The worst thing about the paywall question

Like a lot of people in the news business, I'm interested in the results of 2011's big bets on paywalls -- the New York Times version and Rupert Murdoch's Times of London version. We're several months in, and I still haven't seen much of substance.

Which was why I jumped on this piece when API's SmartBrief service led with it on June 27. But does the reporting it contains really justify the headline "Murdoch's Leap Finds Converts in Cannes as Paywall Use Grows?" Read it. I'll be here when you get back.

(Tap tap tap tap...)

Welcome back. Feel more informed on the subject? Smarter? No? Me neither.

The point of the argument over paywalls isn't that you can't get some people to pay for your content. It's a net cost-benefit analysis between the value of paying subscribers versus the value of the content if you give it away and sell advertising on it.

So when companies give only one side of that equation (offering subscription numbers without comparing that to traffic and ad revenues), they're not answering the real question: Is it profitable?

I still don't know the answer, but I offer one general observation: Considering what we know about Murdoch and Arthur Sulzberger Jr., if their paywalls were wildly successful, do you think they'd be so coy about releasing their figures?

I'm on the record on this subject. I think there's a place for paywalls, and I say that because there are examples of content and publications that make it work. But I definitely don't think that "place" is going to include general news content, particularly not by metro papers trying to charge for the content they generate and post online for free today (although The New York Times is a special case and could still prove me wrong).

Regardless of that, I'm better known as an advocate for developing tools that would allow journalists to capture and store the data in their stories in useful and potentially valuable ways. That's the context in which I took Ann Brocklehurt's Tweet in response to mine (see the image above). And she's right.

But here's the difference: We've got years of experience with paywalls. Companies have invested millions of dollars in exploring those options. And despite that well-documented history of failure, in 2009 the "paywall movement" took the news industry hostage. It's an irony worth mentioning that the American Press Institute continues to tout flimsy evidence of paywall success in 2011, two years after its leadership instructed API employees to put out a white paper that concluded the paywall movement was worthy of the industry's support and investment. Talk about compromising your reputation.

What do we have in terms of real-world experience with data systems like the ones I've described? Nothing. How about R&D spending? Or private investment? Who is out there with a big name and a big brand crusading on these topics? Answers, please, on a postacard.

The reason that we don't have meaningful numbers about data products is that we don't have experiments to cite, because the industry continues to sink its money into solutions that don't solve anything. We know enough to know that paywalls won't save most newspaper companies, yet this non-answer continues to suck up money, time and talent that could be devoted to investigating something that might actually make a difference.

Want more evidence of that? Here's the teling graph from today's Guardian article about that Murdoch paywall:

Yes, theoretically the extra paywall subscribers offset the decline in printed sales for both titles over the past twelve months - the Times gave up 68,695 in headline sales between May 2011 and the same month a year earlier while the Sunday Times dropped a similar 68,150. So, on a gross basis the revenue lost would be £30.7m.

The problem isn't that we're giving content away on the Web. The problem is that our industry's business model is dying. If the best you can do is limit your losses, you're not pursuing a soft landing or a new business model. You're pursuing a harvest strategy: reap the final profits of the old newspaper system before laying the old gray ladies gently down to die.

And as Jay Rosen so eloquently put it, the important thing about a harvest strategy is, if your company has one, it won't tell you about it.

We desperately need a better professional press, but that revival is not likely to begin until we come up with a business plan that will actually subsidize quality journalism. It doesn't have to be one of my plans, but it needs to be something that demonstrates long-term potential.

Instead, our industry is still stuck in paywall limbo. That's the worst thing about the paywall question.

***

Aftermatter...

I forgot about this little gem. On June 23, API's SmartBrief email led with this summary:

"A multiplatform model for montezing content: Piano, a digital-content subscription service in Slovakia, provides access to premium content from seven newspapers and two TV stations. Users can sign up at one site and go behind the pay wall of the others. One publisher has seen subscriptions to its opinion section go up 14-fold since the service launched May 1."

The link is to Alan Mutter's blog. Which goes on to explain that:

Bella and his media partners are reluctant to discuss the specific results of the venture in its first six weeks. But Bella says paid subscriptions at the opinion pages of his alma mater, SME, are 14 times greater today than they were under the in-house system in place before Piano launched.

Got it? They had an earlier paywall that sucked, and when they came up with a paywall that sucked less and offered more content, their tiny subscription base went way up.

And then there's this:

Bella’s not-so-secret advantage is that he only had to bring together a small band of publishers in a country of 5 million residents speaking a relatively obscure language. Could his approach work equally well in the English-speaking world, where competition is far more intense than Slovakia?

Hmm. Anybody want to take a stab at that one?

Here's a better question: Why are industry leaders still so obsessed with trivial paywall news, and so seemingly disinterested in everything else?

Comments

[Aleksj]

If the semantic data is generated, it will still need to be sold somehow. Otherwise it will be the same as the huge human effort to put information on the WWW from 92-98 so that Google could index it and profit from it fabulously. But those who were organizing all those links that PageRank is based on - got nothing.

Now, if you start charging for data, who would be the paying customer for it? And how will you charge for the data? What is going to be the first killer application that will generate enough value to get everyone onboard?

[Dan]

Hi Aleks.

First, the machine-readable data you collect and archive won't all be published for free in machine-readable form. That's one difference between what I imagine and the general concept of a Semantic Web.

Second, I suggest that what gets embedded in the hypertext of semantically enhanced stories isn't the RDF triple that describes an individual statement per se, but a URI to a definition in a declared directory. Once you've stored public information in a directory, you have separate sources for human readable information (stories) and machine readable information (data sets). So when a bot shows up at my directory of machine-readable data, I'll have a much better set of options for how I'll respond to that bot than Web 1.0 webmasters did.

Third, and most importantly, who pays for data? Anyone who saves money or makes money by using data. So there will be data sets that are valuable to Realtors, government agencies, insurance companies, attorneys, bike retailers, venture capitalists, restaurant publicists, etc.

Not all journalism that produces data will produce salable data sets. And many of today's standard journalistic practices won't produce complete and reliable data sets by themselves. I suspect the first companies to attempt this go through some growing pains as they learn how to efficiently and profitably collect and package data for specific markets.

I suspect that this will lead to some job titles that don't exist today.

But if we're giving away the stories and selling the data structures, we'll be creating value in products that cannot be so easily copied and remixed. We'll be producing unique journalistic assets that other companies can't plagiarize. And finally, we'll be producing a new kind of trust between information assemblers and information users.

Is there a killer app in all that? I suspect there are several. The first is a new kind of browser, based on APIs that are licensed by the owners of directories of meaning.

[Jay Rosen]

"Here's a better question: Why are industry leaders still so obsessed with trivial paywall news, and so seemingly disinterested in everything else?"

Because in the guide of preserving the newsroom they are actually trying to preserve the relevance of the knowledge they've accumulated about how to run a newspaper. The paywall stands the best chance of doing that, and so it is framed as the best chance of preserving the newsroom. The other possible courses of action have at least as good or a better chance of working but they all require industry leaders to acquire new knowledge. Or to put it another way: to lose mastery before they can gain a future. They're trying to avoid that. Paywalls whisper: you can!