Shirky: Times paywall is pretty much like all the other paywalls

Clay Shirky's latest essay, "The Times' Paywall and Newsletter Economics," examines all the ways in which Rupert Murdoch's Times paywall is pretty much like all the other paywalls, and failed like pretty much all the other paywalls.
The classic description of a commodity market uses milk. If you own the only cow for 50 miles, you can charge usurious rates, because no one can undercut you. If you own only one of a hundred such cows, though, then everyone can undercut you, so you can't charge such rates. In a competitive environment like that, milk becomes a commodity, something whose price is set by the market as a whole.

Owning a newspaper used to be like owning the only cow, especially for regional papers. Even in urban markets, there was enough segmentation-the business paper, the tabloid, the alternative weekly-and high enough costs to keep competition at bay. No longer.

The internet commodifies the business of newspapers. Newspapers compete with other newspapers, but newspaper websites compete with other websites. As Nicholas Carr pointed out during the 2009 pirate kidnapping, Google News found 11,264 different sources for the story, all equally accessible.* The web puts newspapers in competition with radio and TV stations, magazines, and new entrants, both professional and amateur. It is the war of each against all.

None of this is new. The potential disruptive effects of the internet on newspapers have been observable since ClariNet in 1989.* Nor has the business case for paywalls changed. The advantage of paywalls is that they raise revenue from users. The disadvantages are that they reduce readership, increase customer acquistion and retention costs, and eliminate ad revenue from user-forwarded content. In most cases, the disadvantages have outweighed the advantages.

The Times' Paywall and Newsletter Economics


  1. Excellent points. My thoughts on paywall concepts basically hinge on folks respecting content and appreciating it enough to pay for it if tactfully implemented. Anyone remember the “tip jars” of 10+ years back? Failed because the market wasn’t ready for it. But I think nowadays folks are more in a mindframe to pay for virtual items based on value.

    I’m a web developer and have “tipped” developers who have blogs with detailed info that helps my job. It’s the least I could do. I think there is a business model in cyber-tipping coupled with tangible products. Such as a model-maker who shows you tips on how to build something but will then offer to sell fully built items for those who just don’t want the hassle. Don’t many electronic-websites do this already? Either build a Minty Boost or pay for one that is built, correct?

    That is the future.

  2. While the argument is well thought out, I have to point out that the stated premise that newspapers ever were like owning the one cow that allowed you to charge usury charges, is a faulty premise.

    For a long long time now, newspapers have been a commodity that charged an amount that barely began to cover the costs of the whole operation. The income model was always based on making money by selling space to advertisers.

    The idea of a reader bearing the cost of the product has been antiquated since the industrial revolution.

    “In 1830, the first penny press newspaper came to the market: Lynde M. Walter’s Boston Transcript.[17] Penny press papers cost about one sixth the price of other newspapers and appealed to a wider audience.” – wikipedia

    Now I would argue that the mindset of people not having to pay the full price of news, and further exagerated by the internet to where they feel they shouldn’t have to pay at all, is an interesting argument.

    But its never been about the people’s money supporting the businesses.

    I would point to the internet devaluing the value of advertising in newspapers as playing a bigger role in the industry’s problems. Craigslist has more to do with a newspaper not making a profit than anything else.


    Jay Acker

    1. “But its never been about the people’s money supporting the businesses. ”

      And now, thanks to paywalls, it is!

      OK, I realise Murdoch hopes that he’ll be able to raise advertising rates for the privilege of getting paying eyeballs on them, but until the ad networks actually step up to that particular plate en masse, I’m not sure you really have much of a business case there. At least, not for a general readership (it appears to have worked for the FT online).

  3. I think there’s one model that could raise money from readers. It hasn’t been tried, so far as I know.

    Let people read for free, but let only paying customers comment. Hire someone to police the comment sections and make sure that they’re interesting places to be.

    I could be wrong … but this seems worth trying to me.

