Surprise: Paywalls Cause Massive Falls In Number Of Visitors - And Boost Competitors

from the no,-really? dept

As Techdirt has been pointing out for years, newspaper paywalls make no sense. By stopping people from reading your stories unless they have a subscription, you diminish your influence in the media world, drastically reduce the number of readers and thus make it much harder to generate revenue from them. Paywalls are also a gift to your competitors, as this story in the Guardian indicates:
Mirror Group Digital enjoyed a surge in daily browsers of nearly 20% last month, after [Rupert Murdoch's newspaper] the Sun introduced its website paywall.

...

[The UK publishing group] Trinity Mirror launched an aggressive campaign to lure digital Sun website users seeking to continue reading free online content, following the introduction of a paywall for the News UK title on 1 August.

The introduction of paywalls for Times and Sunday Times content in 2010 led to a 90% drop in traffic. Online metrics firm SimilarWeb has estimated Sun+ monthly site visits were down by more than 60% in August.
This really isn't rocket science: if you make it harder to read your stories, your competitors would be foolish not to take advantage of this fact to encourage people to move across and read their freely-available reporting instead. Some may call this a race to the bottom, and it is as far as how much you can charge is concerned -- that's just basic economics in the digital world. But that doesn't mean there's a race to the bottom in terms of the quality of the journalism. Indeed, skimping there would be unwise, since it would allow competitors to match you on price and beat you on quality.

The challenge is to use a larger readership to pay for that journalism by earning revenue in other ways -- advertising is currently one of the most popular approaches, but others are possible. However, introducing paywalls makes it much harder to generate money, since the online readership is much smaller -- as the experiences of Murdoch's Times, Sunday Times and the Sun all demonstrate. The subscription revenue produced by the paywall rarely compensates for this loss. It will be interesting to see whether Rupert Murdoch sticks with the paywalled approach, or is forced to remove them in order to compete with flourishing titles like those from Trinity Mirror.

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Reader Comments (rss)

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  1.  
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    Anonymous Coward, Sep 24th, 2013 @ 12:30am

    "But that doesn't mean there's a race to the bottom in terms of the quality of the journalism"

    Because the sun and the mirror are already there!

     

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    Beech, Sep 24th, 2013 @ 1:16am

    Well, maybe the Sun views this as getting rid of the crappy customers anyway. Now the Mirror has the 90% of the Sun's readership that were total freeloaders! And now the Sun only has the GOOD readers, the ones who are willing to shell out some cash for quality reporting.

    ...Of course, it's a lot like a retail store kicking out anyone who doesn't make a $1000 dollar order to get rid of cheapskates. I would be interested to see the Sun's before/after monthly profits off the locked down site, because, in the end, it's going to be money that talks, not the 90% of your reader base that walks.

     

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  3.  
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    Anonymous Coward, Sep 24th, 2013 @ 1:19am

    Re:

    No surprise that out_of_the_blue would rally support for paywalls. Get rid of the low-budget movies bringing down standards; $100 million movies are where it's at.

     

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  4.  
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    Anonymous Coward, Sep 24th, 2013 @ 1:49am

    Re:

    I read some dumb comments here on a regular basis, but I think this one takes the cake... at least for now.

    Nothing is more stupid or harmful than willful obscurity.

     

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  5.  
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    Anonymous Coward, Sep 24th, 2013 @ 1:55am

    and is anyone surprised by this, other than the stupid ass hole that thought of the idea originally?

     

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    peter, Sep 24th, 2013 @ 2:05am

    Re:

    Not quite. With the News of the Screws demise, there has been an opening on the sea floor.

     

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  7.  
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    Anonymous Coward, Sep 24th, 2013 @ 2:22am

    Re:

    The newspapers believe the services work and they use their paper to lure people into these paywalled gardens of eden. Years ago they believed that walled gardens was the future of their empire. That is no longer true. Today they are using less resources on them and hope to make 15% to 25% of their revenue in that way in the long run. Walled gardens is a way to branch out. That they lack something to lure people online into their net is their possible demise.

