If People Won't Pay A Monthly Fee For Facebook, Why Would They Pay For Newspapers?

from the simple-questions dept

We've been arguing about the long-term problems with paywalls for quite some time now, but more and more newspapers insist that they're "the answer." Of course, they seem to be asking the wrong question. They may be "the answer" to "doing something" in a desperate attempt to slow down people dropping their paper subscriptions, but they're not a long term solution by any means. Beyond the fact that limiting the ability to share or link people to your content takes away significant value, we've also mentioned that it merely opens up a huge opportunity for others to step into the market and replace you. Newspapers don't seem to think this is a real problem, but they are vastly underestimating the threat.

I haven't seen it explained quite as clearly or in such perfect terms as longterm newspaper man John L. Robinson in explaining why paywalls are like "using band aids on a bullet wound (found via Jeff Nolan). Robinson points out that young people today -- such as students -- admit that they're addicted to Facebook, and spend a ridiculous amount of time on the site. But if Facebook put up a paywall of about $10/month (not out of the ordinary for newspapers), they'd find alternatives:
I asked my class of 20-year-old Elon University students how many were on Facebook. All 33 raised their hands. Many of them suggested they were addicted to the social network. (It was all I could do to keep them off Facebook during class.) I asked how many would pay $1 a month for Facebook membership. All raised their hands.

“Five dollars?” I asked. A few dropped out.

“Ten dollars a month?” I asked. Nearly every hand stayed down.

“No one?” I said. “I thought you guys were addicted?”

A student piped up with an explanation: “Someone will invent something else to take its place that is free.”

I shared this anecdote with a newspaper executive when we were talking about newspaper paywalls. I said that if people wouldn’t pay for Facebook, they wouldn’t pay to get through a newspaper paywall.
Robinson then notes that the exec he told this to was dismissive because his students "aren't our readers anyway". But they are the next generation, and any publication that plans to have a future might want to think about what gets them interested... not what sends them running to find alternatives.


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    Angel (profile), May 29th, 2012 @ 4:14pm

    But they are the next generation, and any publication that plans to have a future might want to think about what gets them interested... not what sends them running to find alternatives.


    Yeah it's amazing how many people don't get this point...

     

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    Anonymous Coward, May 29th, 2012 @ 4:24pm

    Why can't digital newspapers have a pay per issue model like, oh I don't know, paper publications? I don't know about any of you but if I go into a newsagent to buy a newspaper, I don't pay monthly subscriptions.

     

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    Anonymous Coward, May 29th, 2012 @ 4:24pm

    the exec he told this to was dismissive because his students "aren't our readers anyway" ... And they never will be

     

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    Mason Wheeler, May 29th, 2012 @ 4:36pm

    Not that amazing.

    It makes perfect sense. A public company is required by law to maximize short-term value for its shareholders. All the rest of their short-sighted behavior can be deduced rationally from this one simple requirement.

    "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
    -- Upton Sinclair

     

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    Jeffrey Nonken (profile), May 29th, 2012 @ 4:43pm

    I'm not their reader either. I'm a 55-year-old professional.

    Guess that leaves out a lot of the baby-boomers. Granted, that's not a very large demographic.

    I'd say their target demographic is "people who are willing to spend money on our paywall." With that kind of demographic you can be dismissive of an awful lot.

    Because everybody else aren't their readers anyway.

     

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    Rikuo (profile), May 29th, 2012 @ 4:44pm

    Re: Not that amazing.

    "is required by law"

    Really? Required by law NEVER to look at the long-term?
    I would normally say such a thing could never become law, but then again, the people crafting SOPA boasted of how ignorant they were as to their bill's effects.

     

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    Mason Wheeler, May 29th, 2012 @ 4:48pm

    Re: Re: Not that amazing.

    It's not that they're "required not to" look at the long term, it's that maximizing value in the immediate term is the thing that they *are* affirmatively required to do, so if long-term plans conflict with that, they either fall by the wayside or you've gotta be creative about it.

     

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    Anonymous Coward, May 29th, 2012 @ 4:49pm

    This doesn't prove in any way that people won't pay for content they want. All this proves is that Facebook isn't valuable to most of its users. Big surprise, a free service is not perceived as valuable.

