DateSaturday 28 March 2009

Back and forth on the paywall argument

Yes, it’s a scene from Season 5 of The Wire. It’ll make sense if you read to the end.

Paywalls. We ought to talk. Please note that I’m not talking from any knowledge of any plans that commercial people in the Guardian have; I am far too lowly to know what they’re thinking about. I’m just saying that with the collapse of papers all over the place, largely caused by a collapse in print advertising that isn’t seeing a concomitant rise in online advertising spend, newspapers are going to have to think of all sorts of ways to generate revenue. Perhaps it’s selling links. Perhaps it’s buying readership. Whatever: but put everything back on the table, baby, because all those optimistic predictions from the first and second dotcom booms now look frayed and careworn.

Which makes it interesting to see Tim Burden slagging them off. Go visit his site, it’s interesting. But first, he has a post from February (see how remiss I am) which offers ten reasons why you shouldn’t have paywalls.

Let’s take them on then. (I’ve put this into an ordered list so you can see the numbers – on his post he’s done it just in paragraphs, which I think makes it hard to follow the rebuttals in the comments.)

So here we go. Here’s his assertions, his (usually shortened) arguments; click back for the full ones; and my response.

  1. Paywalls annoy people
    The hapless reader has found a link in Google or a blog or some other site. Worse, in his RSS feed. He clicks, waits, and finds he must sign up or pay money. He clicks back, angry for having wasted the time. If he clicked from your blog, he’s angry at you.
    That’s tough. Perhaps it depends on how the blog presents it: a must-read piece? How hard is it to sign up? Does the paywall take Paypal? Does Paypal take penny payments? It’s not a foregone conclusion. And the FT, for example, lets you read a certain number of stories per month, then puts up the paywall.
    Consider this too: if you get enough of those situations where you click the link, and find a paywall, eventually you’ll think to yourself that damn it, you’re going to pony up.
  2. Paywalls discourage links
    Because paywalls annoy people, I for one won’t link to a site that has them. People shouldn’t: it’s disrespectful of readers.
    You might think it’s disrespectful now, but you’d find it a lot more disrespectful if the site you used to link to shut down, wouldn’t you? You used to think its content was worth someone’s time, but not their money. What if it turns out that wasn’t a fair exchange?
  3. Paywalls are anti-web
    The web is built of documents, and links between documents. No links, no web. It’s a tautology. So if paywalls discourage links, they must be anti-web.
    Does that make the iTunes Store and the iPhone App Store and eMusic and Napster and Netflix and all those other sites that charge for content they hold anti-web, too? Or are you “pro-web” (as opposed to anti, right?) if you have a shopfront that anyone can browse but only charge them to get the content? I thought that’s what a paywall was.
  4. Paywalls must fail
    Anybody can make content and get it to me for free. And they will. Put up a paywall and watch them storm the ramparts.
    Yes, anyone can make content. If you’d like to read my children’s analysis of the world news they heard on the radio, you’re welcome. In fact, if you want to write one, go right ahead. You may find it eats into the time you have to actually work, or rest, but hey, it’s free, and everything wants to happen for free, doesn’t it? Except, for some peculiar reason, the mortgage/rent and the food in the parlour. And that computer on the desk.
    On the other hand, if you want to read the work of people who have had to overcome evasion and stonewalling to find original content that could have some relevance to you (eg government or corporate misspending or malfeasance), or just things that you’d like to know about but haven’t the time to find, then you might consider that if those people – let’s call them “journalists” – can’t get paid via advertisers, they might look to you to help with those mortgage/rent/food/computer payments.
  5. Paywalls cause war
    If you are actually successful at having content no one else has, and charging for it, someone will find a way to get it free. And then your programmers will get overtime to fix it.
    Yup, someone will find a way to get it for free. Probably by copy/pasting it. Then their credit card will get zonked, or similar. But that isn’t the key problem. It is already possible to get most major films on DVD for much less than is charged in shops; yet people buy the real thing. If you trust that most people will behave honestly, given the chance, the problems of people taking content for free becomes more of an edge case.
  6. Paywalls are a scam
    Because readers can get the content free elsewhere, and you can deliver it for free, you are trying to charge for something that has a value of…FREE. Rip-off!
    This is a repeat of No.4 above. And it’s also a syllogism. The content doesn’t have a value of “free”. As gets mentioned below, papers have survived for a long time by delivering readers to advertisers (a thread that is being frayed). Thus the content has a value: the value implicit in being a method of getting readers and advertisers together. In the past, that’s been quite high. Problem now is that advertisers think they have better ways to find “readers”. Which may be true. The question then becomes (which doesn’t get dealt with in this debate) what the implicit value of the content is. But on its face, if it’s stuff that people will seek out, it’s higher than zero.
    How can I state this so confidently? Because I know what the web used to be like. I can promise you that I didn’t spend much of the day trawling the web when the best thing on it was Yahoo’s Site of the Day.
  7. Paywalls limit readership
    Anyone in the content business knows that their product is not newspapers, or broadcasts, or magazines, or even news, or even content, or even information. No! It is readership. Your product is readership, which you sell to advertisers.
    True. But maybe the model is going to have to change. In which case we also sell readers to each other: the thing that becomes valuable is the other readers who are prepared to cross the paywall and discover each other’s shared knowledge and interests arising out of the content they find there. I suspect the FT’s Most Read stories give a useful indication of something.
  8. Paywalls hurt ad revenue
    Follows from above, paywalls reduce readership. Someone will be quick to say, “Oh, but it will be a qualified readership, more valuable.” Bullshit. You can get the same qualification by having users sign up to comment/upload/post on forums etc. There are two types of readers: one hit wonders from Google and locals. Your job is to get locals to participate, not try to squeeze every last dime out of them.
    Participation is nice. Money is a lot more useful. And if the “locals” think they’re getting something of value, might they not be persuaded to pay for it? Which then means that objection (1) at the top, about random readers clicking through, becomes less of a problem.
  9. Paywalls are old-think
    In the olden days, newspapers had monopolies. Those monopolies can now die with a WordPress install. In days of yore, you could force people to pay your price. Now, the only price is…FREE.
    Haven’t we gone over this a couple of times already? I’ve considered spending a couple of days really researching what really happened to lead to Saffron Walden’s town square getting dug up. It would require interviewing market traders, shopkeepers, council officials, people representing the company that put up the money that was used for the development, and the company that is doing the construction work. Three days total work, probably. Then I could write it up. It might stop it happening again; it might expose flawed thinking among those involved. That would be useful. But it doesn’t happen for free.
    The idea that truly useful content generates itself is the grand misconception of those armed with a web browser and a WordPress installation. It’s not true. Oh, sure, you can tell us what your cat ate and link to a story about Obama or Gordon Brown and give us the benefit of your knowledge. That ain’t useful, though. It’s not even free; it costs your time that you could be spending learning something useful, like how to program the iPhone and write a kick-ass app.
  10. Paywalls don’t work
    Oh right…we don’t have to argue from principles. We can just gather empirical evidence.
    Good links, all of them. But circumstances change. And the WSJ hasn’t abandoned its paywall. The New York Times is wondering quite how to monetise its content again (because things are getting tight there). So we all thought that free was the only workable model? Sure, and we used to think that a phone without a keyboard would be a flop. Times change.