    1. Making commenters pay would work only if comments were treated as first-class editorial material.

      Would I pay for being able to publicly rebuke stupid “mainstream” pundits, with my material sitting directly opposite their crap? Hell yes, I’d give you a grand a year, no prob.
      Would I pay to comment “ala Boing Boing”, at the bottom of a crowded thread that nobody really reads? Don’t think so.

  4. I would love to see someone set up something similar to the book printing machine, that was in the news a year or so ago, so that it could be used to print magazines or newspapers. Then install it all into a sturdy vending machine like shell. Just walk up, select your reading material (perhaps just a single article), and get it printed and folded while you wait.

  5. Paywalls generally aren’t there to make money from people paying for subscriptions. They’re there so that advertisers will pay the radically higher rates commanded for access to readers who paid.

  6. ..and for the record, I have long paid for a couple of subscriptions to actual daily newspapers: and that won’t stop anytime soon.

    Should I pay yet again for the same information?

    1. I stopped paying for the newspaper a while ago when I started to notice that my recycling bin was mostly filled with unread newspapers.

      After reading news online exclusively for the past couple of years, the idea of a getting a daily newspaper seems positively anachronistic to me. If somebody gave the elevator pitch “I’m going to print out yesterday’s news and deliver it to people’s homes”, who would invest?

  7. The idea that paywalls never work is silly. If your product is niche enough, and your readers are well-off enough, it can work. Thus, it works for the WSJ, and for things like Baseball Prospectus (mentioned only because it is something I willingly pay for). The former extracts premium ad rates because it decommoditizes eyeballs. The latter couldn’t attract much advertising anyway because it is way too niche. The Times, from what I can tell, is a bad poster boy for subscription-based content.

  8. I thought the most interesting part of the article was near the end where Shirky describes what DOES work with paywalls. I.e., that they’re good for creating insular communities that want to talk to each other, and that organizations that go behind paywalls will necessarily be transformed.

  9. One real problem with paywalls that is unavoidable the hit that columnists take- if your work is behind a paywall, who is going to see your work?

    You may craft a great column, an insightful political analysis or opinion piece, but you can be guaranteed that almost no one is going to see it. This makes columnists leery of paywalls, and rightfully so.

    What columnist wants to spend their time and energy writing something that will immediately be locked up and that’s unavailable to the vast majority of people?

  10. My “great big idea” back when the government was bailing out all kinds of businesses and I thought that if we wanted to prop up the newspaper/publishing industry is to give everybody in the country a federal $20 “coupon” to subscribe to a print service. It could be the local paper, Guns and Ammo magazine, book of the month club or Playboy…who cares.

    But think of all the benefits: everyone in the country could get something they wanted to read so all kinds of people would be reading again, you can’t claim to be supporting one agenda or the other because the people could get what they want even if its “reading” Playboy, publications all across the country would get a boost both in the subsidized subscriptions and something to brag about to advertisers, we would be funding journalism again when we need journalists more than TMZ, and I don’t know about you but once I fill in my card info and subscribe it takes a couple years to get around to unsubscribe…

    Pretty much a win all around – well unless you are counting the trees to make all those cards that get in the way of every magazine and the gas to truck that crap to your front step.

  11. Fine in theory, but that’s suggesting all cows are the same. They’re not.

    The Times is a better cow than many. Sure you have the BBC cow, but the BBC cow can barely string a sentence together.

    So I think people will pay, and if the Times was losing money online anyway – then they’re bound to gain.

    I think the longer term problem though is that if you don’t read it, you won’t know about its quality. At the moment they are running on goodwill built up on years of readership. But in five years time, if you’ve never read it, would you want to?

  12. The solution to this is clearly licensing. Why should every tom-dick-and-harry be allowed to spread unverified rumour? Journalists should be protected just like doctors and lawyers. And the public should be protected from these irresponsible people spreading every gossip they hear, passing it off like real news.

    I expect Murdoch to pick up this line and push it. So please do send your flames in my direction.

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