Lot’s of people linking to this newspaper suicide pact article. Of course, it will fail miserably and will actually result in more of what they are trying to avoid:
Newspapers that are turning to paywall plans today are gambling on a risky revenue stream that even the experts aren’t predicting will provide a replacement to their lost advertising revenues (their biggest financial problem is the rapid decline in advertising rates, not the slow decline in print circulation). It’s a “well, we’ve got to do SOMETHING” solution, not a logical, do-the-math solution. And since since most media companies are owned by shareholders, the resulting loss of confidence could be catastrophic.
What will these media executives do when that reality hits them? When these debt-burdened chains, stripped of journalistic talent by a decade of profiteering, their web traffic reduced by 60 percent by their paid-content follies, their pockets emptied by the cost of the proprietary paywall systems offered by Journalism Online LLC and other opportunistic vendors, what will they do?
They don’t get it. They don’t want to get it. And in many cases, they’re literally paid not to get it.
America’s journalism infrastructure – from corporate giants to non-profit foundations like the American Press Institute and the Newspaper Association of America – is funded by dying companies. So when you hear about efforts to save newspapers (and, by extension, journalism), understand that answers that don’t return the possibility of double-digit profits and perpetual top-down control aren’t even considered answers. They’re not even considered.
They’ll do anything to survive… so long as it doesn’t involve change.
I was always of the impression that the overwhelming majority of newspaper revenue came from advertising versus subscriptions. Declining subscriptions (and sales, I suppose) is less able to demand high advertising rates. Increasing subscribers might be a tactic – but good luck trying to convince a populus accustomed to ‘free’ as the price for news (online) without driving them to other sources, like TV, radio, and their associated websites. The core problem for newspapers is advertising, which is driven by subscriptions, and the inability to justify high advertising rates for online ads.
There is an opportunity here for a Win-Win for newspapers and online entities. Yes, we will have to pay for content, but in the same way that we pay for Google and Gmail. We pay by bartering our attention in exchange for the use of their software. We trade our personal information, search queries, and demography in exchange for better search results. We are the currency.
My suggestion would be to allow one of two options:
- Users can opt to pay a fee and have an advertising free experience (which almost no-one would choose).
- Sign in via some other authentication protocol, and deliver advertising based on their geography, social networks, and demography.
The Financial Times does it, and it works. Newspapers at large (and TV and radio) should be doing it as well.
Tags: Advertising, authentication protocol, database, demographics, Facebook, Marketing, Open Social, OpenID, paywall, search, targeting, The Financial Times
