Revisiting the paywall


News Corp. announced earlier this month that it has planned an experiment involving micropayments for its Wall Street Journal web property. The new model will allow non-subscribers to pay for content on a per-article basis, rather than paying the $100 USD per-year subscription fee.
Newspapers and magazines all over the world will closely observe the success of this model. The WSJ is one of the few major newspapers holding fast to its subscription model, despite hints that it would remove its paywall last year. Whether it has suffered for this wall or not is debatable. The newspaper has experienced traffic growth but still lags behind The New York Times and USA Today, two other national newspapers that offer their content for free.

Whether this move helps restore the WSJ to profitability or is just a desperate grasp for a new business model will be seen later this fall, when the system is launched. However, many, including The Guardian, have begun to question whether it can work. While the WSJ may have some advantage due to its business-oriented audience, traditional newspapers face steep challenges in trying to get readers to pay for their content.

However, the WSJ model isn’t the only one being thrown around. Other newspapers are trying experiments of their own, though in a decidedly different direction.

A different approach

Even as the WSJ looks to sell more of its content through micropayments, The New York Times is working to open more of it up. It recently launched the second version of its reader application, which is available for Windows, Mac and Linux on the Adobe AIR platform.

This reader allows anyone to silently stay up-to-date on New York Times postings as well as read the paper’s content in a manner similar to the print edition. It is free for subscribers of the print edition of The New York Times and costs less than $4 USD per week for those who are not.

The reader has received positive reviews, including from some critics of The New York Times, but many are worried that the service may be a dead end. Folks in this camp would prefer to see the functionality of the reader, especially the offline access, brought to the website or free iPhone app.

But this isn’t The New York Times’ only foray into an online subscription service. On 6 May, representatives from the company joined those from The Washington Post and The Boston Globe, which is owned by the Times, to announce launch of the new large-screen Kindle DX.
The execs were gathered to announce subsidised subscriptions that would be offered to those who could not receive printed copies. In exchange for subscribing to the electronic version of their newspapers, readers would receive a discount on the nearly $500 Kindle DX on which to read it.

Readers could then use the Kindle DX to purchase other books, read textbooks and subscribe to other newspapers.

In this regard, the approach is very similar to the cell phone contract system except, instead of a phone, the newspapers are subsidising a reader on which its customers have access to content.

The difference

Although both The New York Times and the WSJ are creating walled gardens, the NYT is creating its apart from the Internet. The NYT does require a free subscription to read some content, but the only items users pay for are in either their print edition or one of these new electronic editions.

The NYT approach has two important advantages over that of the WSJ. First, it prevents the content from “escaping” the garden quickly. Since the NYT controls the devices on which its content is read, it can limit the copying and redistribution of it better than it can on its website. Copying content from a Kindle DX to the web is much more difficult than copying from a paid section of the website.

The second advantage to this approach is that it changes the product for which the consumer is paying. Rather than merely paying for access to content, which is likely available for free (legally or illegally) elsewhere, users are paying for convenience and access to the desired content anywhere, anytime they please on the devices they choose.

The reason this may work is because the web has been for 15 years an open-access platform on which content is free. While there is a market for paid content on the web, especially in certain niche organisations, the web is an open to which anyone can post to at little to no expense. This drives the cost of content on the web downward toward zero. By using platforms that offer convenience and additional features over the web at large, newspapers again open up the chance to charge for content without offsetting users.
This system has already been used with great success elsewhere. When Apple launched iTunes, many felt it would be a failure. Now Apple is the largest music retailer and has sold more than 6 billion songs. This works because mp3 players offer a level of convenience as compared to streaming music via the web. iTunes offers both a legal and more convenient than alternative filesharing networks.

If history is any indication, the key to selling content on the web is to first separate it entirely from the browser. This is exactly what the NYT is trying to do. The other alternative, as with the WSJ, is to provide specialised content to an audience that has proved it is willing to pay.

As the Guardian recently said in an opinion piece on these initiatives, selling content on the web is nearly impossible when so much content is available free. Many news organisations, such as the BBC, will likely never consider raising a paywall around their content, no matter what.

Bottom line

The NYT and the WSJ are experimenting with new business models. In that regard, others, such as The Guardian, have experimented with models in the opposite direction, providing complete openness and access to their APIs.

Which business model is the “right” one won’t be clear until years down the road. Unfortunately though, that is going to mean a lot of closed businesses and many lost jobs. However, all three are trying business models that are either similar to those that have either worked well in the past, which gives them a better chance of survival than those who are doing nothing.

What is clear is that the news industry is changing and at least some response to that change is in order. Even if it turns out to not be the “perfect” solution, it may still open up doors in a flagging news market.


Flickr images from users Enrico Fuente, igorschwarzmann and swanksalot