In his address to the Arizona Newspapers Association, Steve Buttry summed up the argument against newspaper websites setting paywalls or pay meters (and it is just newspapers; you never hear of TV stations debating whether to charge for access to their sites). I’ll quote the part that sums up his summation:
“Most of the forward-looking paths to prosperity work better with a larger audience, and paywalls (or meters or whatever you want to call them) limit your audience. Most of the paths to prosperity demand that we reach a younger audience, and paywalls continue a model in the comfort zone of newspapers’ aging and dying audience.”
There is an argument to be made in favor of paywalls, and Warren Buffett has summed it up – become indispensable:
“Make the paper so good that I get the shakes if I don’t have it.”
This is not an outrageous theory or one new to newspapers. I have pointed before to a slimmed-down version of a Newspaper Next presentation about creating an “experience” in the news pages, the argument being that people pay all the time for an experience rather than the actual product being sold. Under the experience theory, people will seek out and buy a news product online if it gives them a good emotional jolt or something to talk about. It becomes a valuable part of the day by the effect it has on their day.
Where this theory falls apart is the way that real-world newspaper publishers are trying to keep their businesses afloat.
You cannot create indispensable stories “so good that I get the shakes if I don’t have it” if you are paying the story-creators so little that they make as little – or less – money than first-year teachers. Good stories come only from good minds, and good minds may take a first job paying that little, but they also will soon find a way to something better, and then your flash-in-the-pan indispensability departs with them.
But low pay has been built into newspapers’ current cost structure. It was the way that publishers dealt with, first, the demand for maintaining profit margins and, in the recession and crash of advertising revenue, the need simply to stay afloat. Newsrooms across the country – not all of them, but many – tried to maintain as many staff positions as they could by squeezing pay. Now they are stuck.
If you are stuck with a revenue level that won’t support filling your staff with indispensable storytellers, you need to rethink your staff and content model, slim down the staff size and build up the pay. Otherwise you resign yourself to forever being completely dispensable.
You can’t be indispensable and poorly written at the same time. In that case, Steve’s point is completely correct: You will get online subscriptions from current newspaper addicts, the people who are so used to reading you that they just can’t do without. But they will die off, and you will have nothing that non-subscribers find worthwhile, so you also will die off.
Paywall defenders could argue that there is no “prosperity” to be found in unpaid models so far, but Steve is absolutely correct that in order to survive you need to bring in new consumers, new readers, new audiences.
The most recent real example I’ve seen of this is here in Richmond, where Bill’s Barbecue recently went out of business. Bill’s was a Richmond institution. When I moved here in 2001, I saw Bill’s everywhere. I figured it had to have really good barbecue for it to be so widespread. Then I went into one near home and bought some. Lord, that was some awful barbecue. It was soupy. It smelled funny. I started asking around, and to date no one I have met in Richmond thinks Bill’s had good barbecue (everyone praises the pies, but you don’t build a big barbecue restaurant chain based on the dessert). It was skating on a decades-old reputation, frequented apparently by old-Richmonders who fondly clung to memories (although not many of them; there were two Bill’s within a mile of my house, and neither was ever busy, at any time of day). Finally, the family that owns the business decided to stop.
This is where many newspapers are. There is a base of loyal customers who are willing to pay, though they lament what has been lost in the past 10 years. But there is less and less reason for any new customers to come through the door, and to the extent there is any at all, tighter and tighter paywall restrictions cut off the potential new-customer base. At some point, publishers will feel it necessary to open the walls, but by then their product may be an afterthought, a niche publication in a universe of alternative news sources.
With or without a paywall, you can’t attract an audience when you have little worth reading.
Newsroom With A View 