In 2011 the New York Times retreated behind a paywall, requiring regular readers to subscribe if they want more than basic access. Rather than being the way of new media, it confirmed that the venerable old newspaper was throwing its lot in with the dinosaurs.
Publishers the world over should thank Rupert Murdoch. He has invested huge amounts of money and made great blunders in electronic publishing so that the rest of us don’t have to.
He was one of the pioneers in going for large scale paywalls: putting online newspaper content behind credit card ramparts. He was behind the first (paid-for) daily newspaper designed exclusively for one device, the iPad. The Daily, as it was imaginatively named, was launched in February 2011, and closed down 21 months later, after losing $30-million a year.
Still, numerous old-style publishers and editors hang on to Murdoch’s every word when he argues that content shall not be free. And, like all other dinosaurs before them, they will go down fighting for a world-view that no longer belongs in the world.
The next to subscribe to his philosophy that consumers should pay for online content was the New York Times, which retreated behind a paywall on 28 March 2011. It has achieved some success, passing the 700 000 susbcriber mark within two years, but subsequently saw a dramatic slow-down in growth, prompting it to introduce lower-tier subscription options. Revenue from these subs has, in turn, helped to offset a dramatic fall in advertising revenue.
“No American news organisation as large as The Times has tried to put its content behind a pay wall after allowing unrestricted access,” the newspaper itself reported when the announcement was made back in 2011. ”The move is being closely watched by anxious publishers, which have warily embraced the Web and struggled with how to turn online journalism into a profitable business.”
Of course, “embraced” is a strong word for dancing skittishly away from anything that hinted at digital, while throwing huge amounts of money at strategies designed to fend off the inevitable migration of readers. The Murdoch mantra had been that newspaper buyers had always paid for content before, and that’s why they should do so now. Content Must Cost.
The flaw in the mantra is that newspaper buyers had never really paid for content before. Advertising had paid the high costs of maintaining a news-gathering infrastructure. The cover price of a newspaper had always been a pittance in comparison. At best, it paid for the physical printing of the publication.
The problem today is twofold. Firstly, digital advertising is far too cheap. At least, for publishers. It is a lot easier to justify a hundred thousand dollar bill for a full-page, full-colour ad in a magazine supplement than for a digital ad delivered in a small banner format that most people don’t even notice. It doesn’t help to argue that it costs less to maintain a website than to print a newspaper: often the opposite is true of heavyweight online publications.
Secondly, the Web has already destroyed one of the pillars of the newspaper industry in the USA: the classified ad. From close to $9-billion in revenue in Help Wanted ads in 2000, this market collapsed to an estimated $723-million in exactly one decade. Who needs newspapers to ask for help when you have Google, Bing, Facebook and Twitter?
Clearly, it is advertising that has to be reinvented, and not – as the paywall experiment implies – content.
The impending collapse of the advertising model was already obvious 10 years ago. But, like the music industry, the newspaper industry sat on its hands hoping the water would calm again. Instead, it became a digital tsunami of change. When Murdoch tried to hold back the rising tide, old school editors and publishers not only wanted to believe, they had to believe.
And what they believe is that, as they fail to hold on to advertisers’ budgets, subscribers must provide the compensation. Subscribers, however, are not comfortable around dinosaurs; they tend to be trampled in the rush for new feeding grounds.
Nevertheless, venerable old names in media all follow the clarion call to man the ramparts of the paywall. It is happening in South Africa too. Expect much more financial bleeding – and blaming – on the newsroom floors in the coming years.
* Arthur Goldstuck (@art2gee) heads up the World Wide Worx market research organisation and is editor-in-chief of Gadget.
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