If you build it, will they pay?
The New York Times may be reporting moderate success with this attempt at its paywall but, well, it's The New York Times. According to Jeff Fraser, if Canadian newspapers implementing paywalls — Postmedia's The Ottawa Citizen and The Globe and Mail most notably — are to succeed, they're going to have to establish their value all over again.
An opinion piece by Jeff Fraser
For the past decade, media buffs from Clay Shirky to Mathew Ingram to Robert Hackett have condemned paid-access news sites for commodifying the news, placing an unfair financial burden on readers, and failing to keep up with technological progress. The failures have piled up: In 2005 the Los Angeles Times started charging $4.95 a month for access to the entertainment section of its website; two years later it tore down the wall after losing 97 per cent of its pageviews. (Now it’s back.) Further: The Times of London, with the 40th largest print circulation in the world, had only 100,000 digital subscribers after a year behind the wall – and that for a measly subscription charge of £2 per week. After two years, New York’s Newsday has 1,000 digital subscribers, or less than 1 per cent of its print circulation.
In this bleak landscape, no one expected The New York Times’ paywall to change the game. But now more than one year after putting up the wall, the Times boasts just shy of half a million subscribers. Media analyst Ken Doctor estimates that Times digital properties have made about $86 million on $3.75 to $8.75 per week subscriptions – not a large sum in the newspaper business (the Times total 2011 revenue was $1.6 billion) but it might be enough to stop the bleeding.
Postmedia’s Ottawa Citizen has been the latest to announce that it will emulate the Times, following in the footsteps of The Globe and Mail early this month – decisions that have met consternation from readers, investors, and pundits. If The Globe, the Citizen and other Canadian dailies are going to find success with paywalls, they need to understand that the Times’ paywall wasn’t just a quick facelift on an old product. It was the last stage of an engine refit. Yes, the Times’ experiment showed the world that people will pay to read news online − but first it had to offer a service worth paying for.
One reason the LA Times and the Times of London failed is that they neglected the tried business rule that you can’t charge customers for something they can get for free. In a free market, the consumer will always buy the best product for the lowest price – so extreme low-overhead enterprises like the Huffington Post, whose revenue was never tied to subscription, seem destined to dominate the market. This intractable logic has meant the downfall of many walls.
But the Times focused on creating a news service that was more reliable, in-depth and high-quality than what readers could get out of Huffington’s minimalist business model. The Times worked on award-winning online videos, e-book archives, and gorgeous, user-friendly mobile apps, in order to establish a unique and exclusive subscriber experience. Subscribers have access not only to the Times’ celebrated coverage, but a streamlined interface and loads of specialized content, which, so far, internet-only competitors haven’t had the income or work force to produce.
The other half of the strategy was to keep giving online news for free, in order to differentiate the “subscriber experience” from a casual one. The Times gives free access to anyone linked to the site from search engines or social media, and allows front-page visitors access to 10 articles per month (though the limit was 20 until recently). This model had an upshot most of the skeptics didn’t anticipate: it warded off the dramatic downturn in pageviews that spelled the doom of the LA Times and Times of London. What the latter forgot is that most subscribers were once casual readers. The Times gives potential subscribers a chance to test-drive the site, which encourages a lot more people to sign up.
Perhaps the most reader-focused decision the Times made was to favour ease of access over security. Much ado has been made over how easy it is to cheat the Times’ website into letting you read for free – it’s as simple as clearing your browser cache or adding a reference tag to an article’s URL. The Times could easily have ramped up security on its content, as have so-called “hard” paywalls at the Wall Street Journal and Financial Times. But the increased security at those sites is inconvenient for readers who want to access their content from multiple devices or share articles with others. For casual readers, the experience is even more fraught. The Times’ editors considered the tradeoff, and made the decision that would ensure the most functionality for readers at the expense of tolerating a few freeloaders.
All of these choices boil down to New York Times publisher Arthur Sulzberger Jr.’s emphasis on quality. Corporate newspapers the world over continue to play by the assumption that readers need the news they provide, and that charging for subscriptions is like exacting a tax for a public service rendered. But the Times has been among the first to figure out that in what has suddenly become a hypercompetitive market, big news companies have to establish their value all over again. Inviting in casual readers, opting for lax security, and staying committed to the high-quality reportage that Times readers expect – even in the face of major profit reductions – are all reasons why readers choose to pay for Times subscriptions.
If news organizations want to survive the current media crisis, they need to prove to readers that they’re still worth the price they ask for. The New York Times has done that, and hopefully the landslide of other publishers experimenting paywalls this year – including Postmedia and Torstar here in Canada, as well as Lee Enterprises (Wisconsin State Journal, Arizona Daily Star), Tribune Co. (Chicago Tribune, LA Times), McClatchy (Miami Herald, Kansas City Star), and Gannett (Arizona Republic, Indianapolis Star) – will all learn from the New York Times’ example.
Jeff Fraser is a master's student in journalism at Ryerson University focused on science, technology and business news. He has written for The Globe and Mail, Huffington Post, and The Mark News. You can follow him on Twitter @omniclast.
Correction: A previous version of this article erroneously stated that the Philadelphia Inquirer was owned by McClatchy, when in fact it was sold in 2006, the same year it was acquired. We regret the error.