Friday, March 18, 2011


the NYT paywall announced this week is being panned online. that makes sense. the people who write stuff online are the ones who will have to start paying for something they previously got for free. there are a lot of predictions it will fail, and it might. but i'm less sure than others seem to be.

basically the problem is that newspaper revenue is falling and they need to find a new business model. traditionally, newspapers have gotten most of their revenue from advertisements, not sales or subscriptions. but online advertisement revenue, for whatever reason, doesn't bring in as much money as print ads.1 so if ads won't do the trick, the only alternative is either finding a rich patron or getting the readers to pay.

there aren't a lot of rich patrons out there. and even if there were, that model would probably only work for a few major newspapers. it would also raise a real danger of skewed coverage to cater to the whims of the patron. so that leaves the readers as a funding source. but the problem is that the readers are all used to getting the news for free.

other than the alt-weekly press, most newspapers would probably like to find a way to charge their readers, but they can't do it without running up against their reader's expectations. putting up a paywall is possible, but whichever paper does it first runs a big risk as it would both cut itself out of the conversation about the day's events and causing their readers to ditch that paper in favor of the many free alternatives. those fleeing readers would mean an additional economic hit as a fall in readers would mean a fall in advertising clickthoughts and the loss of what small online advertising clicks they currently profit from. on the other hand, if no one does anything, all the newspapers all will continue to lose money and will eventually go out of business.

so i think what the NYT is betting on is that it can put up its paywall and probably lose more money in the short term. but the 20 free articles per month will allow their casual readers to keep visiting, which will hopefully deter a big enough drop in hits to hurt their online ad rates. the times, unlike most other american newspapers, has a lot of clout that gives it a better chance than most of getting some people to pay to read their paper, even if isn't as many as they would want. and if the plan isn't perceived as a total disaster, other newspapers will probably follow with their own paywalls. once that happens and the pool of free alternative news sources starts to shrink and paying to read the times will get more attractive. they might have to fiddle with the price once they are competing with other paywalls, but it could work in the long run.

1-my personal theory for why online ads don't cost is much is due to the better ability to measure how effective an online ad is. online ads can record click through stats, giving clear data on how many people might have been influenced by the advertisement. when advertising clients see how few people actually click through to their site, they won't pay the times' usual exorbitant rates. chances are print ads are just as ineffective, maybe more so because of they lack the easy of clicking right over to the advertiser's products. but because there is no good way to measure their effectiveness, the advertisers can fool themselves into thinking they are more effective than they actually are and the times can soak them for more money

(expands on a comment i left here)