The Times’ Paywall and Newsletter Economics

It is, perhaps, the end of the beginning.

In early July, Rupert Murdoch’s News Corporation placed its two London-based “quality” dailies, the Times and Sunday Times, behind a paywall, charging £1 for 24 hours access, or £2 a week (after an introductory £1 for the first month.*) At the same time, News Corp also forbad the UK’s Audit Bureau of Circulations from reporting site traffic*, so that no meaningful measure of the paywall’s effect was available.

That situation has now been partially reversed, with News reporting some of its own numbers: they claim 105,000 total transactions for digital content between July and October.* (Several people have wrongly reported this as 105,000 users. The number of users is smaller, as there can be more than one transaction per user.) News Corp notes that about half of those transactions were one-offs, meaning only about 50,000 transactions in those four months were by people with any commitment to the site longer than a single day.

Because that 50K number includes not just web site transactions, but Kindle and iPad sales as well, web subscribers are, at best, in the low tens of thousands. However, we don’t know how small the digital subscriber number is, for two reasons. First, the better the Kindle and iPad numbers are, the worse the web numbers are. Second, News did not report, for example, whether a loyal reader from July to October would count as a single transaction or several consecutive transactions. (If iPad sales are good, and loyal users create multiple transactions, then monthly web subscribers could be under 10,000.)

The other figure News reported is that something like 100,000 print subscribers have requested web access. Combining digital-only and print subscribers, and comparing them with comScore’s pre-paywall estimate of roughly six million unique readers worldwide*, the reduction in total web audience seems to be on the order of 97%. (Note that this reduction can’t be measured by before and after traffic, as the home pages are outside the paywall, so people who refuse to pay still show up as visitors.)

Because the print subscribers outnumber digital-only users, most of the remaining 3% pay nothing for the site. Subscription to the paper is now a better draw for website use than any case News has been able to make for paid access.

Given the paucity of the data, the key question of churn remains unanswerable. After the introductory £1 a month offer, the annualized rate rises from £12 to £104. This will cause additional users to bail out, but we have no way of guessing how many.

As with every aspect of The Times’ paywall, interpretation of these numbers varies widely. There are people arguing that these numbers are good news; Robert Andrews at PaidContent sees hope in the Times now having recurring user revenues.* There are people arguing that they are bad news; Mike Masnick at TechDirt believes those revenues are unlikely to offset new customer acquition costs and the loss of advertising.* What is remarkable though, what seems to need more explaining than News’s strategy itself, is why anyone regards this particular paywall as news at all.

* * *

The “paywall problem” isn’t particularly complex, either in economic or technological terms. General-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem. Everything else is a detail.

The classic description of a commodity market uses milk. If you own the only cow for 50 miles, you can charge usurious rates, because no one can undercut you. If you own only one of a hundred such cows, though, then everyone can undercut you, so you can’t charge such rates. In a competitive environment like that, milk becomes a commodity, something whose price is set by the market as a whole.

Owning a newspaper used to be like owning the only cow, especially for regional papers. Even in urban markets, there was enough segmentation–the business paper, the tabloid, the alternative weekly–and high enough costs to keep competition at bay. No longer.

The internet commodifies the business of newspapers. Any given newspaper competes with a few other newspapers, but any newspaper website compete with all other websites. As Nicholas Carr pointed out during the 2009 pirate kidnapping, Google News found 11,264 different sources for the story, all equally accessible.* The web puts newspapers in competition with radio and TV stations, magazines, and new entrants, both professional and amateur. It is the war of each against all.

None of this is new. The potential disruptive effects of the internet on newspapers have been observable since ClariNet in 1989.* Nor has the business case for paywalls changed. The advantage of paywalls is that they raise revenue from users. The disadvantages are that they reduce readership, increase customer acquistion and retention costs, and eliminate ad revenue from user-forwarded content. In most cases, the disadvantages have outweighed the advantages.

So what’s different about News paywall? Nothing. It’s no different from other pay-for-access plans, whether the NY Times’ TimesSelect* or the Harligen Texas Valley Morning Star.* News Corp has produced no innovation in content, delivery, or payment, and the idea of 90%+ loss of audience was already a rule of thumb over a decade ago. Yet something clearly feels different.

Over the last fifteen years, many newspaper people have assumed continuity with the analog business model, which is to say they assumed that readers could eventually be persuaded or forced pay for digital editions. This in turn suggested that the failure of any given paywall was no evidence of anything other than the need to try again.

