Reinventing the Newsroom

Why Paywalls Are Fighting the Last War

Posted in Paid Content, The And World by reinventingthenewsroom on March 15, 2010

Reading through sections of the new Pew Project for Excellence in Journalism’s State of the News Media report, I had an unhappy thought about paywalls: Even if you believe, as I do, that consumers will pay for news online in certain circumstances, the news industry is fighting the last war in its current approach to the problem.

First, the grim news — and it’s almost unrelentingly grim. Many of the numbers in the report ought to come with a warning about reading them while drinking hot coffee, holding a sharp object or taking certain medications. Consider the following:

  • Newspapers saw a 26% drop in ad revenue in 2009, and a three-year drop of 43%.
  • Daily circulation has fallen 25.6% since 2000.
  • Since 2000 the industry has shed $1.6 billion in annual reporting/editing capacity, or 30% of the industry. Meanwhile, over the last four years, $141 million in non-profit money has flowed to new-media efforts.

The metrics about online news consumption aren’t any cuddlier:

  • 90% of newspaper-industry funds come from print sources.
  • Only 35% of Americans surveyed say they have a favorite news sites online — and only 19% of those people (7% overall) say they’d keep visiting that site if a paywall went up.
  • Only 21% of respondents say they rely primarily on one destination for news online.

As I’ve said before with Pew, while admiring the report greatly I wonder how much the methodology is playing a role here. For instance, the question about favorite news sites may undermine the impact of news found through search and particularly through social search. But the first of the report’s “major trends” certainly feels right to me: “As we learn more about both web economics and consumer behavior, the unbundling of news seems increasingly central to journalism’s future. … Online, it is becoming increasingly clear, consumers are not seeking out news organizations for their full news agenda. They are hunting the news by topic and by event and grazing across multiple outlets.”

When I was a kid, there was one daily newspaper in my house (the New York Times) and one national newscast (the CBS Evening News). My parents were loyal to them, and I inherited that loyalty from there. But that world is long gone. My wife still reads the New York Times in print on Saturday and Sunday, childcare willing, but I rarely pick up the physical paper. I read a lot of Times material online (and I’d pay for it), but I also read material from a blizzard of other sources, many of which didn’t exist 10 or 15 years ago. When I’m searching for specific information, I pick and choose what to read not based on loyalty, but on my own experiences with news organizations, prejudices about them and my on-the-fly judgments about what I’m reading. When I’m curious and receptive to new things to read, the greatest influence is what my friends and peers are reading. As for TV, I can’t remember the last time I watched a discrete newscast.

This isn’t just the old print/Web sea change. The very concept of a destination Web site is increasingly out of date — in hindsight, the idea of destination Web sites feels like the old print and TV model crammed into a Web box. The rise of effective search mortally wounded that model, and the arrival of social search is providing the coup de grace.

Yet paywalls and meters are all based around that model. They’re weapons (or defenses, if you prefer) for fighting the last war. Pew’s findings will be widely seen as blowing a hole in paywall hopes, but I think their real import is a bit different: They reveal that the core assumption of paywalls is flawed, because destination sites are a thing of the past.

In the age of unbundling the essential unit of news is not the site or the section but the article. (This isn’t necessarily the way things should be — witness the SXSW discussion of context, and efforts to “lift” the essential unit to become the topic.) Publishers have to think about their sites as they are mostly likely to be encountered: as single articles discovered through search or social search or sharing. That’s your front door, not the section front or the home page.

But that same thinking must extend to how to pay for the news.

I remain stubbornly insistent that paywalls aren’t doomed because of consumer attitudes about paying for news. I think those attitudes are more subject to change than you might think. Yes, I read Pew’s findings. Yes, I know we still have a glut of largely commoditized news. I think the news industry, sadly, is going to have to get a lot smaller to balance out the imbalance of supply and demand — and get a lot better at providing more relevant, valuable and engaging news while it gets smaller. That transformation has been brutal and is going to get worse.

But despite believing people will pay for news, I agree with the skeptics that paywalls are doomed in their current form — because they’re built around a destination-site concept that fewer and fewer readers care about. Rather than paywalls, we need paytags — some way for payment information to travel with a given piece of content as it’s discovered through search and sharing and, sure, the occasional stroll through a destination site. Publishers need a way to substantially decrease or eliminate wallet friction, memorably discussed by Dave McClure. They need to reject the platform model in favor of the app model that lets their content thrive elsewhere, as Maya Baratz has written. They need to find their way across the dreaded penny gap.

Paywalls won’t do that. Subscriptions won’t do that. The only thing that might work is a metered plan — and one that works across a huge number of publishers.

That’s an enormous challenge legally, culturally and technologically. I know that. But it’s an impossible one if publishers continue to fight the last war.

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  1. […] issue instead of their “dreadful” engagement and loyalty online. Former WSJer Jason Fry breaks down the study to conclude that the basic unit of online journalism is not the site but the article — […]

  2. […] instead of their “dreadful” engagement and loyalty online. Former WSJer Jason Fry breaks down the study to conclude that the basic unit of online journalism is not the site but the article — […]

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