When Rupert Murdoch unveiled his paywalled online and mobile digital products attached to The Times in 2010, the coverage ranged from ridicule to disbelief. The Times had become "a newsletter" while Murdoch sought to "milk his cash cow a pound at a time, leaving his children with a dry, dead beast."
But the cries of "it'll never work" are now not so loud. In the UK today there's barely a peep of controversy when another publication decides to test the value of its content with metered or gated access. The paywall question for many publications is now a case of when and how, not if.
The already done...
-- Gannett: The USA publisher's recent Q4 results didn't show great success at its news publishing arm - but that was primarily down to declining ad revenue. Circulation revenue was up 16.8 year-on-year percent in the quarter - primarily driven by an "all access content subscription model" which includes digital access. More than half of Gannett's 80 papers now charge for online access (unlike its UK arm Newsquest which has yet to charge online).
-- New York Times: Circulation revenues overtook ad revenue for the first time in the NYT's history in its fourth quarter. The NYT had 668,000 digital paid subscribers at the end of the quarter, up 13 percent from the previous three months.
-- Financial Times: In July last year, the Financial Times's digital subscriber base reached 300,000, overtaking print subscriptions. The paper is still making cut-backs as part of its (inevitably named) "digital-first" strategy with a net loss of 25 journalists. However, it's profitable and has one of the most lauded responsive mobile-an-tablet apps in the business.
-- The Times: No it's not profitable, but The Times had racked up 131,000 paying subscribers by July 2012, just over two years after raising the wall. News International claims a paying audience delivers better results for advertisers, though it's doubtful that makes up for lost volume. In a minor change aimed at increasingly visibility, the Times now allows Google to list excerpts from its stories.
...and the soon to be?
--Washington Post: Stories emerged late last year this most prominent of hold-outs against charging for content online was likely to do a volte-face in 2013. No word so far on that officially but with an operating loss of $56.3 million in the first nine months of 2012, change is in the air.
--The Telegraph: In November The Telegraph started asking international visitors to pay for content. It opted for a metered approach, allowing non-UK users free access to 20 articles a month, before asking readers to pay £1.99 for a month's access, or sign up to a full digital subscription package including the iPad app for £9.99.
As one analyst told The Guardian: "This approach allows the Telegraph to develop the right payment models with a smaller user base, then refine the model to offer wider packages to UK users."
Something for everyone?
Patrick adds: The increased urgency in this debate stems from the inability of the online advertising market to sustain even the shrunken costbases of newspapers. The point at which marketers will spend more through online channels than print comes this year according to some analysts. But it isn't newspapers and legacy media getting a lion's share of that.
That, crossed with the increasing consumer fetish for tablets and the willingness to pay for digital content, means the time is now to monetise your most engaged users.
In 10 years we've gone from dismissing the internet as, at best, an interesting sideshow to the meat and drink of real-world publishing ("we'll just do more covermount giveaways", copyright: Every Newspaper, 2002-6)... to now arguing against innovating the revenue model too far for fear of losing the online ad revenue senior execs once didn't see the point of seeking.
Perhaps the real barrier is not philosophical, however, but technical. Paywalled systems are not simple: audience management in a paid environment is a delicate science, as is segmenting and targeting your audience with the right offer at the right time (the FT has an audience data team specifically hired to do this - that it has 600k paying customers is no coincidence).
As the US academic and innovation expert Clayton Christensen says in a Q&A with Time:
"The question is not 'Should we shut the (old) business down?' It's 'Where else in the market are people making money?' And if you don’t ask that question then the conclusion is, "We have to keep the existing business.'
Image by TheSociable on Flickr via a Creative Commons licence