What is new about the Times’ paywall–what may in fact make it a watershed–isn’t strategy or implementation. What’s new is that it has launched as people in the news business are re-thinking assumed continuity. It’s new because the people paying attention to it are now willing to regard the results as evidence of something. To the newspaper world, TimesSelect looked like an experiment. The Times and Sunday Times look like a referendum on the future.

* * *

One way to escape a commodity market is to offer something that isn’t a commodity. This has been the preferred advice of people committed to the re-invention of newspapers. It is a truism bordering on drinking game material that anyone advising newspapers will at some point say “All you need to do is offer a product so relevant and valuable the consumer is willing to pay for it!”

This advice is well-meaning. It’s just not much help. The suggestion that newspapers should, in the future, create a digital product users are willing to pay for is merely a restatement of the problem, by way of admission that the current product does not pass that test.

Most of the historical hope for paywalls assumed that through some combination of reader desire and supplier persuasiveness, the current form of the newspaper could survive the digital transition without significant alteration.

Payalls, as actually implemented, have not accomplished this. They don’t expand revenue from the existing audience, they contract the audience to that subset willing to pay. Paywalls do indeed help newspapers escape commodification, but only by ejecting the readers who think of the product as a commodity. This is, invariably, most of them.

* * *

You can see this contraction at the Times and Sunday Times in the reversal of digital to print readers. Before the paywall, the two sites had roughly six times more readers than there were print sales of the paper edition. (6M web vs. 1M print for the Sunday Times* .) Post-paywall, the web audience is less than a sixth of print sales (down to <150K vs. 1M). The paying web audience is less a twentieth of print sales (<50K vs. 1M), and possibly much less.

One way to think of this transition is that online, the Times has stopped being a newspaper, in the sense of a generally available and omnibus account of the news of the day, broadly read in the community. Instead, it is becoming a newsletter, an outlet supported by, and speaking to, a specific and relatively coherent and compact audience. (In this case, the Times is becoming the online newsletter of the Tories, the UK’s conservative political party, read much less widely than its paper counterpart.)

Murdoch and News Corp, committed as they have been to extracting revenues from the paywall, still cannot execute in a way that does not change the nature of the organizations behind the wall. Rather than simply shifting relative subsidy from advertisers to users for an existing product, they are instead re-engineering the Times around the newsletter model, because the paywall creates newsletter economics.

As of July, non-subscribers can no longer read Times stories forwarded by colleagues or friends, nor can they read stories linked to from Facebook or Twitter. As a result, links to Times stories now rarely circulate in those media. If you are going to produce news that can’t be shared outside a particular community, you will want to recruit and retain a community that doesn’t care whether any given piece of news spreads, which means tightly interconnected readerships become the ideal ones. However, tight interconnectedness correlates inversely with audience size, making for a stark choice, rather than offering a way of preserving the status quo.

This re-engineering suggests that paywalls don’t and can’t rescue current organizational forms. They offer instead yet another transformed alternative to it. Even if paywall economics can eventually be made to work with a dramatically reduced audience, this particular referendum on the future (read: the present) of newspapers is likely to mean the end of the belief that there is any non-disruptive way to remain a going concern.


I’ve bundled some replies to various questions in the comments from November 9th here and from November 10th here.

Also, nota bene: One of the problems with the various “Hey you guys, I just had a great idea for saving newpapers!” micropayment comments showing up in my moderation queue is that the proposers often exhibit no understanding that micropayments have a 20-year history of failure.

I will not post comments suggesting that micropayments will save the news industry unless those comment refer to at least some of the theoretical or practical literature on previous attempts to make them work for the news business. Start here: Why Small Payments Won’t Save Publishers

105 Responses to “The Times’ Paywall and Newsletter Economics”

  1. “The Daily”, premier quotidien uniquement sur iPad « La veille d'ERS Says:

    […] et de The Sun en Grande-Bretagne. Les premiers chiffres de The Times ne sont guère encourageants. Comme le calcule Clay Shirky, on est passé de 6 millions d’utilisateurs, certes gratuits, à une … (The Times faisait état de 50.000 transactions en 4 mois, pas d’abonnements). Ce qui fait passer […]

  2. Crosbie Fitch Says:

    The real question is not how to save newspapers (irrespective of their centuries long business model), but how journalists and their readers are going to exchange work for money, how that future market for journalism is going to operate.

