What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital JournalismChapter 5Paywalls: Information at a Price“Information wants to be free. Information also wants to be expensive. Informationwants to be free because it has become so cheap to distribute, copy,and recombine—too cheap to meter. It wants to be expensive because it can beimmeasurably valuable to the recipient. That tension will not go away. ... Eachround of new devices makes the tension worse, not better.”—Stewart Brand, The Media Lab, 1987 1“The Internet is the most effective means of giving stuff away for free thathumanity has ever devised. Actually making money from it is not just hard, itmay be fundamentally opposed to the character and momentum of the net.”—John Lanchester, London Review of Books essay, 2010 2When the Wall Street Journal decided to charge for its online edition in 1996,the company did so without a great deal of deliberation. Rather, as Peter Kann,who was then the chief executive officer of the Journal’s parent company, DowJones, would later recall, “I didn’t know any better. I just thought people shouldpay for content.” 3That was a novel idea at the time—that people should pay for news they goton the Web. Today, after years of declining print circulation and disappointingonline ad revenue, many news organizations have begun pondering whether toinstitute a subscription system for their online sites.Pondering is still all most companies have done, though increasingly they arewarming to the idea of charging for at least some of their digital content. Theirhesitation stems from several concerns. Some are fearful they will lose so muchWeb traffic that their online advertising revenue will fall significantly; others aredaunted by the technological hurdles involved in getting a new online subscribersystem to work in tandem with the one that has served print customers for years.Paywalls: Information at a Price 67
The Story So Far: What We Know About the Business of Digital JournalismAlso, subscription revenue has historically been such a small factor in the addrivenmedia business that many news organizations wonder if they would everget much return on the investment.Publishers usually cite three reasons to charge for online products. One, ofcourse, is to increase subscription revenue. Another, less obvious, is to stanch theerosion in legacy operations: That is, since their readers now get the content theywant for free online, why would they pay for a print subscription? If you startcharging for digital access, shouldn’t that protect your more profitable print business?Finally, there is evidence that a paying audience is more valuable to advertisersbecause it demonstrates deeper commitment by those readers.A few online-only news organizations have tried pay schemes, usually tocharge for premium content beyond their free websites. Politico launched its“Pro” version in early 2011, charging $2,495 a year for in-depth coverage of suchtopics as energy or health care. 4 That puts Politico into competition with olderpublications like Congressional Quarterly, now owned by the Economist Group,and newcomers like Bloomberg Government. At a much lower price, ESPN.com offers access to its “Insider” site, with exclusive blogs, videos and tools, atprices ranging from $30 to more than $70 a year. And to ensure there’s a bundle,online subscribers also get ESPN The Magazine, a biweekly print publication.The paywall issue is especially acute for newspaper sites. In the months leadingup to publication of this report, most of the attention of journalists was directedat the New York Times’ new digital subscription service. Before that, though, theconversation about paywalls in the U.S. has focused on two staunch believers inthe digital subscription business: the Wall Street Journal, which began chargingin 1996 shortly after its website launched, and the Arkansas Democrat-Gazette,which started imposing online subscriptions in 2002.Walter Hussman, publisher of the Arkansas paper, has portrayed his site’s paywallas a way to protect the more lucrative print edition. The online subscriptionservice “does not justify itself as a revenue stream,” Hussman has said. 5 Print subscribersget the online edition for free.68
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