Paywalls might be bad for democracy, but there are other ways to pay for journalism

As soon as Buzzfeed announced a 15% reduction in overall staff headcount, reports quickly emerged sinking the boot into a company on a mission to make digital journalism profitable, or sounding the doomsday bell that this shining light was fading.

But there is one key statement in Jonah Peretti’s email that was glossed over: “The restructuring we are undertaking will reduce our costs and improve our operating model so we can thrive and control our own destiny, without ever needing to raise funding again.”

In case you missed it “without ever needing to raise funding again”.

My interpretation from these six key words is after this restructure, Buzzfeed will be a profitable business and operating from a sustainable commercial model.

Crunchbase cites that Buzzfeed has raised close to $500M across seven venture capital backed investment rounds beginning in 2008. If I were lucky enough to have invested in Buzzfeed over 10 years ago, I would certainly be applying pressure on the board and management to provide an exit option to divest part of my shareholding. Showing an operating profit instead of an operating loss will no doubt help a stronger valuation.

Over the past 18 months, Buzzfeed has been signalling to the market about possible IPOs, acquisitions and mergers. Combined with the recent appointment of a high calibre CFO in Eric Muhlheim three months ago, perhaps this is just a good dose of financial discipline to keep the business operating efficiently and effectively whilst also in preparation for an exit event. After years of exponential growth and experimentation into new content areas it is a healthy business practice to review all operations and stop doing the things that don’t work.

There is one aspect that I would debate ad nauseum from the staff announcement with the multiple references to “diversifying our revenue” and “multi-revenue model”, particularly in the context of traditional paid content revenues and asking the consumer to pay. Jonah is adamant that articles behind paywalls are bad for democracy.

I understand the argument that a paywall will create a form of socio-economic class of people who can afford to read quality journalism vs those that cannot. However, unprofitable and unsustainable journalism would be even worse for democracy.

But the definition of paid as an expensive monthly subscription is out dated. Providing consumers with only a singular payment option flies in the face of user experience-based design, choice and convenience which has defined the success of the tech titans.

Data and attention

Facebook has proven the value of a consumer’s data to underpin its advertising-based commercial model. We just never realised how much data it was obtaining and the extent to which it was being monetised.

All publishers have the perfect platform to introduce a value-based exchange based upon personal data.

Personal data has value. Premium content has value. In this digitally sophisticated world, consumers are primed to complete a one click transaction exchanging personal data to access content. It should be no surprise that Google already does this to access some YouTube content. If a consumer does not want to give up personal data to complete the transaction and access your content, offer them the option take out a credit card and subscribe instead.

After hitting a traditional monthly subscription paywall, a non-subscriber who bounces off to search for comparable content elsewhere has just incurred a cost. It may take 30 seconds or more to search using Google and find a comparable free article. If taking out a subscription is too high a price, but they are willing to give up 30 seconds of their time and attention, then surely it is better to transform this “30 second” cost into a payment type, then allow them to leave altogether?

Should paywalls have a door? | Photo by Philipp Berndt on Unsplash

Publishers are also in a prime position to implement these non-currency based payment options which are faster, easier, simpler and therefore cheaper to “stay and pay” than “leave and search”. The proposition to a consumer is straightforward, exchange three to ten seconds of your attention with a sponsor to gain access to premium content or spend 30 seconds searching elsewhere. In the first option the publisher wins. In the second option Google wins.

If a consumer does not want to engage with the sponsor to gain access for one session on your website, then give them the option to pay 50c or exchange some personal data instead.

If a consumer wants the premium service which is free from disruptions but exactly the same content, then give them the flexibility and choice to subscribe.

Whichever option was selected to “pay” for accessing premium content, the person’s wealth will not determine if an article is read. The decision to read will be based on the quality of your content.

The argument that journalism is essential for a balanced democracy is one that I subscribe to. Digital journalism needs to become a sustainable industry with a diverse array of profitable independent enterprises. The lack of digital revenues coming from paying customers is a significant gap in any publisher’s commercial model which is purely free.

For too long many industry players have allowed and encouraged a societal expectation that digital journalism should be free. For the sake of journalism and democracy, this needs to change.

The first step is to change the default thinking that paid content exclusively means a monthly subscription paid by a fiat currency.

By introducing non-fiat-based currencies such as data and attention, in conjunction with monthly subscriptions and micropayments, publishers will provide the convenience, choice and flexibility for payment options that consumers expect in the digital world.

Acting in collaboration and unison is the best chance for publishers to quickly move the needle and re-educate society that journalism is a precious resource, is costly to produce and is worth paying for.

With paid revenues back on the table, each publisher will be better equipped to create their own unique and sustainable commercial model which aligns to their content.

Christopher Kerrisk is managing director and co-founder at Southgate Media.