For newspapers drowning in red ink, are paywalls really the answer?

At GigaOm, a well-argued rant by Matthew Ingram responding to a recent Columbia Journalism Review post which said, pretty much, that the only way to solve the Washington Post’s financial problems is to put up a paywall around their content like the New York Times, Wall Street Journal, and other big papers.

"This focus on a paywall as a magic solution misses the point about the larger risks facing both the Post and the industry as a whole," Ingram writes.

I've tried to make the case before that paywalls are a sandbag strategy — one that can help keep the rising waters (in this case, the ongoing rapid decline in print advertising revenue) at bay, but not much else. Sandbags don’t solve a rising water problem, just as paywalls won’t get rid of a declining revenue problem: you need to figure out how to get the water to stop coming in, or find out what is causing it and adapt to that. Paywalls do neither.

Even the New York Times — which has what is probably one of the world’s most successful paywalls for a general-interest newspaper — is finding that the revenue from its plan is barely keeping pace with the decline in print revenue, and meanwhile digital ad revenue is also falling (possibly as a result of the decline in traffic caused by the paywall, as I described in an earlier post). As former news executive Alan Mutter notes, the failure to adapt to the rise of digital advertising is the biggest single long-term problem that newspapers have. Will a paywall solve that problem?

Over at PandoDaily, Sarah Lacy agrees. "Old media’s problems are the costs, not the lack of paywalls," she writes.

• [Dara McHugh]

  the Pando pandering over WaPo reminds me of that great Alexander Cockburn article ‘The High Life of Katherine Graham’
  http://www.counterpunch.org/2001/07/25/the-high-life-of-katharine-graham/

• [creesto]

  One much less obvious way that newspaper nationally in the US have tried to boost revenues is by charging exhorbinant fees for obituaries. What was once a nominal fee for a community service has now become prohibitvely expensive. My father died in June, and his life took him to many major metros, where he was roundly loved. When it came time to submit a decent obit honoring his life and accomplishments, the Columbus Dispatch, in Ohio, wanted $1500. Yep, $1.5k. for about 120 words. We could have drastically cut it down, but Dad was a remarkable man who lived an interesting life and touched many people. Unfortunately, he was not dollar focused, so that amount was not possible. And that is one city: ideally, we would have loved to print in three different rags across the country.

  • [Funk Daddy]

    That’s fucked up. Sounds like 3 bucks a character or so. 

    Way to end an era Big Paper, don’t consider your own dignity or any other as you swirl down the drain. I’ll miss you, but not as much now.

• [Lexica]

  Even the New York Times — which has what is probably one of the world’s most successful paywalls for a general-interest newspaper

  Really? The NYT paywall — the one that can be defeated by just deleting everything after .html in an article’s URL —  is considered “probably one of the world’s most successful paywalls”? Huh.

  • [zartan]

    That’s not defeat – that’s by design.  in fact, that’s why the Times’ paywall is so great – it is an inconvenience that doesn’t make it impossible to view the Times’ articles; rather, it encourages people like me that appreciate their journalism and would prefer to read it as conveniently as possible to pay them for it.  Which I do.

  • [Aloisius]

    I actually pay for the NYT just to have access to it on my iPad for my daily commute. I first purchased it when I hit the limit while looking at fivethirtyeight – one of the few pieces of content that is hard for bloggers and other journalists to just summarize and pass off as their own.

    I knew I could just bypass the paywall, but the convenience of offline reading on the iPad was worth the money to me.

• [Jot Kali]

  Interesting use of words :

  “ is finding that the revenue from its plan is barely keeping pace with the decline in print revenue”

  “Barely keeping pace”, on other words is keeping pace. In other words doing exactly what they needed, digital revenue with the paywall is replacing print revenue.

  The alternative is to continue to follow the Google model. The newspapers should pay for all the investigative journalists, and the costs that go along with it. Google will index the articles and let them be viewed for free. Then Google will profit from this by the sheer mass of it being the number one search engine. What are the newspapers getting out of this ? The amount of free referrals Google passing along will in no way pay what it costs to run a real newspaper, nor will the rapidly declining price of hosting ads on a website.  

  BoingBoing I find has an idealized vision of the world that simply doesn’t exist. Very few people are actually making a real living by getting .01 of a cent every time some visits their site. This is even less so with real newspapers that require real investigative staff and have real expenses.

  • [zartan]

    Exactly – I found it very odd that the Times’ results are presented as a failure, when in fact their paywall is having its desired effect of helping them deal financially with the decline in traditional print subscribership.

• [Keith Tyler]

  As much as the loss of the Seattle P-I was saddening, I have to admit that the reduction in dead trees is a positive development. Unfortunately they didn’t just shelve the print version, but also decimated the entire news operation.

