Study: Paywalls Work Better If You Beg

Business Models

from the but-don't-quit-your-day-job dept

Brian LaSorsa points us to the news of a new joint study by Columbia and Indiana University, indicating that online readers will be slightly more accepting of paywalls if you plead the threat of bankruptcy than if you talk about profit and financial sustainability.

In the post-paywall survey, participants read one of two “justification” paragraphs, one emphasizing a profit motive and one emphasizing financial need (that paragraph concluded, “if the NY Times does not implement digital subscriptions, the likelihood that it will go bankrupt seems high”).

Participants then “rated how the information changed their support for the paywall and their willingness to pay.” The results showed that “When participants were provided with a compelling justification for the paywall — that the NYT was likely to go bankrupt without it — their support and willingness to pay increased. In contrast, when participants were provided with a justification that emphasized financial stability, their support and willingness to pay decreased.”

As we’ve often noted, paywalls may generate a little bit of revenue, or even brief periods of encouraging success, but they are ultimately not a sustainable business model for online news (though financial news may prove to be a rare exception to this rule). A survey like this one is rather emotionally manipulative, but by ending on that dark note of bankruptcy it demonstrates an important point: readers will only consider paying if they think, even temporarily, that they can’t get what they want for free. The more the New York Times or any other newspaper retreats into the shadow of the paywall, the more competitors will provide readers with a compelling option. When they see that financial stability and quality content is possible without a paywall (something they already seem aware of, judging by this study’s results) they won’t be so willing to provide a financial safety net to old institutions encumbered by legacy costs.

Of course, more importantly, even these swing voters who are hooked by the sob story represent only a small portion of the overall study. Its broader results (from the full paper) are even more illustrative:

Only 7 percent planned to buy or had already purchased a digital subscription. Another 12 percent already had a paper subscription that provided online access and 16 percent were unsure of their response. Of the 65 percent who planned not to pay, 59 percent felt very certain of their response.

Results suggest that price and availability of free news sources were barriers to paying. Most participants rated the paywall as expensive (68 percent), though only 18 percent of those who planned not to pay or were unsure said it was “very true” that they could not afford it. Few (6 percent) thought the price was inexpensive, with about a quarter (26 percent) indicating the price was about right. Participants who planned not to pay or were unsure most commonly planned to stay within the free monthly limit (60 percent), switch to other news sources (44 percent), and use loopholes (39 percent).

Now, the New York Times paywall has performed somewhat better than expected, largely because it’s not much of a wall at all, but a study like this just enforces the idea that it’s a stop-gap solution at best—and a hindrance to smarter strategies at worst.

Filed Under: begging, paywalls, studies