Canadian media commentator Mathew Ingram looks at the growing number of north American publishers who have reached "for the pill labelled 'paywall' in the hope that charging readers for news can help solve their revenue headaches."
Whether they are are doing it because the New York Times's paywall appears like an attractive idea or because they are growing increasingly desperate isn't clear, he writes, "but even the NYT's experience shows that a paywall is still a sandbag strategy rather than a growth strategy."
He quotes the Minneapolis Star-Tribune publisher, Michael Klingensmith, as saying it was a mistake to give news away free online.
Ingram counters that "the reality is that virtually no one has been able to make much of a business out of selling online content." He continues:
"While it's true that publications like the Wall Street Journal, the Financial Times and The Economist seem to have managed it, this isn't a strategy that every newspaper is going to be able to duplicate, since those outlets have a very targeted readership (and therefore higher-value advertising).
Even the New York Times arguably falls into a separate category, since it is a leading brand not just for national news but for international news.
It's also worth noting that even the New York Times's paywall, which has been hailed as a success for signing up about 300,000 paying customers... has not improved the overall fortunes of the newspaper in a significant way...
As one analyst pointed out recently in a pessimistic view of the paper's current market value, the revenue from the paywall won't even make up for what is expected to be a continuing decline in print advertising."
He believes this to be a "sandbag strategy" because its main goal is to shore up print circulation (see Ken Doctor on this too).
Ingram contends that there is little guarantee that NYT paywall subscriber numbers will continue to grow, and every reason to believe they won't. So, he writes, "it is by definition a stop-gap strategy... newspapers that are relying solely on a paywall to save their bacon are likely doomed."
[In a British context, the same applies to The Times's paywall, which offers far less access than the metered model adopted by the NYT].
Ingram suggests that online revenue growth can be achieved by offering non-news products, such as e-books and by running events "that draw readers to real-world get-togethers."
He adds: "Another promising strategy is to look at your newspaper not as a thing that you need to charge readers for, but as a platform for data and information that you can generate value from in other ways — including by licensing it to developers and other third parties via an open API (application programming interface).
"This is the approach being taken by The Guardian in Britain, and USA Today is also experimenting with a similar model."
He concludes: "An API-based platform strategy is a gamble, just as erecting a paywall is. But one of those is a gamble aimed at profiting from the open exchange of information and other aspects of an online-media world, while the other is an attempt to create the kind of artificial information scarcity that newspapers used to enjoy.
"And if that is all that newspapers are trying to do, the future looks pretty bleak indeed."
Sources: GigaOM/Star-Tribune/Ken Doctor/Nieman Lab