Why Paywalls Are Bad For (Most) Communities

On Tuesday, the Herald-Times online edition hosted a chat with one of their own: Mayer Maloney, publisher of The Herald-Times and Hoosier Times newspapers. The alert to this event came to me via twitter:

The format is less chat than a moderated, crowdsourced Q&A. Although I took the above prompt to clearly be an invitation to chat about the H-T paywall, questions ranged from family to old content to civility in the threaded comments.

My first question to Maloney asked if the paper had considered returning to a paywall only for the archives (content older than a week) or migrating the business model to one that includes service (e.g., news research and monitoring), like many technology companies do when working with open source applications.

The business model of giving away for free online what we sell on paper never made much sense and wasn’t fair to our newsprint subscribers. Charging for content online continues to be a controversial subject although more and more newspapers are trying to figure out ways to generate content-related revenue. Our sites are audited by Nielsen so we know how our numbers of unique visitors and page views compare to other audited sites and we’re doing well for newspapers our size in communities our size.

Maloney also said the paper switched to the current paywall in 2003 (Bedford and Martinsville since 2009), having charged only for older archived content before then.

After referencing my main issue with the paywall—that it makes it more difficult for the online community to help grow the paper’s reputation by reposting links to articles—I wanted to know if there have been any discussions with local businesses about the role the H-T can play in promoting Bloomington and Monroe County elsewhere in the world. Maloney’s reply:

I have never had one conversation with anyone in town—in business or at IU—about how the H-T could help promote our area elsewhere in the world. Without really understand what you mean by “promoting” I’m a bit uncomfortable in answering because I don’t believe the role of the newspaper is to promote its city or county. A newspaper should report about the life and times of its community and leave it at that. Certainly some of the reporting may end up benefiting an area because the nature of the news may be positive and good, but the paper’s intent isn’t to be a promoter of or a PR tool for a community.

In addition to the questions I asked, a few others were on-topic: an inquiry about the policy of charging for obituaries (“We went to a paid obituary format to allow the families the freedom to write as long as they want and to say as much as they want about the deceased.”); why paid subscriptions aren’t ad-free (“as a business the newspaper has to drive revenue to exist”); and, why there isn’t online access to the H-T for subscribers of Bedford’s Timesmail (“They are separate newspapers”).

Sacrificing Reach for Revenue

Over the past year, a number of large international media publications have opted to put a velvet rope around their online content. Those arguing in favor of paywalls typically point to an old model of paid circulation magazines vs. free sheets, porting that philosophy to the online world of Google, click-through ads and impression counts.

In the digital world, however, commodities are made scarce artificially. Whereas printed editions require material that can occupy only one space in the physical world at a time, digital content has no such constraint. It is not as if only one person can access and read a website at any moment. Because the virtual world does not deal in scarcity, the primary economic logic for a paywall dissolves.

It is common knowledge that a shift from free to paid content—the paywall—will lose readership, which can quickly turn into lost value for advertisers. According to a Pew internet report last year, only 7 percent of Americans said they would consider paying for news content. Some content providers hold other advantages that mitigate against the downsides, like a specialized niche and corporate subscriptions. Clearly, from Maloney’s responses above, the H-T has not only weathered any loss of online readership years ago, but they are also comfortable with the level of online activity they are seeing now: “we’re doing well for newspapers our size in communities our size.”

A Newspaper’s Role in Local Reputation

By taking a closed approach to online content, the H-T is missing opportunities to improve reputation and trust as source of information. Those are the things that could lower barriers to future subscriptions for people outside of their current readership, reversing the short-term effects of lost readership. Demanding the financial commitment first is a harder sell.

The paper’s extended online community—including me—is unable to forward links of interest because they don’t lead to accessible content. Social media is an active part of life in Bloomington today, so it is frustrating to have to constantly check links for a paywall. Although my choice of wording in my follow-up question (never say “promote” to a journalist) confused the issue, the quality and availability of a local newspaper is a factor in growing reputation of a community. The H-T need not sacrifice their journalistic ethics and artificially create buzz about Bloomington for their regular coverage of local activities and people to be valuable to others as social objects.

There are other sources of digital information in the area, of course. The IDS, Bloomington Alternative, and Indiana University’s news room all create online content that can be freely shared. There are gaps in that coverage, though—experience, web design, or topical focus—that the H-T can help fill with free online content, giving us a deeper range and quality of social objects to share locally and outside of Bloomington.

To the H-T‘s credit, their initially slow move to Web 2.0 has become an effective use of digital tools. There is free content to be had, in the form of blog posts and videos on niche topics, like sports and environment. Their digital media direction also embraced Twitter in 2009 and has provided both a back channel view of the publishing business and a relational approach to news delivery. The problem of link baiting into a subscribers-only page still runs rampant, as many of the links they and other community members provide lead nowhere without paid access.

Newspapers Should Sell Service, Not Content

The ethical argument given for paywalls is that journalists deserve to be paid, and that subscription is the way to validate their work through economic voting (subscriptions endorse value). Journalists clearly do need to be paid, and newspapers produce better quality when adequately staffed. However, the money to do so can come from other sources that don’t limit the paper’s social capital.

Although it is unlikely any single model can replace the value advertising used to have (both the revenues and effectiveness of online ads have dropped consistently in recent years), other revenue options exist for newspapers. Condé Nast opted against a paywall to address their financial shortfalls, instead looking forward to tablet-based applications to develop new sources of subscription and sales revenue. This month, The Daily launched as a subscription-based iPad magazine that charges $1 per week or $40 annually for content. The app itself is getting mixed reviews, but the publishers behind it are pushing hard to make it successful. Whether it is or not won’t discount this form of delivery as a path newspapers can use to shift traditional subscription sales to a modern medium.

It is a faulty mental model, in my opinion, to view the words people produce as the thing to monetize, when those words are about public events. That was never the case even in a pre-digital age. Subscription dollars paid for service—the manufacture of a printed copy, and the delivery of that physical artifact to your doorstep or outlet—not the hiring of writers. In a digital world, there is nothing to print and delivery has no major overhead that justifies a consumer cost. Service for charge has to come from other things, such as quality of web experience or convenience of an app on the device of your choosing.

Service can surface around the content archives. The people most knowledgeable about the historical content in the H-T are the people who produced that content. It would seem that media monitoring and research would be two viable paid services to promote. The same is true with packaging. Whether it is the print format—the cost of which is still most tied to production costs—or electronic design, there is market value in paying for a better experience reading the content. As other chat participants suggested, the freemium model could allow subscribers to get rid of advertising or gain access to additional content (magazine articles or news from other communities). None of these would interfere with the social and civic contributions the H-T can provide to the local digital community.

Does the Paywall Support Strategy?

My philosophy of information definitely falls on the side of free access, but I do leave room for paywalls to be appropriate under some circumstances. Access is also a problem for academics. Within the microcosm of any particular publishing effort, one of the key strategic goals has to be financial sustainability (someone has to pay for the cost of acquiring and packaging the content). For the academic community as a whole, however, the biggest goal is the spread of research results to impact what academics and industry does in the future. Paywalls may support the former but definitely interfere with the latter.

For a local newspaper like the H-T, financial sustainability has to be one of the big goals that their policies and actions must support. I suspect that isn’t their only goal, and that their mission statement (which I couldn’t find online anywhere) might include quality of coverage and service to their community. Paywalls may or may not fit well in supporting all of their goals, but as long as they do it is a valid choice. I would hope that part of the publication’s everyday process is reflection on what is working, what isn’t, and why. Alternative revenue models may prove a better fit for both community and bottom line as we continue to evolve in the digital age.