    It also proves that young people don't understand what words mean. If you're not willing to pay for your fix, then you're not addicted. Addicts go broke and beyond for their drug of choice. Is anyone on methadone to battle a FB addiction?

    And last I checked, the NYT stock is climbing while the FB stock... well.. you can draw your own conclusions.

     

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    Liz (profile), May 29th, 2012 @ 4:53pm

    Re:

    The problem with any sort of paywall is that with the news, you can almost always go to another source for information. A lot of outlets simply copy-paste current events from yet another source as it is.

    Plus news is fleeting. Unless it's of great historical importance, not too many people will care shortly after they've digested the story. And if some event was of importance, then several sources will carry the details.

    Newspapers don't just carry the news, and what's in print is already outdated information in our millisecond world. They continually have to offer other products and services to stay relevant. I wonder how many people just get the Sunday editions for the puzzles, comics and coupons versus buying full subscriptions? Or if people still scrounge up a fresh copy of their local paper to search the employment listings for local businesses.

    I don't know if digital subscriptions offer these same services as their print editions. I just know that a Kindle makes a poor substitute for lining a bird cage.

     

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    Gothenem (profile), May 29th, 2012 @ 4:56pm

    But, But, Piracy.

     

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    MrWilson, May 29th, 2012 @ 5:01pm

    Re:

    No, you're missing what they're saying. They're "addicted" to social networking. Facebook is just their current poison. If Facebook were to charge, they'd find some other free source of social networking.

    This is akin to a bunch of alcoholics getting free whiskey for a while then being told they have to pay for it, so they go somewhere else to find free vodka.

     

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    Mike Masnick (profile), May 29th, 2012 @ 5:07pm

    Re:

    All this proves is that Facebook isn't valuable to most of its users. Big surprise, a free service is not perceived as valuable

    If you think FB isn't valuable to these people, you don't know any young people.

    It also proves that young people don't understand what words mean. If you're not willing to pay for your fix, then you're not addicted. Addicts go broke and beyond for their drug of choice. Is anyone on methadone to battle a FB addiction?

    I agree that it's not an addiction, but again, I think that's besides the point.

    And last I checked, the NYT stock is climbing while the FB stock... well.. you can draw your own conclusions.


    Wow. Talk about comparing apples to oranges in a very small sample size.

    The NYT is currently valued at approximately $1 billion. Even as FB's stock keeps dropping, it's still valued at more than 60x that). And since FB just came on the market, about the only thing you can conclude from that is that the IPO price was too high. Still, the market values it a LOT more than the NYT. And that's not going to change any time soon.

    Besides, if you look at the NYT stock over any significant length of time, you'd know that's a massive downward trend its been spinning in for a long, long time. I wouldn't overvalue a deadcat bounce.

     

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    Liz (profile), May 29th, 2012 @ 5:07pm

    Re:

    You're mistaking the terms "Price" and "Value."

    A lot of people find Facebook incredibly valuable. Apart from the overload of Zynga adverts and games, you can connect with a lot of people in a way that hadn't been offered elsewhere.

    The article did demonstrate that the students were willing to pay for FB, but the PRICE didn't exceed a single dollar. Plus I'm sure those students are also aware of other services out there like Google+ and Diaspora which can offer the same value for a lower price: Free - if Facebook were to ever charge for it's services. The VALUE in the service is the convenient social aspect that is offered.

    And last I checked, when Amazon.com was first offered as an IPO in 1997, their stock stumbled (for example). After 10 years and being worth 5,000% their initial offering...well...you can draw your own conclusions.

     

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    wsuschmitt (profile), May 29th, 2012 @ 5:15pm

    Not really free...

    Everyone that uses Facebook isn't getting their "fix" for free. Their content is being made available to their friends for a fixed cost of data mining, finding relationships in databases full of keywords and ads that are supposed to be relevant and individualized to them. That's like saying Facebook is getting content for free.