    The idea is not stupid and it didn't take any invention to get there. I would not blame anyone for making such a trivial "innovation". The question is what their longterm plan is. They obviously cannot live on walled gardens and paper alone in the future.

     

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  8.  
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    PaulT (profile), Sep 24th, 2013 @ 2:24am

    Re: Re:

    The second paragraph indicates some sarcasm. Plus, he's right. If they can get rid of 90% of their customers and massively save costs by doing so, while retaining a constant income stream from the remaining 10% then they will have made a good move.

    In reality, that's extremely unlikely, especially for the kind of tabloid readership that The Sun commands. But it's not unprecedented - this is the same newspaper that managed to insult an entire city and lose virtually all of its readership there to this day (http://en.wikipedia.org/wiki/The_Sun_(United_Kingdom)#The_Hillsborough_disaster_and_its_aftermath). They're not unknown to remain highly profitable despite kicking its readers in the face.

     

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  9.  
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    Zakida Paul (profile), Sep 24th, 2013 @ 2:43am

    Yep

    When I am surfing and come across a site with a paywall, I immediately click the back button and look for another site.

    Hands up if you do the same.

     

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  10.  
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    Anonymous Coward, Sep 24th, 2013 @ 3:03am

    Re: Re: Re:

    I disagree and stand by my previous comment. Purposely turning away customers is never a good business decision. Putting up a paywall and choosing to please a few, rather than potential masses, is like turning down an opening gig for the Rolling Stones to play a local gig. News is everywhere. If there's one thing in life I won't pay for it's news. It's free on the TV. It's free on the radio. There are countless online sources for free news. There's even free newspapers I can grab while walking out of the grocery store. Why anyone in their right mind would choose to pay for something so freely and legally available everywhere is beyond me.

    As for sarcasm, that translates about as well through type as a wet fart.

     

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    Sheogorath (profile), Sep 24th, 2013 @ 3:15am

    Mirror Group Digital enjoyed a surge in daily browsers of nearly 20% last month, after [Poopert Out-of-Touch's newspaper] the Sun introduced its website paywall.
    FTFY, Grauniad.

     

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  12.  
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    Sheogorath (profile), Sep 24th, 2013 @ 3:18am

    Re: Yep

    If it's news that's everywhere, yes I do, but if I can only find it in that paper, then I seek a way around the block.

     

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    Postulator (profile), Sep 24th, 2013 @ 3:28am

    I think British newspapers have already completed their race to the bottom.

     

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  14.  
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    PaulT (profile), Sep 24th, 2013 @ 3:34am

    Re: Re: Re: Re:

    "Why anyone in their right mind would choose to pay for something so freely and legally available everywhere is beyond me."

    Well, people do just that. If you walk around any UK city, you can see copies of Metro and other free newspapers anywhere, everyone's using smartphones, everyone has a TV at home. As you correctly stated, news is everywhere and free of charge. But, on the same streets you'll also see people buying and selling physical newspapers - including The Sun. Sometimes these paid newspapers are sitting right next to the free ones. Hell, some people even pay to subscribe to a version of the physical newspaper on their Kindles.

    Getting to the reason why people do this is the core of the problem here. Simply putting a paywall up in front of the content is a doomed exercise, and whatever you do you'll be guaranteed a lower readership than a free product. But, that doesn't mean that nobody can charge for news and make it successful, it's just down to their business model and audience.

    I suspect that we agree that this particular example is probably doomed to failure, but there's niche markets where such a thing could work. It might not work for something as populist and mainstream as The Sun, as I suspect we'll see proven before long.

     

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    Anonymous Coward, Sep 24th, 2013 @ 3:44am

    I view the true power of journalism, as the persuasive power it has over it's audience. The larger your audience, the more effect you have on helping to shape world's future.

