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Paywalls: People will be paying just to say they read The New York Times

January 21, 2010
The Kindle New York Times

Source: B.K. Dewey's Flickr stream

I don’t think paywalls represent inevitable failure. I don’t think it’s impossible to make money by erecting a paywall around your site’s content and I don’t think it’s impossible to maintain that flow of cash over time. I do think paywalls are great risks, especially if the only content on your site is freely available news and information.

Not to beat a dead horse, but I thought it might be helpful to clarify just what you’ll be paying for if you decide to start paying for in 2011 (hint: it’s not journalism or news).

For starters, I thought it’d be helpful to explain why a couple of news sites that already charge for content are able to get away with it, so let’s look at The Wall Street Journal and If you pay for content on, I’m guessing that at least one of the following applies to you: (1) You make a disgusting amount of money; (2) You want to make a disgusting amount of money. Since the Wall Street Journal is trying to sell expert stock and business tips, a paid subscription makes sense for these types of people. They either make so much money that their subscription rates don’t even register, and/or they write off their subscriptions as the cost of eventually making more money (gotta spend money to make money). Similarly, if you pay for an ESPN Insider subscription, at least one of the following probably apply: (1) You love sports; (2) You’re a gambler. In both cases—ESPN and WSJ—the return on investment is more money back (or there is no return and you have enough money to not care about costs). It’s not even the money that matters; what matters is that you’re putting your money into something and you’re getting something tangible back out of it.

The return on investment for an online subscription to The New York Times won’t even be the benefit of being well informed—that can be obtained on thousands of other sites, many of which are just as reliable and informative as the NYT—rather, people will be paying for the privilege to say that they read The New York Times. These people belong to a third group that I neglected to mention in my last paragraph: zealots. Besides people who stand to gain something from dumping money into a product or service, there are people who will pay simply to pay because they love The New York Times (etc.) that much. Or they’ll pay on principle. Or whatever. The point is, these are the same kinds of people who vote for third-party candidates—they don’t care what the outcome of their action is because the action is all that matters. Being a zealot is fine, it’s great and kudos to zealots for sticking to their principles. But if you’re a party relying on zealots to further your cause, you’re taking a risk, because generally speaking, zealots only represent a fraction of any given population.

Argument: Paywalls ensure that you’re serving your readers and not advertisers

I got into a Twitter debate on paywalls with Jason Pontin yesterday, during which he said that paywalls were not only part of a multi-pronged approach to revenue, but that they ensured he wasn’t serving one master, either:

1/2 Oh, no! Never. As a publisher, I have 3 potential sources of revenue: subs, ads, and underwriting (in my case, MIT).2/2 You don't want to be dependent on any one source, because it's dangerous and puts the source in charge of your product.I’ll agree with the revenue part. If you can have more than one source of income, there’s no reason not to. I can also at least see into the reasoning that you never want to put one source “in charge of your product.”

However, I have to reject the idea that newspapers ever considered their subscribers to be revenue-producing masters whom they served. Newspapers never made their real money off subscriptions—it’s always just been a nice “thank you” cherry on top of an ad-funded sundae. Maybe it made news editors feel better, or maybe, lacking any real understanding of the business end of their operation, they actually thought reader subscriptions were what paid their salaries. Whatever the case, the argument that a newsbrand is just as accountable to the guy who gives him 10 cents as the advertiser that gives him $10,000 is pretty thin.

Again: I’m not saying “don’t set up paywalls”

…all I’m saying is: consider what you’re putting inside it before you set the paywall up. Don’t require subscriptions with the rationale that people ought to pay! or we’re losing money to Google! Your product isn’t worth money just because you say it is. Know how you’re going to produce revenue and know whether there’s a reasonable expectation that you can achieve your goals.

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