    There is a value-balance that is being fulfilled between the user and FB. The user brings content and their friends to FB that takes their stories, puts it into a giant database (that can be mined in the background), and deliver's the users' content to the world (if you didn't set up your security settings correctly). I would argue there isn't any "free" going on between the user and FB. I would say that there is a tenuous symbiotic relationship between the user and FB. There is a balance of value between the two. If FB starts becoming parasitic and taking from the user (by devaluing privacy, having data breaches, making ads obnoxious and flashing all over the place (like MySpace)), then the user may not value the relationship as much and will move on to another service that allows communication between themselves and friends in a media-rich and convenient way on the internet.

     

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    RD, May 29th, 2012 @ 5:27pm

    Shortsighted history repeating itself

    "Robinson then notes that the exec he told this to was dismissive because his students "aren't our readers anyway".

    Microsoft: We want to license the disk OS to you, and also other people.

    IBM: Well, the money is in our hardware anyway. Software isn't important anyway.

    Because, you know, that attitude worked out SO well for IBM.

     

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    Keii (profile), May 29th, 2012 @ 5:39pm

    I've often had people come to my door and ask me about a newspaper subscription. I always told them no, because I can get all the news I want on the internet.

     

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    Stephen, May 29th, 2012 @ 6:17pm

    Newspapers were NEVER popular

    The New York Times circulation was only briefly above 1M back in the 90's. That is a national circualtion paper in a town of 9M people, with an even larger metro. No more than 25% of people in any town ever read the paper. Now nearly everyone reads newspapers online. If newspapers put up paywalls, they will just shrink back to the audience they used to have...except now a paying audience. Digital ad revenue at every paper is so crackerjack small that they are giving up nothing. I know newspapers extremely well- the digital ad numbers they report now are usually very small, and even then, they are still bullshit. No advertiser wants a fucking banner ad on a newspaper website. It cheapens the image of your product and people only associate it with annoyance. They just finagle the books to "give" print ad revenue to their digital side. They think this makes them look digital and furturistic. Those who follow their income statements know that they are only fooling themselves.

     

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    Anonymous Coward, May 29th, 2012 @ 6:22pm

    I like the comment that demonstrated one of my common points that if you wait for the news on the newspaper, it's already old.

    The next point is that newspapers are local. This is where the readership is, is in what is happening around the neighborhood. Beyond that, there are too many sources of news to worry about paywalls.

    One site I go to once in a while is Drudge Retort, which has the habit of pasting news article sources to the New York Times to the paywall. Once you arrive there, all you see is the paywall. My answer to that is to merely take the topic matter, paste it into the search engine and come up with an alternative source. What the paywall did for them, was deny them my eyes. I'm ok with that but if they are looking for readership, they missed out.

    Because I am not local to NY, I don't care what the weather is, don't care what their ads are about, and don't care what is happening locally. Put up any sort of barrier, I'll move right along to some other source without issue.

    So yeah that paywall worked out really well for them. They don't have the market cornered on news nor on it's availability. There is certainly nothing in the NYT I'll pay for.

    Nor is there anything in the local papers I'll pay for as I can find that out on the net too. The paywall is a solution looking for a problem to fix and low income isn't the problem it is hunting for.

     

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    TtfnJohn (profile), May 29th, 2012 @ 7:24pm

    Re: Shortsighted history repeating itself

    Actually, in many ways the hardware and support for same, has turned out to be very lucrative for IBM cause they're still around and doing very well, thank you.

    IBM wasn't dismissive of software when the MS/IBM split occurred. Over simplified they both wanted control of the hardware platform that Windows or OS/2 ran on. MS, having learned very, very well about how to be the alpha predator came out on top of that one.

    Yeah, MS came out on top of that one though not for the reasons you outline.

    Which brings us back to paywalls and why people aren't buying into them for newspapers. Newspapers overvalue their content which is freely available elsewhere, particularly their rewrites or cut and paste inserts of content from news wires line AP, Reuters, CP and others, television, cable and other sources.

    This example illustrates that there's a price where compulsive Facebook users will no longer stay if they have to pay it to get there. In this case it was a choice between $1 and $10 at the higher number a lot of them said "not me!". That seems the price where Facebook's content is overvalued.

