Tuesday, 29 March 2011

The New York Times & its Paywall

This week, The New York Times (NYT), a reputed and well-known publication attempts to change the way digital journalism works by implementing a paywall.  What is a paywall and why is this significant?  Basically, in a nutshell, NYT is saying start paying for content online if you want to access it because we can't afford to keep giving it away for free.

In a traditional newsprint environment, publishers know that they can make money from one of two ways - either from subscription income or through advertising revenue.  The lion's share of the revenue is probably from advertising I'd assume.  In the traditional environment, you'd have the costs associated with printing and distribution that don't exist in a digital environment.

So why are publishers now talking about implementing paywalls?

Firstly, they need the revenue.  The advertising revenue that publishers get for traditional newsprint doesn't exist online because you can't guarantee in a digital environment that a reader will click through three or four stories till he see's you advertisement but in traditional newsprint, you can be assured that even if your advertisement is on page 32, it'll be seen by thousands, if not millions of people.

Secondly, most of access news through various digital means and the function the newspaper has itself changed significantly.  Traditional newspapers don't exist to break the news - that's what social media is for these days.  Traditional newspapers provide more of an editorial or indepth analysis or commentary of a story.  Some newspapers have understood this and are adapting themselves accordingly.  Others have failed to see the writing on the wall and represent a deer staring at the headlights of a car that's about to hit them (I've written about this in a blog post several months earlier, that you can read here).

With this being the situation, publishers have seen that the advertising revenue isn't quite cutting it and the other revenue source that they have, subscriptions, has to come into play if they have to survive.  We're in an era of citizen journalism where anyone can say they provide news.  This has been glorified in the era of blogs, YouTube or CNN's i-Report.  There is though still a market for true journalism to prosper going forward and to pay for journalists, the revenue streams need to exist.

How will the NYT paywall work?

What NYT has proposed is to say that you can access twenty articles free of charge a month.  If you want more than that, either get a subscription to the printed newspaper or get a digital subscription and you can start to access all the other content on their website (A letter from the publisher is here and details on subscription plans can be seen clicking on this link).

Interestingly, NYT have said that if you access their website through social media or search engine links, you can read articles for free, as that I assume is good way to drive advertising revenue.

Experiment or Reality?

A few questions now exist in this situation.  Firstly, will people agree to pay for this content or will they switch off and look at alternative news sources online?  Secondly, in a traditional newsprint environment, a newspaper may be read by multiple people within a household or workplace, in the proposition that NYT is proposing, they've said they'll give only one digital subscription free if you subscribe to the newsprint edition of their publication.  Isn't this then unfair as how can you ask a husband, wife and their two kids to each get a digital subscription account because grandpa has used the only one that they get for free whereas they all benefit from reading the traditional printed edition of the NYT?

There are lots of questions and answers that are yet to emerge from this.  It's now moved from being an experiment to becoming a reality and somewhere in the world, Rupert Murdoch is I'm sure thrilled at the thought that he doesn't need to give away free content.  Murdoch himself started a tablet newspaper for the iPad which I've written about earlier (and can be accessed by clicking here).

For more insight on paywalls, you can have a read through this story on the NYT paywall.

I was also hoping to put up a link to a conversation that took place between Jessica Swann, Alexander McNabb and Tom Gara that took place on Dubai Eye's Dubai Today show recently where Tom spoke about paywalls at length since he currently works for FT Tilt, a paywall provider themselves but it seems Dubai Eye hasn't posted this podcast on their website and I can't therefore share it.  Do follow Tom on Twitter where his handle is @tomgara or follow Alexander McNabb at @AlexanderMcNabb.