    It's hard to put a monetary value on that type of persuasive influence. Take Glenn Greenwald's work on reporting NSA spying for example. It sure seems like he's having a huge effect on the world.

    Of course, journalists have to eat and pay their bills too. Putting up a paywall might make someone more money, but it will reduce their audience size. Thus, reducing their influence on the world.

    I guess it all depends on what you're trying to do. Make money, influence the world, or balance yourself somewhere in the middle.

     

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  16.  
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    Ninja (profile), Sep 24th, 2013 @ 3:59am

    Re: Yep

    o/

    There are means of getting money over free stuff. See Techdirt and me giving these bastards money for something that's free ;D

     

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  17.  
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    Ninja (profile), Sep 24th, 2013 @ 4:05am

    The main challenge for the news outfits now is how to remain relevant and monetize on their work in the digital age. Clearly setting up a paywall is not the solution for this specific case.

    I have this impression that the big news outfits would be incredibly more successful if they pursued the social setup. First by creating and nurturing a community (that means risking and accepting douchebags and different views), giving space for independent bloggers and news outfits, allowing independent publications in their sites etc. This could be coupled with a few things such as donations (including flattr style), advertisements, premium content (would be some kind of partial paywall), monetizing on scarcities (ie: TD on t-shirts and other apparel) etc.

     

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  18.  
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    beech, Sep 24th, 2013 @ 4:12am

    Re: Re: Re: Re:

    I wasn't trying to justify a stupid move, just explain that the paper probably doesn't view it as a total loss at this point. If they went into this expection 100% reader retention the shiuld be committed to an asylum. The point is making more money. It they make more money with 10% of their reader base they will consider the paywall a win. I personally still find it stupid and shortsighted, but I think the sun's priorities are different and that's what my prior comment was about.

     

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  19.  
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    FM Hilton, Sep 24th, 2013 @ 4:23am

    Paywalls

    While it's true that news can be had everywhere, there are some sites, like the NY Times, that owns all the content they have on their site, and thus can get away with paywalls to a certain extent. (They do have copyrights on all of their articles, and you'd best ask them for permission to reprint them in any format.)
    They have very little real competition, so when they went paywall, they justified it as being 'real news', as opposed to 'notrealnews', like the Drudge Report and others.

    But that doesn't mean the readers are going to flock to them-I don't read the Times any more than I absolutely have to, and since the fake NY Times Twitter account (with links to the 'out of the paywall' area) got blocked, there's little I do want to read.

    It's a matter of time before all newspapers figure out the one reality of the Internet: people want free, and they'll ignore you if you don't offer free stuff.

    I wonder how long all the tech sites would last if they all went pay? Not long, I think, which is why they're smarter than the average newspaper, and are more popular.

     

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  20.  
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    Anonymous Coward, Sep 24th, 2013 @ 4:24am

    They have the delusion that all purveyors of journalism can be convinced to do likewise, and therefore lead to profit for all .... or more likely they are nuts.

     

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  21.  
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    ChrisB (profile), Sep 24th, 2013 @ 5:00am

    The Myth continues ...

    We have not paid for newspaper news for something like 100 years. Ads pay the reporters salaries. The money you pay for a paper is miniscule, and maybe covers its printing and delivery. These newspapers are rewriting history, trying to convince us that we used to pay for papers, and should continue to do so. This is simply not true.

    Newspapers have always been about bringing eyeballs to advertisers.

     

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  22.  
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    Anonymous Coward, Sep 24th, 2013 @ 5:17am

    Re: Re:

    Does AOL have a patent on the "walled garden" business model?
    They have/will probably become an example in many business classes.

     

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  23.  
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    Anonymous Coward, Sep 24th, 2013 @ 5:21am

    Re: Re: Re: Re: Re:

    "At this point" are the key words. It's a shortsighted move by people with shortsighted vision. Even if they would happen to get a small boost in profits for the short term, it is certain to decrease over the long term. If a paywall goes up on a site I visit regularly, I delete the bookmark and I'm gone, period. By the time they come to their senses I'll have 3 more bookmarks to free sites in their place. News is comprised of facts that can be found in a multitude of places, and when it comes to news, the facts are all that matters. Where those facts come from is meaningless.

