On the Press Gazette blog, Dominic Ponsford notes an interesting fact about the Financial Times’s paywall, which has come in for relatively less press attention than the London Times’s (perhaps due to lacking the polarizing figure of Rupert Murdoch to act as a focus).
Although (or perhaps because) the Financial Times‘s paywall is considerably less rigid than the London Times’s (allowing visitors from Google, and letting unpaid subscribers read up to 10 articles per month), the Financial Times seems to be experiencing considerably more success, recently claiming to have 149,000 paying digital subscribers. Ponsford writes:
The beauty of the FT’s system is that it keeps reminding casual readers it is there by remaining part of the web ecosystem while forcing those who become devoted readers to cough up some money.
Ponsford also attributes its success to the specialist nature of the site attracting people who were more likely to have enough disposable income not to find the subscription fee an undue imposition, and the way the Financial Times adds value that the London Times does not.
It’s hard to know quite how to feel about this. I’m not exactly a non-partisan observer; I’d like paywalls to fail and fail hard. But perhaps if some of them must be successful, it’s good that the milder ones are successful in ways that show why the really hard-line ones are mistaken in their outlook.
Wishing all paywals gone is a non-starter. It is also short-sighted. And the case of the Financial Times is as good a place as any to see why.
What’s the Financial Times’ main competition? The Wall Street Journal. Both are behind paywalls. Both address an affluent customer base that relies on the information in their day-to-day jobs. (Which means they can deduct subscriptions as business expenses.) Neither relies on eyeball traffic because as specialist publications they offer easily identifiable value and authority in their content. They’re not just shoveling out Reuters’ and AP reports with minimal reformatting.
In other words, they earn their keep.
And they earn their keep because the people who need the content understand that without the paywall fees the content would not be there at all: useful financial and business news doesn’t just rain down from the heavens in preformatted AP feeds. A lot of it comes from expensive proprietary sources. It is also the kind of content that doesn’t draw enough eyeballs to survive off banner ads.
People *will* pay for content worth paying for.
But they will *only* pay for worthwhile content; just putting up a paywall around content available elsewhere isn’t going to achieve much as the Murdochs are discovering.
Another paywall-site worth discussing that you never hear any talk about is ESPN’s INSIDER. It’s US$40 a year, not tax-deductible, been around for ages, and includes a subscription to ESPN’s print mag (whether you want it or not) which launched *after* INSIDER had been around awhile. (Probably to level the playing Field with their magazine-based competitors.) Nobody is rallying the peasants to storm ESPN HQ over *their* paywall. Because ESPN customers understand that, like everything else in business and tech (c.f; DRM), paywalls are neither inherently good nor evil.
Pretending otherwise is naive or disingenuous; they can *enable* products that could not exist without them (Library ebook lending without DRM? Really? Not on this planet. That’s barely doable *with* DRM. Look at MacMillan’s refusal to allow it.)
The bulk of ESPN’s business resides behind the paywalls of cable TV fees (and XBOX LIVE Gold); expecting them to offer-up the same content on the net for eyeball traffic only would be asking them to commit financial suicide. For them, paywalling a portion of their content (the part *not* available anywhere else) enables them to maintain and offer the rest openly relying solely on web-adds to pay the freight. Without INSIDER fees, there likely wouldn’t a content-rich ESPN.COM.
Other publications also follow this dual-tier paywall model; off the top of my head, I can name SCIENCE NEWS, THE ECONOMIST, SCIENTIFIC AMERICAN… All come from the print world and offer up full online content free to print subscribers that is segregated from their free-to-all-comers website. It’s a balancing act that works; you don’t see much whining over *their* paywalls.
We all like free stuff, but There Is No Such Thing As a Free Lunch; everything has a price. And sometimes the price of “free” is not having it at all. Paying customers understand this; they understand that direct payments are what enable that particular operation to exist at all.