    For newspapers that price is much, much lower. Unless you're the WSJ, maybe the NYT and can trade on a specialized audience, a past reputation as a paper of record or something as important. Most papers are neither. Some used to be. Before consolidation in the 70's through 90s gutted editorial staff to pay for mergers that never paid for themselves.

    I don't see Facebook going the paywall route if, for no other reason, than the data mining about their users to support apps and ads is far too valuable as it stands without going a route known to reduce traffic. Even if the data collected is 100% unlinkable to a specific user.

    The students are quite clear that they value Facebook content over newspaper and news media content by saying they'd pay $1 month "membership" fee there while they are doing no such things at news media sites.

     

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    Konstantinos (profile), May 29th, 2012 @ 7:35pm

    Reminds me...

    This reminds me of an old "funny" image I once created, suggesting Facebook should offer an optional paid version for $4 a year in exchange for removing all ads.

    http://9gag.com/gag/2823591

    A man can only dream :P

     

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    The Mighty Buzzard (profile), May 29th, 2012 @ 7:51pm

    Re: Re:

    Don't forget, newspaper is excellent for starting fires, masking areas you don't want paint overspray on, lining birdcages, and numerous other things. It's a pretty good deal if you have a thick sunday paper where you live.

     

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    John Fenderson (profile), May 29th, 2012 @ 7:55pm

    Re: Re: Re: Not that amazing.

    it's that maximizing value in the immediate term is the thing that they *are* affirmatively required to do


    That's not true as a blanket statement. A corporation is required by contract to adhere to the corporate charter, which may or may not be all about short-term profit.

     

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    Anonymous Coward, May 29th, 2012 @ 8:01pm

    I wouldn't pay for Internet but I must to.

     

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    oh gosh, May 29th, 2012 @ 8:31pm

    Re: Reminds me...

    oh gosh.. 9gag. Somewhere a redditor lost their wings.

     

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    Andrew D. Todd, May 29th, 2012 @ 9:08pm

    It's the Advertising, Stupid.

    Well, as I've said before, you cannot think clearly about the costs and pricing of newspapers and magazines unless you use the concept of "price FOB final page proof," separating the editorial and advertising business from the printing and distribution business. Generally speaking, with very few and specialized exceptions, newspapers and magazines have never succeeded in charging the reader anything for content, "FOB final page proof." People pay a lump sum for their computer or smartphone, and a monthly sum for internet access or cellphone service, instead of paying a little for the printing costs of each newspaper or magazine.

    The newspapers' problems have to do with advertisers who have bailed out with the transition to the internet. Part of this is that the advertisers never believed in the advertising value of news in the first place, and certainly not that of local news. To a degree, the advertisers always believed that someone who was disposed to buy things would make a collection of relevant advertising material, from any readily available source, and would throw out old material when new material arrived. The advertiser was only willing to deal with the newspaper because the newspaper had a monopoly on distribution. Now, the local newspaper has a special edition for non-subscribers, which arrives through the mail, once a week or so. This week's copy contains inserts for two furniture stores, one auto dealer, Family Dollar, Rite Aid drug store, Lowe's home improvement, K Mart, and two supermarkets, Krogers and Giant Eagle. I made the list while throwing them, one after the other, into the wastepaper basket under my desk. The "newspaper part" of this edition contains classified ads, and a few small display ads, but zero local hard news, being little more than a mailing wrapper for the various inserts. Of course there are other competing advertising bundlers, and Wal-Mart prefers to send out its own circulars under separate cover. The advertiser does not need a newspaper. A considerable element in the decline of the local newspaper is improved computerized postal sorting machines, which enable the Post Office to quote deeper and deeper discounts on junk mail.

    Of course, there are other, related changed going on. Small businesses are being driven out of the business of selling things, that is, mass-produced manufactured goods. When everything is made in China, a kind of "get big or get out" logic prevails. You are either big enough to employ someone who can speak Mandarin or Cantonese, or you are not big enough to be in the game. Some people shop at Wal-Mart, some at Target, and some online at Amazon, but it all comes out about the same in the end. The big players sell a wide enough range of stuff that they can put together economic mail shipments of advertising matter, up to and including something like the old Sears catalogs (perhaps with QR codes), and they don't need a newspaper to do it.

