journalism, news, publishing

News business model strategies & notes on Shirky’s ‘The Times’ Paywall and Newsletter Economics’

Clay Shirky comments on paywalls in particular News Corp’s Times paywall and disclosure of audience statistics. How do we get people to pay for news on a digital platform? It’s never going to be easy, especially being one of the first like The Times, they must be applauded at least for diving in.

But there are other models in along the lines of free, freemium, or hybrids of free and paid-for content. Though I think a ‘Great Wall’ style paywall may be a n extreme that would only work a for a few strong or highly niche/valuable brands.

Different titles with different audiences will need more experimentation before we all find our balanced strategy, playing off some level of charging for access against keeping a presence on the open web.

Quotes from the article:
Robert Andrews at PaidContent sees hope in the Times now having recurring user revenues.*
Mike Masnick at TechDirt believes those revenues are unlikely to offset new customer acquition costs and the loss of advertising.*
General-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem.
The web puts newspapers in competition with radio and TV stations, magazines, and new entrants, both professional and amateur. It is the war of each against all.
The advantage of paywalls is that they raise revenue from users. The disadvantages are that they reduce readership, increase customer acquistion and retention costs, and eliminate ad revenue from user-forwarded content. In most cases, the disadvantages have outweighed the advantages.
anyone advising newspapers will at some point say “All you need to do is offer a product so relevant and valuable the consumer is willing to pay for it!”
This advice is well-meaning. It’s just not much help.
merely a restatement of the problem, by way of admission that the current product does not pass that test.
Paywalls do indeed help newspapers escape commodification, but only by ejecting the readers who think of the product as a commodity. This is, invariably, most of them.
One way to think of this transition is that online, the Times has stopped being a newspaper, in the sense of a generally available and omnibus account of the news of the day
Instead, it is becoming a newsletter
the paywall creates newsletter economics.
If you are going to produce news that can’t be shared outside a particular community, you will want to recruit and retain a community that doesn’t care whether any given piece of news spreads, which means tightly interconnected readerships become the ideal ones. However, tight interconnectedness correlates inversely with audience size, making for a stark choice, rather than offering a way of preserving the status quo.
This re-engineering suggests that paywalls don’t and can’t rescue current organizational forms.

Shirky also adds comments:
“I agree with you that the Times is an unusual case in many ways, not least because it is embedded in a much larger and more diverse media empire. See, on this subject, Seamus McCauley’s terrific piece on the use of the Times as part of a larger “confusopoly” media war: “News Corp’s Paywall Is About News Corp, Not The Times” http://virtualeconomics.typepad.com/virtualeconomics/2010/11/news-corps-paywall-is-about-news-corp-not-the-times.html

I disagree that this makes the lessons of the Times paywall less relevant; in fact, the Times has two unusual cushions–a publisher who is willing to forgo some revenues in order to have influence, and a larger media empire for whom having the papers collect CC numbers may make it an atttractive source of up-selling and cross-selling. Papers that don’t have those cushions are likely to suffer more from a switch to paywalls.”

Quotes:

The Times’ Paywall and Newsletter Economics « Clay Shirky

  • Robert Andrews at PaidContent sees hope in the Times now having recurring user revenues.*
  • Mike Masnick at TechDirt believes those revenues are unlikely to offset new customer acquition costs and the loss of advertising.*
  • General-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem.
  • The web puts newspapers in competition with radio and TV stations, magazines, and new entrants, both professional and amateur. It is the war of each against all.
  • The advantage of paywalls is that they raise revenue from users. The disadvantages are that they reduce readership, increase customer acquistion and retention costs, and eliminate ad revenue from user-forwarded content. In most cases, the disadvantages have outweighed the advantages.
  • anyone advising newspapers will at some point say “All you need to do is offer a product so relevant and valuable the consumer is willing to pay for it!”
  • This advice is well-meaning. It’s just not much help.
  • merely a restatement of the problem, by way of admission that the current product does not pass that test.
  • Paywalls do indeed help newspapers escape commodification, but only by ejecting the readers who think of the product as a commodity. This is, invariably, most of them.
  • One way to think of this transition is that online, the Times has stopped being a newspaper, in the sense of a generally available and omnibus account of the news of the day
  • Instead, it is becoming a newsletter
  • the paywall creates newsletter economics.
  • If you are going to produce news that can’t be shared outside a particular community, you will want to recruit and retain a community that doesn’t care whether any given piece of news spreads, which means tightly interconnected readerships become the ideal ones. However, tight interconnectedness correlates inversely with audience size, making for a stark choice, rather than offering a way of preserving the status quo.
  • This re-engineering suggests that paywalls don’t and can’t rescue current organizational forms.
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