  3. Paperless newspaper is coming out | Yang in USA Says:

    […] out subscribers to the print product, as well as Kindle and iPad users — as the digital thinker and writer Clay Shirky recently did — and the number of actual opt-in customers could be in the low tens of thousands. That compares […]

  4. Pascoe Says:

    After reading the blog above I had an idea for a different approach. I hate to call it a third way but perhaps that’s what it is. My idea revolves around retaining the free access model while enabling news media companies to benefit from the increased advertising revenue which comes from a more sophisticated analytical base i.e. the type of psychographic and behavioural data collected by Facebook.

    It runs a bit like this: Instead of charging people to access the site, they would instead be asked to register. This registration process would include the standard demographic information, complemented by some richer psychographic information. Ideally, this should take no more than a few minutes.

    The registration process would also ask users to commit to answering some market research surveys or polls, perhaps three or four times a year. The data from which could be used to build richer, and more valuable, customer profiles etc.

    The model is based on the idea of having a grown up discussion with site users about the fact that the sites they use need to generate income to continue in their current form. If they are not keen on paying a financial cost then they should be willing to pay with a bit of their time and thoughts.

    The payoff for the sites is a more valuable offer to advertisers and for the user there could be many such as: a tailored home page, targeted advertising, continued free access, priority access to certain features, perhaps getting some information before others, having more of a say in the development of the site etc.

    The idea is fleshed out more in my blogpost but this gives an idea.

    It may be that the current model is simply unsustainable but I think this approach, if it generates a sufficient increase in advertising revenue, could work.

  5. Revisiting Pay-Walls « Unbridled Truth Says:

    […] that is not the case. The Times and Sunday Times are, in the end, generic newspapers. Clay Shirky hits the nail on the head: [Pay-walls] don’t expand revenue from the existing audience, they contract the audience to that […]

  6. iPad to get it’s own newspaper – ‘The Daily’ « Alex Bath… Says:

    […] a subscription, something that has divided opinion of where interenet news is going. According to Clay Shirky, The Times is ”becoming a newsletter, an outlet supported by, and speaking to, a specific […]

  7. Predicting if Murdoch’s iPad Daily will be the salvation of newspapers is a crapshoot | Coney Media Says:

    […] it’s curious that Rupert Murdoch — who’s in the process of purposefully eliminating his newspapers’ online audiences — is banking a chunk of NewsCorp’s future on a newspaper, albeit an electronic […]

  8. Mark R. James Says:

    Yes, given the current smorgasbord, it’s hard to see paywalls working for most publications.

    What I think journalism needs to do is to stop relying so much on surrounding its stories with agenda-pushing content that it doesn’t control. Not only does it degrade the readers’ experience, and feeds them false information, it forces publications to have direct business relationships with entities who are affected by their editorial content.

    What can quality journalism provide that search engine ads can’t? Trustworthy help. A respected source of information has a lucrative source of revenue if it can be rewarded whenever its editorial content (which doesn’t have to be a block of text) helps a person make a decision (such as choosing the most suitable product). This can be done without mechanisms like (the increasingly common) commissioned content and affiliate links, which make a publication part of the sales process. See http://rbate.com/helpers/faqs .

    To me, this is the future of professional journalism. The more serious stories can be cross-subsidised by the more commercial editorial, just as a publication’s advertising distribution isn’t uniform.

    Remember, a journal’s most valuable asset is respect.

  9. Quick Links | A Blog Around The Clock Says:

    […] The Times’ Paywall and Newsletter Economics […]

  10. Bob Tulloch Says:

    The newspaper publishers seem to be treating the web as another form of paper. Write some good copy, stick it on a site, get people to pay to see it – doesn’t work.

    Since general news is by definition a comodity which is available from multiple sources, newspaper publcihers need to abandon their traditional view point. Every news article needs to be linked heavily so I get much more than what I read on the page. I want to finsih an article with an much deeper understanding.

    Paper cannot provide me with a deep pool of background information, the web can. If I wished I could do all this research myself but I would probably pay money to someone who prepackages it and presents it in a easily accessible & innovative manner

  11. leewochner.com » Blog Archive » As newspapers shrink to newsletters Says:

    […] to good friend Doug Hackney for sending me this excellent post about the impact of paywalls on online newspapers. Clay Shirky’s post gets at two key […]

  12. Jonathan Says:

    Great analysis of paywall issues related to short cycle “News” content.

    I would, however, be very interested to hear your assessment of paid content models and arguments related to “long-form” content. For example, does the advent of iPad magazine apps, as a digital alternative, legitimize paywalls on magazine sites (i.e. New Yorker, Vanity Fair, etc.)?

    Do you agree with my opinion (http://post.ly/1AEj6) that paid content is justified for long-form because it is, in many cases, actually “Better” than the free, non-professional, unverified, blog journalism?

  13. My media week 14/11/10 « Molivam42's Weblog Says:

    […] On his blog Clay Shirky looked at the difficult economics of The Times’ Paywall […]

  14. Links are Future Trash, too « zunguzungu Says:

    […] Clay Shirky: It is a truism bordering on drinking game material that anyone advising newspapers will at some point say “All you need to do is offer a product so relevant and valuable the consumer is willing to pay for it!” This advice is well-meaning. It’s just not much help. The suggestion that newspapers should, in the future, create a digital product users are willing to pay for is merely a restatement of the problem, by way of admission that the current product does not pass that test. […]

  15. Jim Says:

    Clay, perhaps you answered this post with your Tainter post before it; the newspaper business is the canary in the coal mine.

    That is, bureaucracy has always been over rated. Raymond and others have shown that open source and peer selection is more effective than hierarchies. Governments are already bankrupt; they can just print money or they would already be dead.

    With newspapers, we will end up with local writers automatically aggregated. Like mp3’s the quality may not be as good, but it will be free.

    For governments, we are blasting towards a totally free market future of free association. When the national bureaucracy fails, that will leave local social nets, paid by locals. But then, that is where it belongs. Only the corporation which proves Coase’s theory to its utmost will withstand bureaucracy’s cost.

    I believe that is at least one scenario.

    In any event, the societal and economic narratives will soon be questioned by reality. I believe we have always lived in a complex system, regardless of economics and sociology to the contrary. When events begin to move more quickly, any constructs in the way of that will falter.

  16. Crosbie Fitch Says:

    Over the last few years I’ve written twelve articles explaining that all we’re seeing is a transition from a market for copies to a market for journalism: http://www.digitalproductions.co.uk/?q=newspaper

    Also see: steveouting.com/2009/11/05/so-what-exactly-is-newspaper-web-premium-content-please-tell-me/ and newshare.typepad.com/newshare/2009/11/what-exactly-is-newspaper-premium-content-thats-not-the-point-.html .

    All business models have been geared to copies. The paywall at least understands that copies cannot be sold, but still makes the mistake of thinking that it is the copy that is valuable – charging for access to it.

    It is not the copy that is valuable, but the work. Very few people are facilitating the exchange of intellectual work for money, e.g. a journalist inviting his or her interested readers to commission a visit to investigate some matter in Tegucigalpa. What journalist has such a facility today?

    I’m working on providing such facilities, see http://contingencymarket.com

  17. Anonymous Says:

    […] Está a levar um pouco mais de tempo do que na música, mas o efeito digital está a alterar radical e definitivamente o status quo financeiro da indústria dos media. As experiências com as paywalls simplesmente não saem da cêpa torta (conferir Clay Sirky, The Times’ Paywall and Newsletter Economics). […]

  18. Paywalls and Online Economics « A Great Becoming… Says:

    […] is an interesting article by Clay Shirky about News International’s new paywalls: In early July, Rupert Murdoch’s News Corporation placed its two London-based “quality” […]

  19. The missing link in Shirky’s discussion about paywalls: The network effect « Clickshare Service Blog Says:

    […] Prof. Clay Shirky, one of the most cited thought leaders on Internet technology and content, has just analyzed the effort by The Times of London to charge for content. The missing link in his analysis is the network effect […]

  20. Elias Simpson Says:

    Good analysis as far as it goes. It reminds me of two things.

    One, the newspapers are acting like the traditional recording industry, which thought it could charge CD prices for songs and expect success. Print subscription prices are unlikely to apply for online readers — and offering both for the same price is not very attractive, as online readers often don’t want the print at all.

    Two, it seems to me it is close to a zero sum game. People have a limited amount of money they are willing to spend for news, in print or online. If I spend money for one or two publications, then it becomes much less likely I will spend money on additional publications. Intertwined with this, it would be interesting to see price-demand studies. As the price goes from $25/year to $50/year to $100/year, how does participation drop off? I use myself as an example with the New York Times, my favorite online news source. They, too, are about to implement a paywall. How much will I pay? I think I’d go to $50/year for full access, but after that I’m not sure. However, I expect the NYTimes is probably thinking in the $100+ range (so far they are coy about that) and they will definitely lose me at that point.

  21. Arthur Kaye Says:

    Clay,

    I haven’t read all the comments but I read your article. Your commodity argument leaves out a couple of things. If I choose to read the NY Times or the London Times online, I certainly believe I’m getting a lower quality product than when I read the print edition because the print edition allows for page scanning in a way that no web version does – and this includes seeing ads that matter and acting on them – but then online I get the added value of no ink on my fingers, no paper to throw away and perhaps ongoing updates.

    More important, when I read a particular newspaper online, it is because that is where I want to get my news. I don’t want to get news about Fargo, ND from the NY Times unless they are covering it for a reason, but I will go to the Fargo Forum’s website for news local to that region. As long as the NY Times or the London Times or any other newspaper continues to make a case for offering the content I want to read, not merely the news, I will seek them out. And when I am forced to choose between getting my national and international news from the sources that I don’t believe in, then I will make my decision to either buy or not buy.

    One last comment: if all of the best news reporting cost, what choice would I have? In the present situation where I can get what I want for free why would I pay. But once everyone worth reading decides that “Now there’s a charge for what she used to give for free” (thanks to Tom Lehrer), I won’t have much choice but to pay.

  22. Unique Value and Business Fundamentals: How Euromoney’s Getting It Right and Most Others Won’t « Digital Media Land Says:

    […] of the ‘digital media needs to add real value to support paywalls‘ argument in his otherwise great post on the Times and the economics of news paywalls. I get his point, saying that print publishers […]

  23. Elvenrunelord Says:

    Why would I pay for a newspaper to look at ads?

    Virtually everyone I know uses advanced ad-blockers so we never see their ads anyway. And btw, I don’t want to see them.

    I have a brain folks. I know when I need or want something and I can find it on the web without all those colorful, attention grabbing, time wasting, bouncing, flashing, and crawling ads that advertisers use. My gods people its nothing but porn for businesses.

    I don’t have an answer to this problem other than paywalls are not it, and neither is advertising on the web when most people block it.

    I guess you could raise the price of advertising to reflect the real cost of delivery. That would put off a lot of advertisers, but then how many damn car commercials do we need to see anyway? Same goes for fast food commercials.

    If I never see a hardees or mcdonalds or dominos or car commercial again it would still be to soon.

  24. Paid Content – it’s not about ideology but rather strategy and execution « Rory Brown Says:

    […] numbers have been poured over enough by now but I would highlight Clay Shirky’s analysis (together with the comments) as being a ‘go to’ article on the subject. You can also […]

  25. Pigsaw Blog » Blog Archive » Bookmarks for 10 Nov 2010 Says:

    […] The Times’ Paywall and Newsletter Economics « Clay ShirkyClay Shirky on the Times paywall. Again, refreshingly not about the numbers: "One way to think of this transition is that online, the Times has stopped being a newspaper, in the sense of a generally available and omnibus account of the news of the day, broadly read in the community. Instead, it is becoming a newsletter, an outlet supported by, and speaking to, a specific and relatively coherent and compact audience. (In this case, the Times is becoming the online newsletter of the Tories, the UK’s conservative political party, read much less widely than its paper counterpart.)" (times paywalls news_international analysis ) […]

  26. RJ Says:

    Clay,

    I haven’t seen anyone address the cost-side economics of excluding people who don’t subscribe to the physical newspaper, as well as those who are subscribers who might opt out of physical delivery b/c of the convenience of web access. Given an evidently international subscriber base, is it possible that the tradeoff b/t total subscriber revenues, and the cost to actually serve those subscribers, makes sense (for News Corp or any other physical print media company)?

  27. Bill Densmore Says:

    Clay:

    Thanks for doing the hard analysis on the Times’ of London charging strategy. Individual websites charging for content would be like a mobile carrier only allowing you to call within town, or an ATM card only working at a single bank branch, or a cable TV subscription that works only for the local over-the-air stations. A shared-user network for trust, identity and information commerce — one which includes a background microaccounting system (not a consumer-facing micropayment service), has a decent chance of success, because it would provide enormous value to consumers — just as ubiquitous cell services, ATM networks, Visa networks, multi-state toll road transponders and the like provide enormous convenience and consumer value. Earlier today I interviewed Peter Bhatia, editor of The Oregonian, in Portland, Ore. He said they had one million hits on their post-election stats-aggregation page. I asked him, what if you could without any effort receive a penny for each click on that page and the result was to cut the hits to 500,000 instead of a million. Would you take that deal? It’s easy to say paywalls will never work, and the evidence to date proves it. But unless we are willing to live with the uncertainty of what will emerge to fund the values, principles and purposes of journalism going forward; unless we are willing to conclude that participatory democracy will be just fine in a world of digital new pamphleteers — and I’m willing to concede that’s not an unreasonable position — then then the analysis best not end there. From Spot.Us, to Kachingle, to public radio, to whatever, we might work to use the network technology of the web to find a way to make it easy and convenient for people to pay for what they value — and similarly to be rewarded by marketeers for their attention. Would you lend your considerable knowledge and intellect to such a collaborative effort? effort?

  28. dick pountain Says:

    I think buenosam has it right. Murdoch is furious with the web, wants to avoid losing Times paper subscribers to the web edition, a la Guardian, so has crippled it. What he’d really like long term is to pressurise legislators into hobbling the web via newly-enfanged copyright laws, but he’s probably too late.

  29. Thomas Beagle Says:

    What is the real reason that business/financial papers can charge for access?

    “I am a senior employee and the company I work for will be insulting me if they refuse to buy me a subscription.”

    The cost of this perk is low enough that there are a whole class of people who can expect it to be bought for them, and this market is big enough to sustain the financial newspapers.

  30. Introducing The Long Good Read – For when people want longer articles to read « Rev Dan Catt's Blog Says:

    […] And talk about why Closed is bad too, for which we’ll turn to Clay Shirky: The Times’ Paywall and Newsletter Economics […]

  31. Havas Media Lab » Disruption Landscape - 11/10/2010 Says:

    […] The Times’ Paywall and Newsletter Economics – Clay Shirky […]

  32. clay Says:

    @David Sanger,

    I don’t know what any tablet business looks like right now. The market has one supplier of hardware, few suppliers of content, and a userbase in the single-digit-percentage of the web.

    When there are Android and Windows tablets, and multiple suppliers competing for large audiences, the dynamic will be so different I don’t feel comfortable trying to extrapolate from today to that future state.

    @Kagem,

    It isn’t true that “anyone who wants to work in media” wants paywalls to work — there are both old and new organizations committed to reaching an audience sustainably without paywalls (e.g. the Guardian, or Ground Report.)

    I also don’t believe in a world where anyone can hang out their shingle and make money off content. Rather than recap that argument, I’ll just point to “Weblogs and the Mass Amateurization of Publishing”
    http://www.shirky.com/writings/weblogs_publishing.html
    (which also agrees with @Jack’s analysis) and Fame vs Fortune: Micropayments and Free Content
    http://www.shirky.com/writings/fame_vs_fortune.html

    Newsletters are only profitable if revneues exceed expenses–this will mean re-structuring for any newspaper going that route (and that restructuring is often what various magic bullets like paywalls and micropayments are assumed to help people avoid.)

    And newsletters are emphatically not executing on the original vision of a large, general-interest newspaper, unless by “original vision” you mean “despite the collapse in audience and withdrawal from the public sphere, someone keeps getting paid.”

    Also, I agree with what @Ryan and @Steve P, both said about not paying for content. The best piece I know on the subject is Paul Graham’s “Post-medium Publishing”:
    http://www.paulgraham.com/publishing.html

    @David Atkinson,

    To me, this comment reads like the exhortation to offer a product the user is willing to pay for, which is, as I noted, merely a restatement of the problem.

    I disagree that what makes the financial publications able to charge for access is that they are adding real value and analysis. I think financial publications are able to charge because they are financial, which is to say they traffic in access to material the recipient can act on, and which the user wants access to _right now_. (This, incidently, also the business model for pornographic images.)

    There is, in my view, no use hectoring papers about a “race to the bottom” or any such thing; there is simply no way to make news from Tegucigalpa as relevant as quarterly earnings reports for stocks you own. We need both, and are willing to pay for the latter.

    @Buenosam and @William,

    I should have made it clearer that my main goal here is not to talk about Murdoch, News Corp, or the Times as going concerns. My goal, given that la tout Paris seems to have decided that this paywall, out of the thousands tried, will be evidence of something, is to try to read what that evidence suggests.

    It’s certainly possible that Murdoch is not trying to make the paper profitable, so much as to stem the losses to an acceptable level, while using it as part of a larger, revenue-generating bundle. If that is the case, however, it make the case for ‘paywall as method of rescuing existing organizational forms’ even weaker.

  33. Chris Howell Says:

    The newspaper’s main job is not to deliver news but rather to deliver advertising. Certainly you don’t believe that the 75 cents or a dollar pays for the cost of producing the news content? Newspapers will survive both online and off by being the best at delivering more ads to more people. Paywalls do not deliver ads to more people. Business models are changing. Adapt or perish!

  34. On Shirky and Brock on paywalls | A Web editor's tale Says:

    […] Clay Shirky puts it: “General-interest papers struggle to make paywalls work because it’s hard to raise prices […]

  35. William Owen Says:

    Like most of the debate around the Times paywall Clay’s post and the consequent comments focus on the new business model. Given what we know about R. Murdoch and his motivations (money and power: power and money) we should probably give as much thought to the new influence model. Why has Murdoch willfully turned his back on 97% of his audience?

    I think Miles Galliford makes a very good point: value lies in the audience, not the content. So, either Murdoch is irrational, hubristic and in such denial that he believes he can force people to pay for a commodified product (possible, but unlikely) or – as Seamus McCauley argues at http://bit.ly/cZHZR8 – he believes that bundling in the Times with Sky will restore lost revenues (probable, but not necessarily so) but also, critically, lost influence. I think that the influence issue is critical because the numbers just don’t add up, but one way or another the conclusion of this post cannot be denied, that there is no way back to the now past phenomenon of the newspaper as a powerful monopoly of news, opinion and influence.

  36. Steve P Says:

    I’m the son of a newspaper advertising manager and I worked in editorial for a large newspaper. I’m tired of this Soviet-revisionist-history attempt to claim readers ever paid for newspaper content. Readers paid for the physical newspaper – the paper, the ink and the delivery, never for the content. Advertising paid for the content. (I read this claim in many newspapers now – it is almost as if they think that by repeating it enough, it will be accepted as truth.)

    I used to teach journalism students, and one of my first questions for the newbies was “Who determines how many pages are in any given issue of a newspaper?” Invariably, the answer was “the Editor”. No, people, the Advertising department does, because it depends on how many pages of advertising were sold. It’s a BUSINESS, not a public service.

    I know this throws a spanner into the milk/cow/commodity argument. Unless we consider we paid for the bottle and the milk was given away free by advertisers who placed ads on the bottles…

    It can be said that this previously cozy relationship *allowed* the creation of much good journalism, but it certainly didn’t *cause* it to happen – there is plenty of evidence showing successful publications with absolutely crap content (journalistically). OK? Hello? Can you hear my message?

    Newspaper ownership succumbed to the fat, dumb and happy syndrome, much like Kodak and film. The owners were fat, the consumers were dumb and everybody was happy. Newspapers could have invested in what we now know as the web before it even existed (they have long had access to electronic news feeds and could have been the leaders in information dissemination in the New Digital World). Instead, they milked the cow to death. Oh well, no use crying…

  37. RussellXPD Says:

    A few comments which I don’t think have been picked up.
    Clay says that The Times has been tending towards becoming a newsletter for the Tory party. There is certainly some truth in this. However there actually is a competing brand – The Daily Telegraph – which in my view already occupies this spot.
    I can confirm from many years personal observation that the people most likely to remain orthodox mainstream Tory voters are likely to take or read the Telegraph.
    The Times will also be found in this milieu but readers of this paper have a much wider demographic – they will tend to be younger and more socially mobile.
    Clay’s contention that the conditions of scarcity and supply have changed totally is well supported and it could well be that the NewsCorp business model and others like it will collapse like the market for online songs.
    Another amplification respecting competition: Murdoch, when he bought The Times (and ST) bought 200 years worth of good will which made the newspaper the journal of choice for ‘the establishment’ and all those who considered themselves good citizens and true. The consequence? Go into any library, club, public meeting place, even cafe, and you will find a copy free to read. You might disregard this information, but I am one of the thousands who has access to a publicly owned copy of The Times on any day of the week.

  38. Ryan Garcia Says:

    @Kagem Tibaijuka I understand what you are saying but I think you are taking a very simplistic view.

    I wasn’t saying that people don’t pay for newspapers – sure they do, but the real value has always been in capturing an audience that is attractive to advertisers – that’s why so many free newspapers exist and are commercially viable.

    Let’s wait and see who’s right. If people flock to the Times website to pay for content then I must be wrong…but somehow I doubt it

    What do others think about this debate?

  39. buenosam Says:

    Clay’s argument is sound, but I think he’s called Murdoch’s ambitions wrongly.

    This isn’t about making the web profitable, it’s about giving up on the web altogether. The Paywall exists in order to stop valuable print subscirbers becoming almost worthless online readers.

  40. links for 2010-11-10 « Seotons Says:

    […] Clay Shirky – The Times’ Paywall and Newsletter Economics Shirky reflects on the numbers […]

  41. David Atkinson Says:

    Newspapers that add real value and analysis are able to charge, and have high readership levels – the FT and the Economist for example.

    Anybody can set up a blog with some google ads, pay for some content, and start competing with the big newspapers on almost equal terms. This is why there was 11,000 news sources in your example. They all bought the story from the same small number of newswires, and bought the photos from the same small number of agencies. There certainly were not 11,000 journalists and photographers on the ground in Somalia to cover it.

    The big news operations should be going beyond that, but they’re not. They’ve decimated their journalistic staff to concentrate on press releases and newswires. They’ve raced to the bottom, and now that they’ve arrived, there’s nowhere else to go.

  42. The Times paywall: what do the numbers tell us? « A Cultural Policy Blog Says:

    […] Clay Shirky argues the paywall means a retreat from broad-based newspaper-style publishing to narrowcast newsletter publishing: One way to think of this transition is that online, the Times has stopped being a newspaper, in the sense of a generally available and omnibus account of the news of the day, broadly read in the community. Instead, it is becoming a newsletter, an outlet supported by, and speaking to, a specific and relatively coherent and compact audience. (In this case, the Times is becoming the online newsletter of the Tories, the UK’s conservative political party, read much less widely than its paper counterpart.) […]

  43. Kagem Tibaijuka Says:

    @Ryan Garcia, ”Newspapers were never about paying for content, they are about paying for access to an audience.”

    This is not true. They charge readers with a cover price for access to content.

  44. Honey, I shrunk The Times to a newsletter | Whitireia Journalism School Says:

    […] his self-titled blog, he argues the paywall has created “newsletter economics”, and offers some analysis of […]

  45. Jack C Says:

    Doesn’t this get back to the amateur vs. professional issue? Let’s posit that maybe one in a thousand amateurs is able to produce something within the spectrum of professional quality. In the case of journalism/news, you’ve got not only retired, semi-professionals, academics, graduates, and others, but also notably locals that help bolster the rank, quality, and opportunity advantage of amateurs. At scale, professional amateurs are an untamed competitive force. Value shifts towards information curating, an alternative aggressively being explored (e.g., apps), but which also falls victim to the same underlying challenge.

  46. Ryan Garcia Says:

    @ Kagem Tibaijuka …. wanting something to work and making something work are not the same thing. Newspapers were never about paying for content, they are about paying for access to an audience.

    Murdoch may be prepared to underwrite the Times paywall for some time yet but I can’t imagine a situation in which he will make it profitable

    I don’t know the answer, perhaps it lies in the linked products other have suggested, but newspapers need to find an alternative model that works…and quick

  47. Chris M Says:

    It would be interesting to know if the sales of the expensive Times and S Times abroad have gone down, and the number of e-subscribers who are outside the UK.

  48. What web content would you pay for? « Not The User’s Fault Says:

    […] philosophy, web economics | Leave a Comment  Last night, after reading Clay Shirky’s latest article about why paywalls don’t work, my wife asked me a deceptively tricky question: Would I pay money for […]

  49. Exploring the ongoing challenge of converting traffic into customers « excapite Says:

    […] 10-11-2010] Clay Shirky has just written a piece on The Times’ Paywall and News Letter Economics that suggests the Times Online conversion rate was less that half the rate indicated by […]

  50. links for 2010-11-09 « Sarah Booker Says:

    […] Clay Shirky – The Times' Paywall and Newsletter Economics Shirky reflects on the numbers […]

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