Paywalls serve a purpose when used properly. The Murdochs of the world may not understand the rules that define “properly” yet but the customers do. The borders of their paywalls need adjusting as they realize charging for everything that used to be “free” isn’t going to get them anywhere. Eventually they’ll sit down and figure out what their customers will be willing to directly pay for (in cold hard cash) and what is only worth indirect, eyeball-based payment. Their current policy is merely stupid, not evil.
Give it time and they’ll get it.
Just don’t expect them to give up on the paywall completely. Paywalls are here to stay. If anything, judging by the success of content sales in the Apple iPXXX ecosystem, paywalls are a growth business. And given that Apple disallows subscription, that growth is going to come at full list price.
Now *that* is a development worth griping over.
Felix, I completely agree with you on this. Specialist publications spend serious money to gather, filter, interpret and explain the topics they cover; money they have no realistic hope of recovering via banner ads or the sale of coffee mugs. Paywalls are I think the only way some of them will survive the transition from print; how they manage those paywalls is vital to their marketing (no one will subscribe if there is no way to evaluate the worth of the content). The Economist, WSJ, Journal of Commerce) and many others have fine-tuned their approaches and all seem to be doing quite well; Murdoch’s crowd just haven’t figured it out yet.
I am perfectly happy to pay for quality information, just as I am happy to pay for a good book, good music, or a decent movie, rare though the last might be. I believe that the people who write/compose/perform these should be compensated for their effort.
Felix, as a long time Telereader, I must say that your longer comments are often some of the finest editorial commentary on the e-publishing space that I know of. I’d actually pay to read some of them. Kudos.
Great little snippet of an article to start an absolute epic article/comment from Felix! Got to say I agree whole-heartedly with everything that is said here. Pay-walls are for some and not for others, simple as. The quality of journalism that the FT provides compared to other newspapers such as The Guardian in the UK can’t be compared because they value different sorts of content and delivery. The notion of free open news content to all is central to the success of the web and one of the defining attitudes of contemporary society, and I’m all for it! That’s not to say that everybody needs to approach it the same way.
It’s also important to emphasize the point that pay-walls are good for the cultural aspect of news industries. Greater reliance on advertising revenue could lead to an increased level of influence on news published (arguable I know, but still a valid point) and the saturation of ads in the news providing process is just another example of the death of the cultural industry.
I have to say though, an interesting article I read online commented on the pay-wall system as flawed because it essentially punishes rather than rewards subscribers with increased costs… I think the success of pay-walls lies in rewarding these subscribers with decreased costs and/or special ‘bonuses’ the more they interact and get involved in the site. Just an idea 🙂
Cheers for the info
MJay
While I agree with the first part of your comment Felix, I cannot agree with the second.
The FT is a very different animal to the ST whose paywall is failing miserably. The FT’s target audience, as you point out, are not the general public but business/management/financial people who more than likely access the FT online ‘though’ their business employment. The barrier to payment is distinctly different from that of ordinary web users.
As you also say correctly, other paywalls used by already closed subscription user bases are also quite successful for obvious reasons.
Where I disagree is in characterising any of the other paywalls as ‘successful’. There are no ‘public’ media paywalls that could possibly be described as ‘successful. None of them are making any serious money and they have repeatedly admitted this while they complain about the public’s unwillingness to pay.
You say there is no such thing as a free lunch – yet in the world of online news and media – there actually is. There are dozens of excellent news sites that are completely free.
Are firewalls here to stay ? Of course they are. But are they producing any success ? not they are not. As long as there is a huge number of free sources, the public will not pay unless they are offered something better, something different from the usual.
The general public don’t want to get locked into one news outlet, for example. They want, very intelligently, to be able to read a variety of sources. Locking in to a subscription for more than one or two outlets is a bridge way too far for the vast majority of people, imho.
Also the outlets who are installing paywalls are not then stepping up the service they offer to differentiate themselves from their previous offer. That is not good enough imho.
Real success for online media will not come until a global micro payment system arrives where people can top up (or be billed) monthly and be charged something like 2c -4c per article that they read across a wide range of media outlets. A system that Skype uses for phone calls for example. This will enable people to browse and graze, as they consume in the way that they want to, while producing a significant income stream for media across the world.