     

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  24.  
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    Anonymous Coward, Sep 24th, 2013 @ 5:22am

    Re: Paywalls

    "owns all the content they have on their site"

    Wow - and where did it all come from.

     

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  25.  
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    Anonymous Coward, Sep 24th, 2013 @ 5:25am

    Re: The Myth continues ...

    They're jealous of cable tv - it was once ad free because you directly paid for it. Then there was the big switcheroo followed by laughing on the way to the bank.

     

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  26.  
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    PaulT (profile), Sep 24th, 2013 @ 5:50am

    Re: Re: Re: Re: Re: Re:

    "Where those facts come from is meaningless."

    I'd definitely disagree there. Some places report the facts as neutrally as possible. Some inject their own commentary and biases. Some outright make things up (The Sun being an oft-cited example). Some perform additional investigation or break new stories, others merely report what others have written. The source can be extremely important.

    Of course, this is why it's so important to have a number of different sources, and why those that are free to browse are more likely to retain people who care about news. You'll rarely get the full truth on every subject from a single source, and nobody wants to pay monthly subs for everything they might read.

    Then again, remember that The Sun is a tabloid that largely built its readership on things like topless women and bingo, not their news reporting. It might not be a good example of the kind of thing we're talking about to begin with.

     

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  27.  
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    AC Unknown (profile), Sep 24th, 2013 @ 6:31am

    Re: Yep

    Sites with paywalls never get my attention.

     

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  28.  
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    Anonymous Coward, Sep 24th, 2013 @ 6:47am

    Rupert Murdoch (using paywall logic): Our 90% drop in traffic must mean our price is too low. Customers simply want to pay us more for what they used to get for free!

     

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  29.  
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    madasahatter (profile), Sep 24th, 2013 @ 7:06am

    Walled Gardens

    The problem with general-media wall gardens is that the content is that unique or critical for most people to want to pay money for it. If the story is big enough many organizations will cover it.

    Also, most newspapers do not have the type of readership that is willing to pay for the privilege of reading them. About the only one in the US I that fits this model is the Wall Street Journal.

     

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  30.  
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    jupiterkansas (profile), Sep 24th, 2013 @ 7:29am

    Re: Walled Gardens

    The real problem is you can't share the content with people who haven't paid for it, meaning your influence in the online world is reduced, and as a news organization you become less relevant.

    The news organization that gets shared the most is ultimately going to be seen as the most relevant and authoritative.

     

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  31.  
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    Stephen (profile), Sep 24th, 2013 @ 7:48am

    Newspapers have 2 customers

    I've had this debate with newspapermen before. Newspapers have 2 customers: Readers and Advertisers.

    The reader side of the revenue stream is pretty well covered, but people often neglect the negative impact that paywalls have on advertisers.

    Advertisers pay for eyeballs. Paywalls reduce the eyeballs on ads, making adspace on their sites less valuable. Either advertisers won't want to pay existing rates for the now-less-valuable opportunity, or they'll just go straight to Google Adwords and host their own business site that's under their own control.

    Paywalls are just a faster death to the paper, making the news site less relavent both in terms of a source of news, and as a marketplace for advertising.

     

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  32.  
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    Not an Electronic Rodent (profile), Sep 24th, 2013 @ 8:15am

    Re:

    And now the Sun only has the GOOD readers, the ones who are willing to shell out some cash for quality reporting.
    I'm assuming this is sarcastic. Either that or you seem to be using some strange definitions of the words "good" and "quality" that I was not previously aware of.

     

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  33.  
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    Anonymous Coward, Sep 24th, 2013 @ 8:27am

    Re: Re: Re: Re: Re: Re: Re:

    But I was not talking about commentary or biases. I'm talking about news facts.

