Pitfalls of the pay wall

Cross post from Knight Digital Media Center Leadership 3.0 blog: Before they jump into charging for content, news organizations must bypass the “quality journalism” argument and answer these five questions instead.

I’ve hesitated to write about the notion of charging for online news content. I’m not a news business expert and I was not focusing on online years ago when some news organizations tried charging for content and could not pull it off. But with News Corp, The New York Times and The Boston Globe and other organizations considering charging for online content, I’ve been studying up and I want to add my voice to the chorus that’s saying “Don’t” or at least “Take a hard look before you leap.” (Special thanks to Steve Yelvington, Steve Outing,  and Jeff Jarvis, whose blogging about paid content has helped me understand the issues.)

Last week, News Corp owner Rupert Murdoch stepped it up a few beats, announcing his news Web sites all soon would charge for access to content: “Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting.”

Indeed. While it is evident that many news organizations provide quality journalism, I don’t think that really addresses the question of whether news organizations can profit by charging for content. (I also realize that doesn’t seem fair.) But after all, if quality content was the key, many news organizations would have been charging for years (and some tried and failed more than a decade ago.)

Instead, here are five questions I think any local publisher or editor needs to ask before charging for content:

1. Will the content behind the pay wall be unique and essential to users?
Finances aside, I think this is a critical question for news organizations. It also is a question that journalists are ill-equipped to answer on their own. Sure, we have plenty to say about the value of our work. But we tend to see it through the prism of the time and talent we invest in it and we judge it by the approval of our peers. Journalism has struggled for decades to be consistently relevant, useful, engaging and credible. Sure, you say, your organization is the dominant provider of local news, so your content is unique and residents cannot do without you. Think again …

2. What about the competition? If you are in a market with decent local television, a weekly and few fledgling local news Web sites, you can probably assume those will be good enough sources for many of your users who won’t or can’t pay. Even if you don’t have competition now, a pay wall is likely to encourage start ups, small community-oriented sites that can be operated on a shoestring. Of course, you say, those sites don’t have the breadth of all the news we bundle on our site. But these days, with links, social networks, and RSS feeds, people can do their own bundling.

3.Is it even possible to put a lid on your content? Copyright law allows others to use a small amount of your content. What’s to stop another site from posting your headline and a few words? That may be all many people want to know. And how much time and effort will it take to monitor for fair use violations? What about politicians, agencies and others who want to get the word out. If your stories are behind a pay wall, won’t they just take their news to other distributors? Don’t forget, many people who now find you by search won’t click through to the paid stuff.

4. How many users are you likely to lose? That’s an open question. It depends on your market, your users, your pay plan and your journalism. Given the unknowns, be sure to look at multiple scenarios and the effect each will have on your online advertising rates. In the process, figure out when to declare defeat if it comes to that.

5. What is your plan for finding out what people in your community will pay for and providing it to them? Circle back to Question 1. Talk to your users: Where do they get their news? What do they come to you for? What will they pay for? How much?

The pay wall works for Murdoch’s wsj.com because users think it is essential for them to make money and many of them can write off their subscription fees either on their expense accounts or their income taxes. Some form of it may also work for The New York Times because it has unique national and political content and a brand that won’t quit.

It may also work in some local news markets that have the right combination of strong local content and brand, loyal Web savvy users with a little money to spend, and weak competition. More likely, though, it could be a lot more difficult and a lot less lucrative than appears on first blush.