so much talk about paywalls these days, I thought I would address some of the many moving parts to setting one up.

First order of business, what kind of paywall do you want? There are multiple models: all content is behind a paywall, some content is behind a paywall, or users get a set number of articles before hitting a paywall. With all content behind a paywall, the publication is likely a scholarly journal (like this MIT article I was denied access to) with a niche market and highly unique content. Many newspapers have experimented with having select content available for subscription, including Times Select and the Pittsburgh Post-Gazette. The times announced it is planning to move to the third model in 2011. I think it has a chance to be moderately successful, but will not be the silver bullet that slays their financial woes. They will be walking a very fine line between generating additional revenue and losing advertising revenue. A good illustration of the fragility of the model is the Paywall game. It allows you to enter in your assumptions and estimates (guesses) for consumer behavior at the foot of the wall. Small changes in subscription and readership loss (<10%) href="http://www.malcolmcoles.co.uk/blog/paywall-marketing/%20" target="_blank">Malcolm Coles points out that the screen the site uses to inform users that they have just run into a wall can have a big effect on their consumer behavior. Personally, I do not want to see that little lock icon anywhere I click... and I don't think I am alone. Visually appealing paywall pages that actively promote the value of the site within will be part of a successfully crafted wall. Newspapers are now selling the content, they would be unwise to ignore the huge body of human wisdom surrounding good salemanship.

Another issue to consider is search engine listing. Google has policies against displaying certain content to their web indexers and different content to users going through the link. If a site has a subscription model they require the First-Click-Free model, where users get to view that article in totality, but any subsequent clicks will hit the wall. I have personally gamed this system by reading one article, finding the next article I wanted to read, and then entering its exact name into a google search to return for my "first" time. The 25 extra seconds it took me were well worth not paying infinitely more than FREE.

And no paywall post could be complete without an honorable mention to Rupert Murdoch, hard charging his way into the subscription model with the Times and the Sunday Times of London. He has claimed that if he can get just 5% of current readers to pay 2 pounds per week, he can generate 6.24 million pounds per year. But he does not mention how much advertising revenue would be lost from losing 95% of your readers. I cannot imagine this glaring fact has escaped the attention of such a shrewd businessman, but can imagine his anger at losing money has caused him to gamble.

The die have been cast, all that remains to be seen is who picks up the money off the table... newspapers from the other side of a paywall or new organizations on this side. I know who I'm betting for... do you?