    "25 dead in suicide bombing in Baghdad"

    Does it really matter where you would read something like that?

     

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  34.  
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    Ninja (profile), Sep 24th, 2013 @ 9:28am

    Re: Re: Re: Re: Re: Re: Re: Re:

    www.dailymail.co.uk/‎

    To mention one example where the place where it's written matters. Not that I read it, I just know its reputation.

     

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  35.  
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    Joseph Ratliff (profile), Sep 24th, 2013 @ 9:32am

    On the "race to the bottom"...

    I hate the excuse "race to the bottom." It implies laziness on the part of whomever is using it to justify their charging for content.

    Use. The. Information. To. Market. Something. Else. That. Has. Value.

    As it applies to newspapers, advertising is one method...

    Collections of stories, DVD content that supplements reporting (professionally produced), physical (and Kindle) books that supplement reporting, become a publisher yourself and publish books, etc...

    There are a ton of ideas, but if you run a newspaper, don't sell yourself short at "race to the bottom."

     

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  36.  
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    Anonymous Coward, Sep 24th, 2013 @ 9:57am

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    http://www.nationalenquirer.com/

    We have ours too, but fact and fiction are 2 different things.

     

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  37.  
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    Anonymous Coward, Sep 24th, 2013 @ 10:23am

    Re: Re: Re:

    We can always turn to the ridiculous practices in the patent world, but that is for another day! :)

    The article is on UK gossip cental "The Sun". UK as part of EU, do not recognize neither business patents nor software patents. Of course there are bordering exceptions, but the AOL-patent is not even close to that.

     

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  38.  
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    John Fenderson (profile), Sep 24th, 2013 @ 10:50am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Sadly, the National Enquirer became one of the most factually reliable newspapers in the nation once they spawned their UFO/Bigfoot/Bat Boy stories off to News of the World. Strange, but true.

     

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    Anonymous Coward, Sep 24th, 2013 @ 11:13am

    Yep putting up a paywall is the quickest way to irrelevance.

     

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    John Pettitt (profile), Sep 24th, 2013 @ 11:44am

    The best ad for content is the content

    News is an information product, for a paywall to work the customer has to perceive that this information source has more value that the free source one click over. The Sun was never known for being a high value information source.

    The UK market is particularly interesting because there are multiple, national, daily papers each carrying the same news withe a different editorial slant. (see http://www.youtube.com/watch?v=DGscoaUWW2M for an explanation). What's been interesting is the Daily Mail and the Guardian, have embraced the web and seem to be riding the wave and the rest still seem to be struggling with how to adapt.

     

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  41.  
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    Internet Zen Master (profile), Sep 24th, 2013 @ 12:06pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Wait, they stopped reporting on Bigfoot in the Enquirer? But how is he supposed to promote his new line of haircare products to all their readers?

     

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  42.  
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    Anonymous Coward, Sep 24th, 2013 @ 12:26pm

    Re: Yep

    Another bastion of Murdoch's, WSJ does this and it only adds to my contempt for his news outlets.

     

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    That One Guy (profile), Sep 24th, 2013 @ 2:06pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    I think he's moved on to promoting jerky these days actually.

     

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    John Fenderson (profile), Sep 24th, 2013 @ 3:20pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Yeah, they changed in 1979. The National Enquirer switched to color and became a gossip rag, and their sister publication World Weekly News carried on with all the bizarre and paranormal stories.

    It was shortly after that the the National Enquirer became actually very solid in their reporting. In most studies, they rank in the top three of the best publications for accuracy (in the sense that if they state something is a fact, it is very likely to be an actual fact).

    It is widely believed the reason for this curious outcome was self-defense: celebrities started suing them for libel quite a lot, and they had to tighten things up so they could defend themselves in court.

    World Weekly News never had that problem, as Bigfoot hasn't worked out how to file a lawsuit yet.

