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Goldstuck on Gadgets

Paywalls vs the digital tsunami

Today the New York Times retreats behind a paywall ‚ requiring regular readers to subscribe if they want more than basic access. Is this the way of new media, or the way of the dinosaurs? ARTHUR GOLDSTUCK argues they are trying to hold back the tide.

Publishers the world over should thank Rupert Murdoch. He is investing huge amounts of money and making the great blunders in electronic publishing so that the rest of us don’t have to.

He is one of the pioneers in going for large scale paywalls: putting online newspaper content behind credit card ramparts. He is behind the first (paid-for) daily newspaper designed exclusively for one device, the iPad. Numerous old-style publishers and editors hang on his every word when he argues that content shall not be free. And, like all other dinosaurs before them, they will go down fighting for a world-view that no longer belongs in the world.

The latest to subscribe to his philosophy that consumers should pay for online content is the New York Times, which will retreat behind a paywall from this Monday, 28 March.

‚No American news organization as large as The Times has tried to put its content behind a pay wall after allowing unrestricted access,‚ the newspaper itself reported when the announcement was made this month.‚ The move is being closely watched by anxious publishers, which have warily embraced the Web and struggled with how to turn online journalism into a profitable business.‚

Of course, ‚embraced‚ is a strong word for dancing skittishly away from anything that hinted at digital, while throwing huge amounts of money at strategies designed to fend off the inevitable migration of readers. The Murdoch mantra had been that newspaper buyers had always paid for content before, and that’s why they should do so now. Content Must Cost.

The flaw in the mantra is that newspaper buyers had never really paid for content before. Advertising had paid the high costs of maintaining a news-gathering infrastructure. The cover price of a newspaper had always been a pittance in comparison. At best, it paid for the physical printing of the publication.

The problem today is twofold. Firstly, digital advertising is far too cheap. At least, for publishers. It is a lot easier to justify a hundred thousand dollar bill for a full-page, full-colour ad in a magazine supplement than for a digital ad delivered in a small banner format that most people don’t even notice. It doesn’t help to argue that it costs less to maintain a web site than to print a newspaper: often the opposite is true of heavyweight online publications.

Secondly, the Web has already destroyed one of the pillars of the newspaper industry in the USA: the classified ad. From close to $9-billion in revenue in Help Wanted ads in 2000, this market has collapsed to an estimated $723-million in 2010. Who needs newspapers to ask for help when you have Google, Bing, Facebook and Twitter?

Clearly, it is advertising that has to be reinvented, and not ‚ as the paywall experiment implies ‚ content.

The impending collapse of the advertising model was already obvious eight years ago. But, like the music industry, the newspaper industry sat on its hands hoping the water would calm again. Instead, it became a digital tsunami of change. When Rupert Murdoch tried to hold back the rising tide, old school editors and publishers not only wanted to believe, they had to believe.

So it is that venerable old names in media all follow the clarion call to man the ramparts of the paywall. It will happen in South Africa too. Expect much financial bleeding ‚ and blaming ‚ on the newsroom floors in the coming years.

* Arthur Goldstuck heads up the World Wide Worx market research organisation and is editor-in-chief of Gadget. You can follow him on Twitter on @art2gee

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The truth of the matter is that those who still make their content available on line for free (and it’s most of them) do so at significant losses and are therefore sustaining their businesses from the “dinasour”” business models in physical distributions. Those that do not have this “”crutch”” are dishing inferior quality content, because it takes money to develop quality.

At a personal level though, I enjoyed having free access to NYT. But now that I shall have to pay for it, I expect premium product second to none.””,””body-href””:””””}]”

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