  IMO there needs to be a non-profit online news outlet — including video and/or audio, not just text, and including live coverage, flashes, and updates — to replace all the Old Media dinosaurs. That sort of organized and standardized information source is what the free-to-read Net is sorely lacking, and the biggest problem of the death of Old Media. For better or worse, Old Media at least has structure, standards (maybe), quality, integrity, accountability, and timeliness.

  • [zartan]

    There are many non-profit online news outlets.  And, there are for-profit outlets, from Salon to the Times to the WSJ, that you can subscribe to and support with your dollars.

    • [Keith Tyler]

      Which one of those has the “video and/or audio, not just text, and including live coverage, flashes, and updates” that I mentioned?

• [Michael Smith]

  I will not pay for my local preferred newspaper (The Age) because half the time I open its online edition it upsets me so much that I refuse to go back until the feeling fades away. This happens because The Age trolls for page views. They put stupid articles on timers and fire them off on schedule.

  If it frightens me I won’t commit to paying for it, so I don’t pay.

  • [Derek Thorn]

    And this is the problem. You have newspapers frantically trying to compete with new media, and idiots like Sarah Lacy excoriating them to “innovate” or be put out to pasture. The world is changing, many old media outlets will (and probably should), die. But the problem, while exceedingly difficult to solve, is blindingly simple: it’s a cost/benefit analysis. If your local paper, and other newspapers, provided consistently excellent writing and coverage and presented it in a modern, attractive manner, SOME people will be willing to pay SOMETHING for this. See: the NYTimes. See: iTunes (for music and movies). Old media listens to the outspoken new media mavens who insist that there has to be some way for somebody ELSE to pay for this, which is never a solution. It’s easy to pick out the numerous flaws of old media, and they are tremendous and number, but that doesn’t mean there isn’t an equally long list with what claims to be replacing it.

    • [Michael Smith]

      I also think they could do more to promote their archives and the raw data which they use to assemble their stories. I often buy The Age on paper on Saturdays. If that came with a key to access in depth information on line then I might start paying for more online access during the week.

• [Layne]

  I’ve worked for a Times-held paper and it was just as large of a clusterfuck as any dotcom gig I’ve had. At the same time that Sulzberger was using eminent domain to steal the land for the huge, cash-draining NYC headquarters, they were building a brand new, shiny LEED-certified headquarters for the local branch while they laid off dozens of workers. 

  Print magazines and newspapers sat on top of the hill for too long and now they can’t bother to change enough to gain back the kind of relevance they enjoyed 20 years ago. The local paper is decent but they scatter so many awful “facts” or unsigned editorials throughout that a casual read makes you want to drop the subscription by the time you finish.

  Don’t even get me started on crappy print magazines. The holiday GQ picks Rhianna as one of their “Men of the Year” and gushes about a $30 *doorstop* as a holiday “must-have”.

  • [Won Word]

    You too, eh? At the paper where I worked (owned by mega corp whose name rhymes with “worst”), all of the prestige was still with the print side (and this was only a few years ago!); we online folks were seen as a minor inconvenience. Want to get ahead and sit at the big boy’s (and girl’s) table? Best not be in ‘online’.

    TPTB saw the iPad as their savior–because everyone will want to PAY to have a virtual newspaper! Suckers.

    Then they thought they could win by using content mills like Demand Media to influence Google–until Goog’s page rank algorithm changed to punish content mills. Suckers.

    If—if!—they got rid of their fossils at the top and brought in some folks younger than 50, they might have a chance.

    Meanwhile, the daily dead-tree edition typically features four stories by staffers, with all the rest from AP and other. Pathetic.

• [webstu]

  The answer to newspapers’ financial woes is as utterly, completely, blindingly, astoundingly obvious, as it would be seriously lucrative.  I can see how, if you were focused on printing on dead trees, the answer would elude you, especially if you were interested primarily in selfish interests, but dang.

  But I’m sure as hell not going to tell anyone.

  I ****hate**** our local newspaper’s kissing up to whoever appears to be the wealthiest person/party on every story. And their sloppy reporting based on the vaguest of notions of what happened at public meetings.  And their outright contempt to anything resembling a citizens group.  One of my greatest fears is that they will figure out the obvious solution before they go under. 

  Once their demise is announced, I’ll be writing to the editors of every newspaper I admire.  If they listen, they’ll be on a profitable basis within weeks.  Completely serious.  

  As for magazines, well, they’re on their own; no idea how to help them.

  • [Won Word]

    It is the publisher who has the power. Also, he (or rarely, she) usually takes their marching orders from megacorp headquarters.

    Even if you had a foolproof idea, they would hardly listen to you. Everyone follows The Grey Lady (NYT)’s direction, because they’re too scared to take risks.

• [snowmentality]

  From the CJR post: “As Monty Python would put it, the free strategy is a dead parrot.”

  That misses the entire joke of the Dead Parrot sketch. And the author actually links to the sketch, so he really has no excuse.

  The appropriate phrasing would have been “The free strategy is pining for the fjords.”