The News Limited paywall isn’t about revenue. It’s about data

Hal Crawford editor-in-chief ninemsnIn this guest post, ninemsn’s editor in chief Hal Crawford argues Fairfax Media and News Limited’s new paywalls won’t draw much revenue, but will generate data. And they’re late to the data party.

When I first learned that ninemsn’s major digital competitors Fairfax and News Ltd were going to introduce paywalls across their mainstream properties, I was excited.

Every obstacle thrown in the way of their audiences is an opportunity. People hate friction and anything that makes life difficult on a rival site is a chance to get them on yours. This business is tough. You sweat over every thousand visits, every incremental click you can squeeze out of your page design or your pitches or the stories. It’s sweet to hear your competition is going to run the race with a ball and chain.

You can imagine my disappointment when the details of the paywall going up on The Telegraph and The Herald Sun came to light. The model allows readers to access more than 80 articles a month (Telegraph) in exchange for registering at no cost. For the Herald Sun, it’s 65 articles a month.

According to Nielsen, the average Telegraph reader accounts for 56 page views every month, well under the free allowance. For the Herald Sun, it’s 32 page views a month. Given that a fair number of those page views are going to be hompages, slideshows and autorefresh (multiple page views only accounting for one article under the paywall scheme) it’s going to be a rare reader who encounters the paywall proper.

So the “paywall” strategy isn’t a subscription revenue play at all. It’s a data play. I would be surprised if the paywall itself hit 10 percent of the total audience. Of those, some will pay and some won’t. A bunch of people will drop down from being power-users to sitting just beneath the pay threshhold. For those who fall in the “register to read” band there will be a drop-off because of the hassle, but if the product guys make that process relatively painless, these sites won’t be taking much of a hit. Ten to 15 per cent?

It’s better than nothing, but not the massacre I had been hoping for.

I think you can tell from the above that ninemsn won’t be introducing a paywall anytime soon. It’s not an ideological question. It’s practical. We don’t need it because we are profitable on our digital display revenue alone. We don’t want it because we value every member of our audience. When you are mainstream, reach is important.

According to reports, staff at the Telegraph were sat through a lengthy meeting on Wednesday listening to the logic of their imminent paywall cloistering.

They were told they know they are going to take a traffic hit, but it’s a good move because all news publishers are heading that way and everyone would end up with paywalls eventually.

So that bit’s not true.

And if it’s not true, what happens?

The mastheads lose some ground, say 15% of ground, and they gain data about their users. If that were unique, it might be a decent strategy. But it’s not unique. These guys are late to the data party.

The revenue from subscriptions is not significant, so that is not going to help. Looks a lot like News was forced to introduce a paywall and made the best of it. It’s a retrofitted strategy that has nothing to do with the audience and everything to do with the emotional and fiscal needs of the company.

The world does not exist to support any particular media company. The assumption that the model must work because there must be some way to support newspapers at their current cost base is wrong. Good strategy arises not out of the needs of the publisher but the needs of the customer, and any plan that ignores that will fail.

  • Hal Crawford is editor-in-chief at Ninemsn

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