Business Models

by Leigh Beadon

Filed Under:
begging, paywalls, studies

Study: Paywalls Work Better If You Beg

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.

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  • This comment has been flagged by the community. Click here to show it
    below_average_out_of_the_bob, 5 Nov 2012 @ 9:00pm

    Did you mention paywalls???

    Blargha flargha!

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

    • icon
      Togashi (profile), 5 Nov 2012 @ 9:51pm

      Re: Did you mention paywalls???

      Come on guys, could we just stop it with these? They add nothing, lower the level of the discussion, and are frankly more annoying than the posters they're intended to insult. All they do is egg on the qualities we wish would go away.

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

    • identicon
      Glen, 6 Nov 2012 @ 8:16am

      While I agree with the statements above, I do have to say that this has been the most thought out statement ootb has ever made.

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

  • identicon
    Androgynous Cowherd, 6 Nov 2012 @ 2:47am

    A news paywall is really a "Donate" button.

    Because there are plenty of free alternate sources for news, and (most) news paywalls are fairly porous, a news paywall is asking people to pay money for something they can easily get for free. That makes it, in effect, a "Donate" button.

    So it is not at all surprising to me that a "begging" approach works best at convincing people to pay. That is what you are really doing if you have a "Donate" button: begging. It's just a more dignified way of doing it than panhandling.

    Of course, there are ways to make it no longer begging (and probably more effective), such as a tiered offering that sells scarcities at the non-free levels. Not sure off the top of my head what a newspaper site can offer in that area, though.

    There's also the Kickstarteresque model of requiring payments up to some threshold to produce each new issue or something. That works better for something whose web presence would still be periodical (e-magazine) or in chunks (webcomics) than for something that ought to update continually (news), though. Everyone gets free access, but paying makes it less likely the next issue will be delayed or missing, or makes it sooner that the next issue comes out, so is worth more than just the goodwill-value of tossing a dollar into someone's hat to the payer.

    And they can of course be combined. A webcomic could include a credits page at the end naming the people who paid for that issue's production: everyone who paid between when the previous issue appeared and the funding thermometer emptied until it filled up again and production of that issue was now fully funded and could commence. Larger single payments could provide other perks, like a printed volume or even a signed, printed volume in that case. With magazines, credits and printed issues are again options -- instead of a magazine going online-only it could go mainly-online with print-on-demand issues for larger payers.

    But now, it occurs to me that the "pay more and the next one comes out sooner" business model of pre-paying for production of a recurring thing might really disrupt the online pr0n industry. Pay and the next photoshoot, video, or whatever will be posted online that much sooner. Meanwhile the older, already produced, free material adds to the glut of free pr0n that's strangling your competitors who have plain old paywalls, and you can legally run your own bittorrent tracker with your own older material to help that process along. Of course, some of the extra tiers become problematic there -- do you want your name in the credits at the end of something like "Steamy Stephanie Sails to Saratoga?" -- but an 8x10 glossy signed by one of the girls is certainly saleable, etc.

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

    • identicon
      Anonymous Coward, 6 Nov 2012 @ 7:17am

      Re: A news paywall is really a "Donate" button.

      I don't like the donation analogy because it implies you can give any amount you want ratter, than pre-chosen amount of money or no money at all.

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

    • icon
      John Fenderson (profile), 6 Nov 2012 @ 9:19am

      Re: A news paywall is really a "Donate" button.

      But now, it occurs to me that the "pay more and the next one comes out sooner" business model of pre-paying for production of a recurring thing might really disrupt the online pr0n industry

      By appealing to the premature ejaculation crowd?

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

  • icon
    Ray Trygstad (profile), 6 Nov 2012 @ 1:28pm

    Even more annoying to me than paywalls...

    ...are digital subscriptions that cost more than the printed paper subscriptions--which include FREE digital subscriptions! Wired magazine costs me $10/year, which includes both the print and the iPad subscription, but if I want iPad only, it costs me a minimum of $1.99 per issue. The Chicago Tribune charges $3.46/week for a digital-only subscription, but only $1.48/week if you get the Sunday print edition plus digital. Someday it will occur to them that digital subscribers may ONLY WANT DIGITAL. Heck, if they threw in digital versions of the two pounds of ads in the Sunday Tribune, I'D READ THEM! [end rant]

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

  • icon
    Wally (profile), 6 Nov 2012 @ 2:53pm


    Ok, this data had got to be wrong. Begging = Nagware. FarmVille for instance.... Will you help Mary Suellen make will scarves for the winter? Use 5 farm bucks per scarf and produce 20 scarves to complete this mission.

    For those who never play it, the only way you get farm bucks is by leveling up and you only get one per level.

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

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