This afternoon I will once again be working with a group of editors as we look at business models for online news. To their credit, the micropayments/paywall issue rarely comes up – and then only as a ‘devil’s advocate’ question. But it seems others have been asleep for the past 10 years. To those and the unfortunate souls having to field these questions, I offer you the following primer culled from recent coverage of this pointless debate:
“Let’s look at the numbers, and I’ll keep this very simple: Imagine that a good-sized metro daily can charge $20 a year for access to its Web site, and that it attracts 500,000 people to pay that much to read whatever the paper puts online (and this assumes that the content is so unique that those readers won’t decide to take their business elsewhere when confronted with a pay wall). How much revenue is that? It’s $10 million a year.”
“these kids have complete faith in the availability of a substitute good — that is, something else that would come along, serve as a decent Facebook surrogate, and be free.
“So, I ask you: If these kids aren’t willing to pay for Facebook — something they engage with every single day, something they love, something they have already invested countless hours into to build up a network of friends and apps and what have you — what’s the chance they’re ever going to pay half a penny to read a news story?”
“Micropayments have never been shown to work except when distribution is tightly controlled (see: mobile phones and iTunes). Subscriptions have been abandoned by The New York Times and others because the costs, enumerated above, are too high. A newspaper cartel is an oxymoron, as publishers have never shown the ability to self-organize (the last attempt in the U.S., the New Century Network, was a flaming disaster). Charities are lovely, but even the Scott Trust that generously supports this newspaper rose not out of pure altruism but out of a need to avoid inheritance taxes that would have forced a sale. Government support has been discussed in these pages but I, for one, am fearful of the notion of the prey feeding the watchdogs. The Kindle is cool but has a tiny audience.”
From Paid Content Strategies for News Websites (PDF), an academic study:
“Interviewee responses [executives at national newspapers] indicated a widespread consensus that it is impossible to charge for general news content, because it is freely available in a similar form elsewhere on the internet.”
“Anyone in the content business knows that their product is not newspapers, or broadcasts, or magazines, or even news, or even content, or even information. No! It is readership. Your product is readership, which you sell to advertisers. More readers = more ads = more money. In the bad old print days, newspapers had to charge subscription fees to offset the costs of delivery. Hey, no more cost of delivery! Why charge subscription fees and limit your readership, then?
Finally, from Brand Republic: