To Pay Wall Or Not To Pay Wall, That Is The Question

Philip M. Stone July 29, 2010 Follow on Twitter

Can you make enough money via subscriptions to afford to lose around 90% of your readers and the advertising revenues their numbers attracted? That’s what The Times and The Sunday Times in the UK are finding out, and the fact that management doesn’t want to talk about the figures after nearly a month of pay walls is not a good sign.

This past weekend at a media conference Jon Miller, the chief digital officer for News Corp. who reports directly to Rupert Murdoch, only wanted to talk about how well the Wall Street Journal Internet site was doing. But when he was asked about The Times and Sunday Times he would only say, “It’s early, it’s just a few weeks in.”

Now, we all know if there was good news to tell News Corp would be telling us, but one tends to keep bad news private for as long as possible so for Miller to decline to give a status on that pay wall experiment which most of the media world is watching very closely would seem to signal there is little good news to tell.

The only such “news” so far has come form the beehivecity Web site that claims the newspapers have lost around 90% of their Web readers with only about 15,000 readers paying. Assuming all of them are at the £2 a week fee and they don’t miss any weeks that would be worth around £1.5 million (€1.78 million; $2.3 million) annually. Also some 12,500 are said to have bought the iPad subscription at £9.99 a month so that would be an additional £1.5 million so digital is worth some £3 million annually in subscription fees thus far.

And those will be the easy ones. Usually in a selling cycle you get the easy ones real fast and then you have to really work on getting more so the marketing people will have their hands full trying to get those numbers up. No one has whispered the value of the lost Web advertising.

The Web blogger view seems to be that even £2 a month is too high, and there are objections to giving so much personal detail when signing up. As one blogger complained, you don’t give that kind of information when you go to a newsstand to buy a copy so why go through all that for digital access? We all know the reason why – the more the newspapers know about their readers the more targeted can be the advertising,

Since Murdoch has made clear he wants all his publications behind a pay wall no one more than he and Miller will be studying what is going on with The Times and The Sunday Times sites. No doubt News Corp. is doing its own market surveying, and if they find the price is too high and/or people are objecting to a lengthy process to sign up then those will be lessons learned before the rest of the group goes the same route.

But there is still a lot of disagreement out there whether pay walls are the way to go. Tim Brooks, the managing director of Guardian News and Media that publishes among other titles the leading Guardian web site recently told MediaWeek, “We did our own calculations around pay walls in the early part of last year. And the indications we’ve had is that the assumptions we put into our model are actually similar to the assumptions that they’re working on. We looked at the difference it will make to our net revenues, and we looked at the loss of over 90% of our audience for the gain of a very small percentage of additional revenue. That trade is not worth it from our point of view."

But he admits Murdoch and his newspapers do not have the same end-game in sight. He says for Murdoch it is all about profit whereas for The Guardian it is having as many people as possible read its journalism. "For News [International], journalism is a means to an end, and the end is profit. For us it’s different, journalism is our end. It’s not a means to anything… and you would need very powerful journalism arguments for us to close our journalism off from 95% of people who are accessing it currently." That doesn’t mean the group doesn’t do all it can to be economically viable, but maintaining the largest readership possible is integral to its business model. But that is probably a minority view.

He accepts that the future of the news business is digital. "The internet’s more efficient at getting news and advertising to people quickly and cheaply. It’s not that newspapers’ are going to swing back at some point. The shift to digital is inextricable,” he says.

And then there’s Jimmy Pitaro, Yahoo!’s vice president of media, who absolutely believes the web’s future is “free.” He told the same weekend media conference, “We firmly believe that free is the future. The feeling is that when other people are charging they’re kind of driving people to free alternatives.”

He may well be right. How many of those lost Times and Sunday Times web readers have now made their way to The Guardian and Observer free web sites?

Perhaps the most succinct comment at the conference came from Brian Sugar who operates several web sites aimed at women. “We love paid …for our competitors.”

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