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Business – How To Get Readers To Pay: Carrots Vs Sticks

David Kaplan

The big debate over pay walls is getting down to the fine points; as opposed to grand theological, existential questions, it’s really more of a sharper dispute over the method of getting users to pay. Do you dangle carrots and hope the support follows? Or brandish a stick—perhaps a variety of sticks of different lengths? The debate played along those lines at the Paley Center on Tuesday, with the make ‘em pay side represented by Steve Brill, cofounder of startup Journalism Online, which promises to help news outlets charge for their content, and Vivian Schiller, president and CEO of non-profit NPR, arguing for making pay optional.

The most vocal panelists—the group included Buzzmachine’s Jeff Jarvis and media consultant Shelly Palmer—backed up Schiller’s contention that having a formal pay wall will only drive consumers away. In defense of the pay model, Brill contended that businesses need to run on direct money, and advertising and promotions won’t keep the lights on. Plus, he and others dismissed softer measures of coaxing money through online tip jars as being hard to count on.

Developing the pay habit: People have been exchanging cash for newspapers and magazines for decades, they just need to get back into the habit of doing so online, Brill said. In a conversation after the panel, Brill told me that the pay wall isn’t the only way to achieve that: “We believe in giving publishers a variety of options, including donations and bundling online and print. But some have this religious idea that people will be offended if you try to get them to pay for the news product. I’m just asking, ‘Who really knows?’”

Brill also dismissed the notion expressed by pay-wall opponent Michael Wolfe that subscription and newsstand sales aren’t what supported the news historically—that it was advertising all along and social-media sites and Craigslist have demolished that model. “That is not across the board,” Brill said. “There has never been a news organization that’s been able to exist on ads alone. Many newspapers have relied heavily on circulation revenue. By putting it all online for free, they abandoned the core print product and the revenue that came with it.”

Audience participation: During the session, Schiller spoke about the experiment with pay walls when she was general manager of The short-lived TimesSelect, which put archives and columnists behind an online pay wall, “made $10 million, but I don’t think it was worth it.” Afterward, she stressed the need to get revenue directly from consumers, but said that at a time when there so many alternative news sources, companies had to tread very gingerly. “I think trying to force a change in audiences’ behavior is the fundamental problem I have with some of these pay wall models. The meter model [users can explore the site freely until hitting a certain number of page views] is fine, because those are people who are loyal and who are going to be with you. To think that we are so smart that we can retrain the audience, that’s an awfully elitist, condescending, and frankly old perspective. I’m not slamming the entire commercial news industry. But I think we have to be careful about alienating the audience for short-term gain.”

Note: Despite NPR’s success with voluntary contributions—Schiller noted that the network’s pledge drive is an imperfect vehicle, but it did bring in $300 million in donations—it’s far from clear that a random newspaper in a mid-sized market could turn that same approach into a viable financial model.

As the event broke up, I asked Shelly Palmer—who sparred with Brill over pay walls during the panel—if he thought there were any pay models that could work without alienating the audience. And despite the back-and-forth he had with Brill during the panel, the two don’t seem too far apart. “One of the better models for small scale/big profit is [DIY mag publisher] Taunton Press. They have a pay gateway with exclusive content behind it and they’ve got teaser content. If you’re a professional woodworker, you want their paid content. However, if you’re not as serious about it but curious, they have content that is accessible to your interest level. But most importantly, they understand how to translate their value into wealth. They have DVDs, glossy books and plans you buy. It’s a holistic approach to engaging the consumer based on their content. But the thing is, strictly commoditized news ain’t going there.”


October 14, 2009 - Posted by | Uncategorized |

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