10 reasons to love a paywall

NZ Herald publisher APN says it will introduce a paywall in early 2015.

A Herald paywall has been talked about for a while now, and a couple of inhouse deadlines have come and gone, going by staff chatter.

This time, I hope Granny keeps her nerve. To help boost her confidence, I've reposted my top 10 reasons to love a paywall (with a few of the figures updated, plus a new NBR ONLINE subscription revenue to justify that headline above).

The Herald is not in the same position as NBR. It operates in general news, and faces a direct competitor, Stuff, which has yet to put any date on its own paywall plans. 

But many of these points still apply:

1. A paywall encourages sharper stories. People won’t pay for churnalism, advertorial, or a story on Kate Middleton they can see on 10,000 other sites. Subscriber-funded content is a good thing across all media. Just ask anyone who prefers Game of Thrones or The Sopranos or The Wire or any other HBO fare over the Worst Dumbest Skateboarders garbage often turned out by free-to-air, ad-funded broadcasters.
    
2. A paywall delivers advertisers a qualified audience – the rarest of things online. Sure, every site boasts about its demographics. But these are usually from self-selecting online surveys (and, yes, your friendly neighbourhood NBR  sales rep can give you our age and income breakdowns). A paywall makes things black-and-white. Someone with the wherewithal to pay $230 a year for an individual sub to NBR ONLINE is by definition a target many advertisers will want to hit. A qualified audience means you can charge more for ads — a downstream paywall benefit ignored by most academic surveys on the state of publishing.
    
3. A paywall makes for a loyal audience. Yes, people get their news from many sites now, and social media, but if they've paid for something it builds a desire to get their money's worth.
    
4. There’s been speculation about how many have paid for NBR ONLINE access. I’m not sure why; our publisher’s willing to tell anyone. NBR ONLINE has around 3000 individual paid subscribers. And more than 300 organisations have paid for a Business Subscription, giving all of their staff access to NBR ONLINE. The business subs have been a runaway success. Roughly two thirds of NZ's 500 largest organisations now provide NBR access to all employees (as long as they're on their company's IP address, which typically means being in the office). The list includes some of NZ’s biggest employers such as Fonterra, Auckland Council and Spark, plus large law shops, big accounting firms, government departments, universities, and telco, tech, media, real estate, travel, automotive and energy companies. Again, the list is no secret – anyone can view it via the Companies With Access to NBR ONLINE Paid Content block on our home page.
    
5. The tens of thousands of people covered by Business Subscriptions (or indeed 100,000+ if you throw in the universities) helps explain why NBR's traffic hasn't seen the same post-paywall dip as some sites. On a typical day we now see around 55,000 unique visitors generating between 270,000 and 300,000 page impressions per week, by Nielsen NetRatings' count. That's far more than when we introduced the paywall in 2009. That's obviously less than the Herald or Stuff or Yahoo - but there are only two stories in publishing: you've either got the biggest audience, or the best. No prizes for guessing which NBR tells. The initiative was recently expanded with a lower-cost option for small to medium size businesses.
    
6. A lot of publishers cheat when they introduce a paywall in that all print subscribers are automatically granted paywall access. That leads to instant numbers that look great on a PowerPoint (Boom! 10,000 digital subscribers!). But it doesn't actually bring a single extra dollar through the door. NBR, by contrast, has largely different content between online and print, and charges for each separately (print customers do get a loyalty discount if they also take an online sub). That means NBR ONLINE now brings in more than $1 million in subscription revenue. That's still behind print, where subscriptions cost $475 a year, and there is an ABC-audited circulation of around 6000 (and a total readership of around 40,000 with pass-ons). But it's become a serious chunk of change, and it's growing fast. The Herald, as a much larger operation, will obviously be looking to add one or two zeros to NBR's figures, but then again it has more readers. 
    
7. A paywall helps fund a professional newsroom. Sure, online advertising is growing (it’s now in third place, ahead of radio but behind print newspapers and TV; see the latest dollar figures here). But on most news sites, advertisers will only pay a fraction of what they spend on a print ad. Search engines and directories (essentially, Google) take most of the money, followed by classified ad (Trade Me, Seek etc), with display (most of the ads you see on newspaper sites) a distant third. NBR ONLINE ad revenue is growing (thanks, in part, because paid subs qualify the audience). But we would not have been able to replace every departing journalist on ad revenue alone.
    
8. People will pay for news they can use. This is probably the stickiest sticking point for the Herald; many people pick up the paper, or hit its website, for a general browse, not news they can use. Lance Wiggs points out that while the New York Times website is often sited as a paywall success story for mainstream news, translated to NZ's population it would have a mere 7000 subs. People will pay for unique news in a niche; content that helps them save money (e.g. Consumer.org.nz); news that helps them in their job; or yes, when they can expense it (and for many NBR readers, the boss is already paying for it via an IP sub). For general news, it’s harder yards. There are so many places to find it. And while Fairfax and APN are open to a joint paywall, in terms of behind-the-scenes systems. That would ease logistical headaches and solve the who-goes-first problem, but there would likely be Commerce Commission complications.  Like other general news titles, the Herald will implement a metered paywall (while still a Fairfax director, Sam Morgan called NBR's model a "brick wall"). A metered paywall is great for keeping up traffic, but it's also easy to get around by hopping between web browsers or clearing your cache. Padlocking individual stories is blunter, but often people need an immediate incentive to subscribe. 
    
9. To paraphrase Gordon Gekko copy-and-paste protection, for lack of a better word, is good. It does draw a lot of flak, and I'm no fan of it myself at times as I find my right mouse button disabled (an unfortunate side effect) and an inability to highlight text (a lot of people highlight text as they read, with no intention of copying). But it prevents people easily copying an article to an email or Facebook then sharing it with all-comers — something that can really undermine a paywall and, with it, my publisher's ability to pay my salary.
    
10. People are pretty happy to pay for stuff on a mobile. It’s just a mindset. The same person that will seek out a free online movie or song on their PC will happily pay $4 for a lame ringtone on their cellphone. This phenomenon naturally steers many publishers toward iPhone, iPad and Android apps. The downside is Apple and Google also take a chunk of revenue, and make keep subscriber details to themselves, leading to a cat-and-mouse game of in-app purchases. Notably, The Financial Times got sick of it and killed its iPhone and iPad apps. That doesn't mean the FT has gone anti-mobile, at all; just that it now prefers to optimise its own site to be viewed on any device. A website that automatically adjusts its layout depending whether you're viewing it on a PC, tablet or smartphone has a lot of appeal. Check out the recently upgraded www.rnz.co.nz as an example of this "responsive" design. And watch this space for mobile developments at NBR.

Yes, there are cons. Among them: there's always some degree of hassle with a sign-up process and subsequent logons, particularly on mobiles (NBR eases the pain by letting you be be logged onto three devices simultaneously); many people simply refuse to pay for something they've previously enjoyed for free; and at times it can be a downer for reporters who often want to be rockstars and reach the widest possible audience — although they also want to see revenue coming in the door as they watch friends get laid off at other publishers. And in NBR's case, our Business Subscriptions have helped build a decent audience for padlocked stories.

Paid content makes it harder to promote stories, and solicit feedback, through social media (although NBR is no slouch on that front, with more than 11,000 followers on Twitter).

And freebie rivals, bloggers and social media jockeys can be quick to copy your exclusives, or at least spill the juiciest details to all-comers. But then again rivals matching stories is an issue faced by all media. Whether you're paid or free, the answer is to write with more authority, and keep moving faster than the opposition.