Paywalls – what are they good for?

There’s been some discussion about paywalls over the past couple of days with AUT and PwC releasing surveys that touch on the topic.

I don’t want to re-litigate the whole paid content argument, but here are some quick points that often seem to get lost:

• 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. Such non-advertiser sources of revenue are 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 broadcasters.
   
• 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 $220 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 benefit ignored by most academic surveys of paywalls.
   
• 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.
   
• 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 more than 2800 individual paid subscribers and more than 310 Business Subscribers with organisation-wide access. Employees of each have IP [internet protocol] access to NBR.co.nz; that means when they’re in the office, our system recognises them and they don’t even have to log on. These IP subs are a very big deal for us. Also on the list are some of NZ’s biggest employers such as Fonterra (16,000 staff),  Auckland Council (7000) and Telecom (6500). It also includes large law shops, big accounting firms, key government departments, universities, and telecommunications, tech, media, real estate, travel, automotive and energy companies. The fast-growing list goes on. And, again, it’s no secret – anyone can view it via the Companies With Access to NBR ONLINE Paid Content block on our home page.
   
• The tens of thousands of people covered by IP subs (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 45,000 to 55,000 visitors generating between 200,000 and 300,000 page impressions by Nielsen NetRatings' count. Even the lower end of those ranges are more than when we introduced the paywall in 2009. Obviously that's 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.
   
• NBR recently expanded its Business Subscription offer to cover small and medium companies.
   
• NBR ONLINE's paywall is off to a promising start, but it's still far behind circulation revenue generated by print (where 6000+ pay $475 a year). It's a similar story for advertising. Everbody knows which direction the market's heading, but that's today's unsexy reality.
   
• 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 news sites) a distant third.
   
• I hope mainstream news websites survive and thrive. But I’m not sure a paywall will work for them. 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 (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 - which would ease logistical headaches and solve the who-goes-first problem - there would likely be Commerce Commission complications.
   
• On a similar theme, most of the mainstream newspapers that are being touted as paywall success stories offer paid print edition subs free access to their paid online content. That’s a bit of a cheat. It’s good for getting an instant paid online subs figure that looks great on boardroom PowerPoint or presentation to shareholders. But it’s bringing in no new revenue, only extra online costs. For the most part, NBR has different content in its print and online editions, and print subscribers have to pay to access online content (although they do get a loyalty discount).
   
• NBR's copy-and-paste protection draws a lot of flak - and I'm no fan, either, when I find my right mouse button disabled, and Google searches broken, as side-effects. But it's a fact of life that many readers share their password (they do get at least three simultaneous logons. This allows, say a laptop, smartphone and tablet to be connected to the same account). Or they try to copy and paste it to share with others. With a primarily ad-funded model, as for most websites, the more sharing the better. And a lot of social media experts have a robotic default setting that anything that hinders sharing is bad. It does bug me, for sure - as a writer and as a reader. But in a paywall world,there's a commercial logic behind it.
   
• People are more likely to pay for content if they access it through 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. And Google, Apple and other app store hosts make it easy to distribute your content. The downside is they 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). And we’ve also seen that many stop paying for a newspaper app when they realise it’s just the same content as when they view a news site’s regular website on their tablet or smartphone, only with bigger pictures. And even Rupert Murdoch’s The Daily, with its small army of staff creating iPad-only multimedia content, couldn’t cut it (News Corp folded it last year; the publisher has made more paywall success with its existing titles, including The Wall Street Journal and The Times). 
   
• Yes, there are cons. Among them: there's always some degree of hassle with a sign-up process (and subsequent logons); many people simply refuse to pay for something they've previously enjoyed for free; there's some loss of political influence, should that be a proprietor's aim; and it can be demoralising 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 layoffs at other publishers). Paid content makes it harder to promote stories, and solicit feedback, through social media. But it would be good to see some discussion of the pros, as well.

Okay. I’ll stop now.

ckeall@nbr.co.nz

Follow @ChrisKeall