Monday, October 15, 2012

Are Newspaper Paywalls Working?

One thing is clear, the success of media, be it cable, print, or radio, rests with multiple revenue streams.  As companies demand more and more return for their investment, a single ad sales model has a hard time generating investor interest than one that relies on revenue from subscription, e-commerce, and other streams.  In today's digital world, newspapers especially have suffered as free content on the web has cost papers their subscription base.  But the cure, putting content behind a subscription service or paywall may be the cure.  As today's Wall Street Journal asks, are these paywalls working?

Investor mentality certainly reflects the improvements and future expectations of the digital business model. If today's earnings from Gannett are any indication, then an improvement in revenue because of an increase in paid digital subscribers will be welcome news of the success of the web subscription business  "The big risk of paywalls is that by restricting online audiences, newspapers can hurt their ability to sell online advertising. Until recently, that concern had prevented many publishers—other than those with market-moving financial information like The Wall Street Journal and the Financial Times—from charging readers for online access."  But if the subscription model leads to a scalable business, then there is hope that the ad model also works.

Consumers are being asked more an more to pay for digital services.  Cable television, Sirius Radio, MLB online, Amazon Prime, Hulu Prime, Netflix, and others are pushing a paid subscription model.  Free on the web just doesn't financially work and the free ride of content may be harder and harder to offer.  We are getting more and more comfortable paying for digital content provided that it delivers for us a worthwhile value.  it is when we believe we are being charged to much, that we threaten with cord cutting.  And that opens the door for competition.