Does any of my arguments make paywalls inevitable? No. Do any of this make paywalls utterly rebuttable? I don’t think so. We’re going to see a time of huge experimentation pretty soon, and paywalls are definitely going to be in that mix.

Oh, bonus link: David Simon interviewed in the Guardian plus the shorter news story in which he says that the death of newspapers in the US will mean, in the short term, more corruption:

“The internet does froth and commentary very well, but you don’t meet many internet reporters down at the courthouse.”

(And yes, I’m aware of the irony in linking to his argument about the need for paywalls on the Guardian’s site which has no paywalls.

Oh yeah, apart from its digital archive. To point that out would be supererogatory.)

Links: an IMF warning, and why financial journalists missed it

  • The Quiet Coup – The Atlantic (May 2009)
    Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause—Lehman was small relative to Citigroup or Bank of America—is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington. Bank of America obtained its second bailout package (in January) after warning the government that it might not be able to go through with the acquisition of Merrill Lynch, a prospect that Treasury did not want to consider.

    The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

    Scary article by a former head of the IMF – in 2007/8. Basically, unless the US (and UK?) can end their capture by the financial markets, they’re not going to be able to get out of the cycle of incomplete bailouts of the banks. How to fix it? Tough medicine: nationalise and/or break up the banks into “not too small to fail” units.

  • Audit Interview: Mark Pittman : CJR
    Q: So what’s your prescription for business journalists? What do they need to know and do? Not everybody’s going to have a $20,000 a year Bloomberg terminal to play with.

    Mark Pittman: Hardly anyone has a Bloomberg machine and the ones that do don’t know how to use it.

    But you know what? The government needs to make this kind of data much more publicly available than it is now. We purchase a lot of this. But, for instance, a lot of the bond deals were (not subject to disclosure). And all the CDO’s were private placements. We know why—because they placed them with themselves. The number of secret deals going bad is astounding, it’s probably 90 percent of them were secret deals.

    Intriguing: Mark Pittman of Bloomberg on how hardly anyone understood what was going on – but he did. Who was listening, though?