Why paywalls won't help most big newspapers



A few years ago, I moved a small local newspaper's online edition behind a paywall. Most free content was removed from the web. Instead, we sold a PDF of the newspaper. Web traffic plummeted from about 15,000 views a month to about 8,000. The PDF edition attracted only a few hundred subscribers on top of the daily print run of about 9,000.

In other words, it was a big success.

I know what you're thinking! "How is that a success? You lost all your traffic and only gained a handful of paying customers!"

It was a success because the Hobbs News Sun's website went from losing money—it generated no revenue and occupied employees for hours each day—to making enough money to sustain itself.

This isn't a counter-argument to what we often write about here: for major publishers, paywalls represent a desperate floundering in the face of death. But recognizing why it's good for some throws light on why it's bad for most. And here's why it was good for us:

• We made negligible ad revenue from the website. Traffic was too low for affiliate schemes or adsense to make any money. The local advertisers had no imagination, and it was difficult to convince ad sales staff to push it on them. While we were going from nothing to something, today's big publishers are trying to maintain something they already have.

• Readers had no-where else to go for professional local journalism. The Lea County Tribune fills the "happy society page" niche that newspapers often ignore, but that's it. Even the radio stations would often just read our stories on the air. Bottom line: no-one else is doing written reporting there. There weren't even any local bloggers doing their own thing.

• The paper's small size meant we could get away with using PDF files. We used them because PDF qualifies as paid circulation with the Audit Bureau of Circulation, which means online views counted for advertising purposes just like selling copies of the print edition.

The critical point here is that advertising is still what makes money for news, even when there's a cover charge. Paywalls aren't just sold to readers. They must be sold to advertisers. Paid walls make the eyeballs behind them much more valuable.

To succeed with paywalls, then, publishers need not only an established monopoly on something valuable (local news, scoops, reporting quality) but also a plan to translate that into advertiser interest. Paywalls alone, unless they are ridiculously expensive, just won't be enough.

(There were, however, other reasons to erect a paywall at the News-Sun. For example, legal counsel convinced it not to permit the essential ingredient of a successful website: user-contributed content. The reason given was that the potential liabilities involved haven't been settled by a definitive SCOTUS ruling. Which is absolutely true, of course. Just as it is true that the risk of exploring the pyramids hasn't been conclusively settled until we've proven that we won't be attacked there by golden unicorns.)

It'll eventually be time for the News-Sun to do something fancier than plain-jane paywall PDF. But if that's still paying its way, why bother? Publishers can make a go of paywalls as long as advertisers and readers have few options and they can maintain the status quo.

Which would, of course, count out just about almost all of the major publishers currently thinking of implementing one.

Photos:Ray Phua and Joriel