As CPMs fall on almost all forms of advertising (including online), publishers are preparing by exploring new business models. One such business model is paid content: users pay to access a portion or all of the website content. There are some very rare exceptions where paid content does have possibilities (such as market research, financial analysis, and any other types of content which businesses can profit from reading), but for newspaper and magazine publishers, it’s pretty clear that paid content is not an attractive option, at least in the near future. Here is my reasoning…
You’re competing with “Free”
Content is slowly becoming a commodity. With sites like eHow, About, Youtube, and Wikipedia, thousands of new (free) pieces of content are added each day. Your site is competing with these sites in some way, whether you realize it or not. Unless your content is so unique, and impossible to replicate, a competitor will undoubtedly offer a free version of the content you’re selling. Why would people pay for content they can get (legally) for free? It’s like “putting up a tollbooth on a 50-lane highway where the other 49 lanes have no tollbooth” – David Carr, New York Times
Reduced search engine visits/rankings
In order to make the offer more enticing, presumably the publisher would decide to save its best, most in-demand content for paid subscribers. But your top content is the content that will perform the best in search engines – other sites link to this content, increasing the page rank and domain authority. Considering most sites depend on organic search engine visits for as much as 50% of their traffic, hiding your best content behind a paywall could have a major affect on traffic.
Reduced advertiser demand
The least risky option in pursuing a paid content strategy is a mix of paid and free (advertising-supported) content. But the inevitable drop in unique visitors means less reach for your advertisers, and ultimately lower advertising demand. Meanwhile your competitor, who has gained a portion of your audience, suddenly looks like a more attractive advertising opportunity. Not only will your total advertising revenue fall, but likely your percentage of sold impressions will fall too.
Increased need for marketing
A well-tuned website with high-quality free content practically markets itself. If your visitors find your content valuable, they will link to it, (increasing referral visits and search engine rankings) and share it with others via Twitter, Facebook, Digg, etc. These previously free forms of traffic (organic search & social media) are no longer at your disposal, so how do you attract potential subscribers to your site? Advertising & promotion – and likely lots of it if you want to have any chance of competing with “free”.
The business model is unproven
While a handful of publishers have had a small amount of success, the Newsday’s of the world (35 paid subscribers) greatly outweigh the Wall Street Journals (over one million paid subscribers). Very few newspaper or magazine sites have been able to demonstrate success with this business model. Setting up a paywall is a large investment, and considering the lack of demonstrated success, we’re understandably not seeing many companies willing to take the risk.
If you’re still on the fence, here’s a great little calculator to help you figure out how much money you could potentially lose or gain by imposing a paywall.
New York Times has hinted at a return to the paid content model in the not-too-distant future. What do you think? Will they be the next Wall Street Journal or the next Newsday?
