Our understanding of “paywall” needs to change
I’ve noticed that, like President Obama, I’m increasingly reading news on my iPad, in much the same way I used to read newspapers. I pick up my iPad in the morning and read the New York Times over breakfast, or I sit back in bed just before I go to sleep and swipe through some headlines.
Even though I gave up on newsprint long ago and have been getting my news purely through digital means, I’m finding the iPad to be the ultimate news machine. It is such a powerful device that I have even found myself willing to pay for the news that is delivered to it.
For me, that has been a significant shift, because I have long been opposed to paywalls of any sort. I argued against them at Time Out Hong Kong, where I was online editor, and at Asia Sentinel, a bootstrapped news site I worked with that is still trying to figure out how to make money. (Disclosure: I own 1 percent of Asia Sentinel, but that share is worth $0.00.)
Before the iPad, I never would have paid for news via a website. News is too abundantly available elsewhere on the Web; other organizations would capitalize by just rewriting what the sites have behind their paywalls and then publishing it; and writers would suffer from not getting their work seen by a large audience. What I’m starting to realize, however, is that the word “paywall” is no longer adequate to describe emerging digital subscription revenue models, such as the one employed by the likes of the New York Times and being considered by the Washington Post.
The first phase of the “paywall” put the emphasis very squarely on the “wall” part of that word. News websites – such as, for a short while, the Times, the Wall Street Journal, and the Financial Times – erected a strong barrier that locked away all of their content. It was only accessible to one account at a time and there was no leakage around the edges. The stories existed in their own little world, one that couldn’t be expanded by social sharing or serendipitous virality. The content was a prisoner, and the readers mere visitors.
The South China Morning Post, for whom I was until recently a regular contributor, uses this approach and it has always infuriated me. Even though its site has apparently helped the newspaper stay profitable, it has contributed to the Post’s increasing irrelevance to an international audience at a time when a more open approach could have positioned it as a preeminent news source on China for a global readership just as the world’s biggest country was becoming the world’s biggest story. I have had many stories published on scmp.com, but not a single word of feedback on any of them, and none are available through a Google search. It’s like those stories never existed.
The “paywalls” we’re seeing today, however, are different and place more emphasis on the first syllable of the word. Call this Phase Two of the paywall. The newspapers want you to pay, but the walls are lower and more permeable. Some publishers are not at all concerned about their stories “escaping” into the wild. Both the New York Times and the Wall Street Journal let anyone read their content for free, provided they find it via Facebook, Twitter, or Google. They know that it’s easy to get around the paywalls in other ways – such as deleting the extraneous code pasted onto the end of a story’s URL – but they figure the costs of “losing” the revenue opportunities on those stories are lower than the gains they make from the people who prove willing to pay a subscription.
Paul Carr’s NSFW (of which I’m also a paid subscriber) espouses a similar philosophy, with a clever twist. It lets non-paying readers temporarily access stories thanks to a feature that “unlocks” a story for 48 hours if a reader chooses to share it via Twitter or Facebook.
The other thing about “paywalls” today is that they’re not just something erected on a website. Instead, they function more as “passes” that give subscribers access to a publisher’s content wherever that content may be. The New York Times is the best-case example of exactly how that works. Important caveat: The Times in no way represents newspapers in general; it has one of the largest newsrooms, biggest budgets, and widest reaches of all newspapers in the world. But, given its experiments and products – both a direct result of having such clout in the first place – it is still instructive to consider its approach. And the early numbers related to its Phase Two “paywall” continue to be encouraging.
After one and a half years, the Times expects to make more money from subscriptions than from advertising, according to Bloomberg. That’s thanks in part to a rise in digital subscriptions, which will generate $91 million this year, out of a total subscription pool of $768.3 million. At the same time, its subscription sales are rising faster than ad revenue is falling, says Bloomberg. This success has not come merely because the Times said “Let’s start charging people for all the content on our website.” It’s come because the Times has been smart about when it asks readers for money, and how it has been packaging its digital content.
The Times took a risk by reintroducing a subscription element to its website back in March 2011. Many people thought it wouldn’t work. It let anyone read 20 articles a month for free, before asking those readers to pay up. It later changed the quota to 10 articles a month. That approach alone might not work for many newspapers. There would be less incentive to pay up for access to the websites of smaller city newspapers, many of which rely heavily on syndicated stories that could be found elsewhere on the Web.
The model is more useful, however, when you stop thinking of the paid element as a “paywall” and start thinking of its as a “pay pass.” The Times’ subscribers can read its news fully unlocked across all devices and platforms, including smartphones, tablets, and mobile Web sites. And those properties are very good. The iPad reading experience for the Times, for instance, is competitive with the newsprint experience, even in terms of design, but especially because those stories are shareable, always up-to-date, and highly portable.
More importantly, reader habits are shifting to mobile devices, where subscriptions make more sense. While it’s a cinch to get around a paywall on desktop, thanks to the keyboard – thus making its easy to delete a piece of code at the end of a URL, for instance – the reading experience on an iPad is more laidback, meaning the workarounds become much more of a nuisance. Readers like me just want the news delivered in as low-fuss a way as possible, so they can sit back with the iPad and consume. I am prepared to pay for that. It’s like paying a few extra cents for a pre-sliced bread rather than cutting up a loaf yourself. The latter is easy to do, but the former is preferable because it’s far more convenient.
The word “paywall” tends to provoke knee-jerk reactions, perhaps because of their Phase One legacy of failure and alienation. First time round, paywalls were all in the mould of the South China Morning Post’s: cold, hard blockades that kept content in and readers out. Writers lost, readers lost, and only a few publishers – the Wall Street Journal, the Financial Times – managed even small wins.
It doesn’t feel right to call what the New York Times has now a “paywall.” Actually, there is no “wall” around its content. Each story has many doors open to it, via Twitter, Facebook, Google, and email. As long as you’re not reading more than 10 stories a month, you can even walk through the giant front door that is the New York Times homepage. But for those who are willing to pay for the convenience of cross-platform access, or who want to support good journalism, or who think the iPad version is worth just as much as the newsprint version – well, they get to pay a fair price. For all access, that’s $35 a month, compared to $52.50 a month for the paper version.
As my boss Sarah Lacy argued recently, paywalls in and of themselves aren’t going to be the answer to Old Media’s problems. For many publications, the business models of the future will still depend heavily on some form of advertising or sponsorships, possibly with events and memberships in the mix. But some sort of paid element, such as a cross-platform pass, that respects and leverages the openness of the Web while monetizing high-value chunks of it could help supplement publisher incomes.
To call that subscription-based approach a paywall, however, sells it short. It’s much smarter and more flexible than that, and built for a new era of media consumption. As the rising importance of subscriptions in the New York Times' revenue mix proves, it's also a step in the right direction.