Three fallacies of newspaper thinking (and how paywalls cracked at the Frontline Club)
My first trip to the Frontline Club last night (thanks, @saradotdub) was rewarded with a lively and contentious debate on the future of newspapers featuring The Times digital director, Gurtej Sandhu, enduring a severe cross-examination on Murdoch’s paywall strategy. It came from all sides: the Chair (the subtle and persistent Steve Hewlett) fellow panel members and the floor.
My takeaway was that the discussion highlighted three fallacies that still govern much newspaper thinking.
Fallacy Number One is that the internet is free because of a mix of habit and a spurious moral right, and that if you can change habits and challenge morality we’ll go back to paying for content.
This is confusing newspapers with content. We used to pay for newspapers because they had a monopoly of the means of production, and to get the content we had to pay for paper, printworkers, printing machines and trucks. The internet reduces the cost of material production and distribution to virtually nil and reveals that whatever we used to pay for content was a fraction of the total newstand price, and we paid for that because we couldn’t get it elsewhere, which brings us to…
Fallacy Number Two: that a newspaper’s competition is other newspapers.
Panel member Doublas McCabe suggested that if every newspaper went behind a paywall we might start to pay again. This misses the point that we can now get the news from a myriad sources, not just ‘newspapers’: specialist blogs, tv websites, Google, twitter, etc. ad infinitum. The monopoly no longer exists and everybody can be a media owner (picture me waving my iphone in the air) and for this reason alone content is worth much less than it used to be – sometimes actually nothing – unless it occupies a privileged niche, as does the Financial Times (represented last night by product manager Marybeth Christie with a lively account of experimentation and research in different ways of paying and consuming).
Fallacy Number Three is that nothing else changes, content is still just the end product of the publishing process.
Steve Hewlett made the point that, even when we paid for newspapers, our secondary consumption (eg. in a library archive) and conversation was free. It was, and its a good point, but the network in which that conversation occured was comparatively stunted – just people we knew. Now the network of secondary consumption and conversation is gigantic and accounts for much of the value created by content in terms of comment, correction, re-use and aggregation. The relationship between journalist and audience has changed from one that’s indirect and mediated by truck and newsagent to one that’s direct and continuous, a service relationship with two-way interactions where publication is often the beginning rather than the end of content production.
The internet creates the potential to make a fundamental change in journalistic practice and enables publishers to shift from product to service, whereby content is the means of introducing other sources of value such as real world products, information or services. This means, simply, that advertising and subscription are no longer the only revenue sources and might become secondary. This is Murdoch’s error, not realising that a newspaper isn’t a newspaper any more.
When asked why the New York Times tried a paywall and went back to free, Gurtej Sandhu said they blinked. We wonder if The Times will be blinking, sometime in the next six months or so, when it sees the light.
Stop press: you can watch/read about the full debate here:
http://frontlineclub.com/blogs/theforum/2010/05/apple-and-paywalls.html
8 comments
On a simple business level given that the Guardian already has the most popular of the main newspapers websites, due to quality of content and accessibility, how do the paywall sites ever hope to compete with their reach and influence when they drastically reducing their market share going into the increasingly digital future.
On a simple business level given that the Guardian already has the most popular of the main newspapers websites, due to quality of content and accessibility, how do the paywall sites ever hope to compete with their reach and influence when they drastically reducing their market share going into the increasingly digital future.
+1
On a simple business level given that the Guardian already has the most popular of the main newspapers websites, due to quality of content and accessibility, how do the paywall sites ever hope to compete with their reach and influence when they drastically reducing their market share going into the increasingly digital future.
I thought Gurtej was incredibly graceful considering how difficult it must have been to answer – or sometimes not to answer – the questions coming from all quarters. I think the whole room warmed to him despite being mostly in disagreement – which is quite a feat. Great post btw William.
He was Tim, and also – you never know – he or RM might be right and we shall all be eating humble pie
I think the answer to ‘how’ is in the word Exclusive that pops up all over the Times sign up pages and at mytimesplus: an ‘exclusive’ paying club of people-attractive-to-advertisers & marketeers who will provide affiliate and referral and commission income on sales as well as paying subscriptions. The strategy is to abandon reach and nurture an influential few. It sounds very counter-intuitive. I haven’t done the maths though, just on subs MyTimes is £50 per annum, so 100,000 subscribers generate £5,000,000. How many days’ losses does that cover?
And here’s some more from the horse’s mouth on how Rupert Murdoch plans to compete (from the LA Times, with thanks to Mr Williams of Vancouver)
‘Said Murdoch: “Simple. You turn them off. They’ve got to sign on. They give you their credit card number. And that’s it. And then you e-mail them and say you’re putting the price up or you’re taking it down or whatever.”‘
http://bit.ly/cF9wMR
http://bit.ly/cF9wMR
I think the point about newspapers having a monopoly over the means of production – and hence we were happy to pay for the printing, distribution etc – is an excellent one. What’s less often mentioned is that this monopoly of production also created a monopoly over building a mass market. And this is where the real revenue/profit came from (monetised through selling advertising).
People always focus in this debate on the content and value or otherwise of that content, but what’s getting missed is the value of the audience. Audiences fragment, become more niche-y, as absorbed attention spans reduce, get more flighty in terms of media consumption etc etc etc; all adding up to the second pincer in the movement that’s making newspaper-thinking redundant.
And btw, I don’t think there is any scalable revenue replacement option (certainly not paywalls) for content production. Those days are gone. And it’s no coincidence that the most profitable company in recent history is one who does not rely on the value of content consumption, but on the easier discoverability of that (aggregated) content.
Very nicely put Justin. The squeeze on newspapers wouldn’t be hurting nearly so badly if they could achieve the same scale of ad revenues online, where the market share is measured in fractions of one per cent, not the tens of per cent they’re used to.
Organisations like the AA (and their private equity purchasers) focused on audience value built around a simple but consuming attractor like ‘keeping my car running’. With increasingly fragmented audiences I think the idea of an attractor (almost as in ‘chaotic attractor’) is an important one, something that’s quite fluid and mobile but recognisable in multiple states, through some coherent operating principles – aka brand principles. Now, newspapers need to think about their attractor. They have nothing left to lose but their brand.