     

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    Pro Se (profile), May 29th, 2012 @ 9:27pm

    Re: Re:

    Just my musings, but I do not believe that people are dedicated to FB, per se, but to the utility it currently offers. Create a compelling, competitive site that offers even more utility and FB will rapidly become "so yesterday's news" (and especially if FB data can be readily imported). Same goes for all the other social media sites.

     

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    The eejit (profile), May 30th, 2012 @ 12:22am

    Re: Re: Re: Re: Not that amazing.

    There is actually a law in al least the UK whereby profits (not losses) are mandatory. IT's very rarely enforced, but it's there nonetheless.

     

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    Mike Masnick (profile), May 30th, 2012 @ 12:27am

    Re: Re: Re:

    Just my musings, but I do not believe that people are dedicated to FB, per se, but to the utility it currently offers. Create a compelling, competitive site that offers even more utility and FB will rapidly become "so yesterday's news" (and especially if FB data can be readily imported). Same goes for all the other social media sites.

    Sure. But same goes for *any* site online. So, not sure your point. Other than that you're agreeing that paywalls are a really stupid idea since they open up anyone who tries them to competition.

     

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    PaulT (profile), May 30th, 2012 @ 1:47am

    Re: Re:

    "You're mistaking the terms "Price" and "Value.""

    As these people always do. They seem literally unable to understand that these are 2 different words with totally different concepts. Yet, they seem to value this particular free service to use to attack others. Hmmm...

    "A lot of people find Facebook incredibly valuable."

    ...and a lot of people used to find MySpace useful and Altavista invaluable. Then better alternatives came along.

    If Facebook really messes up and manages to make its product less valuable than its competition, they will leave. Many users of Facebook are dissatisfied with parts of the service, but stick with it either because their social circle is still there or because the benefits outweigh the problems. If they're given impetus to move to a quality competitor for the services they want, they will move. The competitor being free while Facebook charges is just one potential impetus.

    Of course, the mental midgets who post as ACs here won't see this reality and will try to spin the whole thing into some kind of moral failing of users, or to use to try and attack the tech companies they blame for their own failings.

     

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    hfbs (profile), May 30th, 2012 @ 3:28am

    Re:

    ... except that no-one "must" read the news. Sure, it's handy for conversation, but you can live without it.

    Come to think of it, the same argument could be said about the internet. So what was your point again?

     

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    Ninja (profile), May 30th, 2012 @ 4:53am

    I use FB because it's where every1 is. And it's quite annoying that most ppl assume that telling you there's a party next weekend via FB is enough to get you informed.

    That put aside, I do believe it's a paper ship ready to sink anytime. I would never buy FB stocks because they lack coverage (I'm not sure which word to use, I mean to say here they don't have any assets that serve as base for their said value like a physical industry).

     

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    the cleptoid, May 30th, 2012 @ 5:04am

    Re:

    yeah but most students transform into adult dullards as they get employment or situate their working lives in rabbit hutches.

     

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    Jeremy Lyman (profile), May 30th, 2012 @ 5:11am

    Re: Re: Re:

    I was actually thinking about newspaper for grill kindling a couple weeks ago. I don't really need that much that often and I obviously don't subscribe to get my information delivered on paper. I was about to ask a friend "can you buy like just one newspaper at a store", but I only got out "can you..." before I realized what a stupid question it was.

    Maybe I had a small stroke or large brainfart, but I think it demonstrates how far removed from the traditional newspaper culture my daily routine is.

     

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    Ninja (profile), May 30th, 2012 @ 5:20am

    Re: Reminds me...

    I don't see ads in FB =D

    The wonders of FireFox =DDD

     

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    Ninja (profile), May 30th, 2012 @ 5:24am

    Re:

    Oh to clarify, by paper ship I mean both Facebook and this paywall scheme. I don't think newspapers are going anywhere anytime soon. They'll have to reinvent themselves though.

     

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    Anonymous Coward, May 30th, 2012 @ 5:57am

    People want simple and direct experiences with content. They don't want to be denied content because of a paywall. NYT is 2.50 an issue now on paper and $10/month for an online subscription. That's not appealing at all.