     

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  45.  
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    John Fenderson (profile), Sep 24th, 2013 @ 3:24pm

    Re: Yep

    Yes, I do this. Even if bypassing the paywall is easy, it's never actually worth even a trivial effort to bother with.

     

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  46.  
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    John Fenderson (profile), Sep 24th, 2013 @ 3:29pm

    Re: Paywalls

    It's a matter of time before all newspapers figure out the one reality of the Internet: people want free, and they'll ignore you if you don't offer free stuff


    I don't think this is actually true as a blanket statement. I can think of a lot of things I pay for that I could get free (including Techdirt.)

    I think what people want is good value. If something doesn't present good value, people will ignore it even if it's free. And if it is good value, people will get it even if they have to pay (unless the price makes it no longer a good value).

    I think that what a lot of companies, especially media companies, don't understand is that a large part of the problem with paywalls isn't the "pay" part, it's the "wall" part. Paywalls require that you register with the site and limit your ability to share with your friends.

    The registration requirement is, for me, the real catch. If I have to register, the odds approach zero that I'll bother with the site even if it's free.

     

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  47.  
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    PaulT (profile), Sep 25th, 2013 @ 2:49am

    Re: Re: Re: Re: Re: Re: Re: Re:

    "Does it really matter where you would read something like that?"

    Absolutely. It's not about mere commentary but in the way a story is reported.

    One newspaper would skew the story to try and skew it into an argument for withdrawal from Baghdad, another as reason for further involvement. One source would note the women and children dead, another the soldiers. One might dismiss the reasons as being more examples of Muslim extremism, another might look into reasons why, or note that it was in response to the accidental shooting of a civilian by US forces a week prior. One might parrot the official lines or reprint an AP feed, while another might do some actual journalism. There's also the way the news is reported - one paper might have the story as front page news with in-depth examination of the incident, another might make a half-page mention of it on page 9 having led with another story or some celebrity gossip.

    All of that information is important, and different outlets will report different mixes of that information in different ways. Somewhere in between lies the truth.

    Every news outlet has its biases. Some try to be as neutral as possible. Some wear them on their sleeve and create an echo chamber that skews the reader's perceptions. You need to know this, and realise that no one source is correct all of the time.

    To give a concrete example today, I looked at the covers of a few UK papers here: http://en.kiosko.net/uk/

    Some newspapers lead on the same story (Labour leader Ed Milliband's speech pledging energy reform). The headlines:

    The Guardian (traditionally left wing broadsheet): "Milliband fires up faithful with assault on fuel prices", main story

    Daily Telegraph (right wing broadsheet): "Labour pledge to freeze fuel bills", main headline

    Daily Mail (very right wing): "Back To The Bad Old Days. Fixing energy prices. Grabbing land from property firms. Boosting minimum wage. Red Ed revives 70s socialism.", main story

    Daily Mirror (right wing tabloid): "Ed: Bed Tax Dead", small corner headline, main cover focusses on a Simon Cowell sex allegation.

    The Sun (right wing tabloid): No mention whatsoever on the front page, leading with a story on the Kenya massacre, a football story and a TV story.

    Yes it's VERY important where you get your news from, and the commentary might be a simple part of how they construct and advertise their newspaper in the first place. The story here is "Labour promise to reform energy prices if elected", but what the reader will get from the stories is far different if they only read one source.

    You can argue that this is all commentary and not the facts, but this is the filter through which people are reading the facts.

     

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    PaulT (profile), Sep 25th, 2013 @ 2:50am

    Re: Re:

    Worthless crap is a *kind* of quality I suppose...

     

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  49.  
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    John Fenderson (profile), Sep 25th, 2013 @ 9:23am

    Re: Re: Re:

    Indeed. Like "luck", the word "quality" does not inherently indicate whether we're talking the good or bad kind.

     

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  50.  
    identicon
    Anonymous Coward, Sep 25th, 2013 @ 6:40pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    I find it quite easy to read between the lines. It's a shame if others can't.

     

    reply to this | link to this | view in thread ]


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