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Who’s Gonna Pay for News? You, for starters…

Posted by Tim Berney

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flickr-2054107736-original-210x210A few years ago I wrote in our newsletter that the news industry could not survive in its current form if it did not begin to charge for online content. What is now called a paywall, would allow the news organization to keep its reporters employed, which results in original content.

And, it would prevent the news aggregator sites from repackaging the content in a more attractive form, but not having to pay for the content itself, giving the aggregator a significant advantage in attracting sitevisits.

The Wall Street Journal was the first major news site to adopt the model, allowing it to gain subscribers while dropping site visits at an acceptable, single-digit rate. The New York Times installed a paywall of their own earlier this year. Analysts said the break even for NYT was 107,000 new subscribers to replace the traffic of what it expected to lose. Thus far, about 100,000 subscribers have been added. Looks like a successful decision.

This is not just a dilemma for print publications making their way online, but they are certainly the most desperate right now. There is a significant cost in gathering news and information. If nobody can afford to gather it, we won’t have it. But because there’s demand, there can be a price. It is not unlike any other consumer good or service. In the past, we have paid a nominal fee for newspapers and magazines – a bit more lately. But, advertising revenue covered the majority of the cost. With advertising revenue down for most communications channels, especially print, the cost has to be made up somewhere. It was inevitable to me that the pay model would come into play.

Further, as the news aggregators have less and less news that they can re-purpose, traffic to the publication sites is likely to creep back up. Talk radio needs to learn from this scenario. Unfortunately radio over the airwaves can’t have a similar paywall. The obvious solution for them is to dump their reporters altogether and partner with TV and/or online news organizations – something that music stations figured out long ago. Jack Welch said, "If things are changing faster on the outside than they are on the inside, the end is near." Print pubs are making the change just in the nick of time.

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