     

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    Anonymous Coward, May 30th, 2012 @ 7:59am

    Re: Re: Re: Re:

    "Sure. But same goes for *any* site online. So, not sure your point. Other than that you're agreeing that paywalls are a really stupid idea since they open up anyone who tries them to competition."

    I think that you are missing a point here Mike, one that is very important: Facebook content doesn't cost anything to make (the users make it), but a newspaper / media outlet has costs related to generating content.

    It's a huge logical jump to draw the sort of conclusion you are trying to draw. The types of media are very different, the methods are very different. To draw a parallel is flawed.

    It should also be noted that paywall news sites appear to be doing fairly well these days (last report from the NYT seemed positive), and as more and more of that media tries to focus it's delivery online, you will see more and more sites doing the same thing. There really isn't enough advertising revenue online to pay for these news organizations to exist, the cost to provide the service exceeds what can be taken in.

    It's simple economics. You remember those, don't you?

     

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    PT, May 30th, 2012 @ 9:43am

    Re:

    What is this "NYT Paywall" of which you speak? I hear about it from time to time, I even see messages from NYT about it while I'm reading their paper online, but it never gets in my way.

    Ah, NoScript.

     

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    Mike Masnick (profile), May 30th, 2012 @ 10:49am

    Re: Re: Re: Re: Re:

    It should also be noted that paywall news sites appear to be doing fairly well these days (last report from the NYT seemed positive), and as more and more of that media tries to focus it's delivery online, you will see more and more sites doing the same thing. There really isn't enough advertising revenue online to pay for these news organizations to exist, the cost to provide the service exceeds what can be taken in.

    First off, I'd suggest that the NYT setup is not actually a paywall, since anyone can see any of the content. I've never paid for the NYT and I've never run into any paywall. It's really a donation system which they pretend is a paywall.

    Second, I don't think you can usefully compare the NYT, WSJ or FT to any other paper. Most newspapers are local. Those three are international papers that have a much bigger audience and are often considered "required" reading.

    Third, I've seen no evidence that the paywalls are actually that effective. They make some money -- even the NYT/WSJ/FT ones -- but the amount is pretty tiny compared to what they make elsewhere. And, there are some pretty clear indications that the stricter paywalls (FT/WSJ) hurt their long term ability to find and attract readers.

    Paywalls are a dumb idea by companies ceding the future to more innovative upstarts.

     

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    Anonymous Coward, May 30th, 2012 @ 12:23pm

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

    Yet all of this, and you have no considered the concept that "local news" is really a dying art. You are also mistaking those smaller local news sources as the type of sites that most people would go to looking for general news, that would be generally wrong.

    "paywalls" (aka subscription services, when you stop trying to slay the idea) seems to be a given in the future. How will you deal with it when you can't get most of the news online except via people's tweets?

     

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    Liberlibri, May 30th, 2012 @ 12:55pm

    Satisficing

    Let's face it (and the studies are in- search "satisficing information" in any academic database)-- most people are satisficers. That means they aim for the satisfactory, rather than optimal, solution to an information need. Moreover, there will always be individuals willing to create free content that will meet the needs of satisficers.

    The real question is are there enough people willing (and able) to pay for optimal information to keep a few papers like the NYT afloat? I think there might be. That said, the public good is getting lost in the transition. Perhaps the NYT and others can no longer afford to be deeply ethical. Murrow would be sad.

     

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

  42.  
    icon
    TheBuzzSaw (profile), May 30th, 2012 @ 1:19pm

    not worth paying at all

    I'm surprised even at the people who would pay $1 per month. Facebook is far from a necessity in my life. I love using it. I love seeing friends' updates. It's how I stay in touch with lots of friends and family, but I use precisely because it costs nothing. There is no guilt in using it ever (maybe my electric bill...?). The threshold between $0.00 and $0.01 is huge. The very requirement of money in any amount is deal breaker for such non-essentials. Going from $0.01 to $0.02 is a lot easier because it's a mere value proposition: we're offering more services, so we need to charge a bit more.

     

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


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