At a regional news debate at City University yesterday evening, media blogger Roy Greenslade asked us (me, freelance media reporter Jon Slattery, Northern Echo editor Peter Barron, Times web development editor Joanna Geary and paidContent:UK reporter Patrick Smith) if we thought pay walls would work. I said I thought Rupert Murdoch hadn’t much to lose as a result of pay wall experimentation. I noticed a little challenge to that on Twitter so here’s why I think that, in a bit more detail…
My boss – Journalism.co.uk founder John Thompson – once called pay walls a ‘no hoper’ strategy and I’m inclined to agree with him when it comes to regional – and probably national – paid content. I’m happy to be corrected if it all works out in the pay wall publishers’ favour. Time will tell.
But let’s take a look at the actual risks involved for the pay wall pioneers, namely News International and Johnston Press. Let’s suppose it does flop (and remember that – as yet – Johnston Press are only trialling pay walls for three titles) … so what?
We’ve seen pay wall peekaboo before: now you see it for free, now you don’t. At the New York Times; on parts of UK sites; and various magazines. The readers come back – and multiply – when it’s free.
Now, I’m unlikely to extract a figure for how much pay walls cost to put up from News International or JP towers, but I suspect it’s not too great an investment and certainly, cheaper than buying MySpace (do drop me a line if you run a pay wall construction company and know the answer).
As a point of context, former Times online chief Anne Spackman once claimed that online comment pre-moderation systems cost a six figure sum to maintain (she didn’t specify the period and wouldn’t later be drawn on the statement). Not so much of that commenting manpower/equipment needed for imprisoned content…
Now let’s say the Great Paywall of Wapping fails:
a) People stop visiting the sites and go elsewhere for their news
But the real risk at play – (b) that people stop buying the Times – is the least likely outcome. As paidContent:UK’s Patrick Smith pointed out at last night’s debate (as in the past), Murdoch’s real strategy motive may be a bid to boost whatever print sales he can.
Say a) is the outcome and sales / subscriptions decline and the print sales don’t make up for lost advertising revenue. Well, Murdoch can bring the wall down. The Times is probably a big enough brand to lure those news bloodsuckers back to its site – and the advertising cash with them. Back to square one, but little really lost – just a bit of egg to wipe off News International’s face.
I’m not alone in this view: Peter Kirwan dissected the ‘bogeyman’ in August 2009, in a Wired.co.uk piece that adjusted the frame of the pay wall debate [I recommend reading it in full]:
“As a risk-taking entrepreneur running a $30 billion-turnover quoted company, Murdoch is one of the last representatives of a near-extinct species.
“Like most entrepreneurs, Murdoch is capable of conceiving great enthusiasms that can be dropped rapidly if they don’t work out.” [my emphasis].
Also, consider Murdoch’s other businesses: cable and film, in particular, and the fact that 70 per cent of News Corp’s revenue comes from the US.
As pointed out by Peter Kafka, reporting rather bluntly on News Corp figures in November:
“Newspapers: Getting hammered. Operating income was a mere $25 million, a decrease of $109 million in the last year.”
$109 million down isn’t good, but it’s in the context of News Corp overall revenue, $7.2 billion (down 0.3 bn).
So what’s to lose in Murdoch’s bid to re-gain $109m +? He isn’t enjoying advertising dollars from his news sites so he needs a new strategy. If it doesn’t work, he can go back to the old system… or (as his shareholders might prefer) pull back from newspapers and invest elsewhere.
It’s the same with JP: they’re struggling to make money online so this is a last ditch attempt to bring some in. It doesn’t work, well they haven’t gone back any further than they were.
They try it. It works – they win. It doesn’t work – well, back to square one. Like Kirwan said, a game of entrepreneurial risk, with – in my view – fairly low stakes.
Instead of worrying about whether the Digger is doomed, I suggest we take Kirwan’s lead and re-write the ‘paid content’ debate to include Guardian sponsorship and membership drives:
“Increasingly, the question isn’t about whether or not to introduce a paywall. It’s about where to locate it: around content, reader affinity, affiliated retailers – or at the entrance to festival tents in the British countryside.”