As digital media grows and print revenue shrinks, papers around the world are struggling to find ways to make online news pay. One of the most obvious - and most controversial - solutions has been the paywall. But getting people to pay for content is no easy task if they feel they can the same thing for free elsewhere.
Bill Mitchell, Head of Entrepreneurial and International Programs at the Poynter Institute, offers his expert opinion here. He talks about how "charging today for something that was free yesterday is fundamentally a non-starter". Yet paywalls can work if papers invest in flexible systems, exploit their journalists' expertise in niche areas, and, crucially, offer readers their money's worth in terms of new value.
Mitchell will be speaking at the 18th World Editors Forum in Vienna about paid online content from the perspective of the newsroom.
WAN-IFRA: News organisations have different paywall systems, from The New York Times' metered paywall to the more or less straightforward paywall of The Times of London. What's the best model?
MITCHELL: I think the so-called 'leaky' wall is the best bet as opposed to a hard wall. With an emerging business model like this, flexibility is really critical and the metered or 'leaky' wall enables flexibility across many fronts. It enables the publisher to shape the terms of the two fundamental experiences that it offers to its customers: the paid experience and the free experience.
WAN-IFRA Have paywalls changed the way journalists and newsrooms work?
MITCHELL: I think so. I was just talking with the editor of the Augusta Chronicle in Georgia, who's in the Press Plus metered paywall system. He was talking about the way in which the newsroom is focused on creating two kinds of experiences for users: the free experience and the paid experience. And by way of example he said that even when quite a bit of great news is available without charge, the experience that you have as a paid user is quite different. He described it in terms of being a more relaxing experience for the user, who's not interrupted with pop ups, and finds the material organised well along the lines of topics. I think that to create these experiences is going to require a great deal of newsroom work.
WAN-IFRA: Will the content of the news change as a result of paywalls being put up?
MITCHELL: I think that the idea of charging today for something that was free yesterday is fundamentally a non-starter, economically. The user really needs to see evidence of new value. And new value means changing the way that the content is presented and gathered and the way that publishers enable their customers to put that content to use. I think in at least those three respects there's going to be quite a bit of change.
WAN-IFRA: Do you think that niche publications will fare better with paywalls than general news sites?
MITCHELL: I think for the most part yes. A niche publication offers the user the opportunity to get content that either helps them do their job better, because it's focused on their area of employment, or really addresses a personal passion. But I think this doesn't close the door to general interest publications because most are made up of a number of niches.
WAN-IFRA: Do you think that paywalls can generate enough money to replace the decline in print revenue?
MITCHELL: No, I think that one has a pretty simple answer. As promising as the meter has been in generating additional revenue it doesn't begin to replace the revenue that a combination of traditional print subscriptions and various forms of advertising have generated in the past. But I think that revenue is going to be an important part of what will emerge as a much more diffuse hybrid revenue strategy for news organisations.
WAN-IFRA: Is there a danger that news organisations that put up paywalls will block themselves off from the rest of the web and not be able to generate fresh users?
MITCHELL: There is with the hard wall, because imagine the traffic you turn away when big news happens in your market and people searching around the world are turned away from a link from Google. Again, I think this speaks to the wisdom of the meter over the hard wall.
Publishers are finding a couple ways of doing it. The New York Times, for example, I believe enables links from search engines in a way that does not count against the metered number of articles per month. But even newspapers that do count search traffic against the meter are finding that because a typical drive-by or user is visiting only when big news happens, they don't consume enough articles over the course of the month to represent much of a barrier.
WAN-IFRA: Can you name other good models you've seen for monetising content online?
MITCHELL: I think that some of the strategies that are beginning to make up overall hybrid revenue approach include ideas about membership. In some ways, you can think of membership as an enhanced subscription relationship. A membership in a news organisation might involve things like regular events. It might involve the opportunity to host free classified ads if you're selling your piano or buying a second car.
Online advertising, while not directly tied to monetising content, is also an area where lots of things are changing. I think that, just as user-generated content is changing the way journalism gets done, user-generated advertising will reduce some of the production costs for advertising initiatives. That will open up the area of advertising to small business owners who traditionally have been priced out of the market for most publications.
Another revenue model is the social media consultancy that some news organisations are beginning to develop. Pretty much all companies with enough of a marketing budget to advertise in a newspaper -- and many that don't -- are developing social media marketing strategies. How do they most effectively use Twitter and Facebook and such locational tools as Foursquare to grow their businesses? Many companies are struggling with this challenge, experiencing the kind of pain that news organizations can help relieve with the expertise their staffs have been developing with social media. This is an opportunity both for news organizations to grow their business with exiting advertisers and to develop new relationships with clients that once considered the newspaper too expensive.
WAN-IFRA: As newspaper revenue becomes more uncertain, is it increasingly necessary for editors to be involved in business decisions?
MITCHELL: I think it is. I think this can happen in a way that serves both the journalism and the commerce as long as both the business-side and the news-side colleagues agree upon the importance of editorial independence. There's a way of creating new editorial products and services that create so much new value that they also generate revenue. But it's still important to do that in a way that the focus of the journalism is not on the revenue itself but on making the user an important person in the equation.
WAN-IFRA: Can you give an example of a news organisation that has done a good job of that so far?
MITCHELL: Here's one example: The Miami Herald was faced with needing more revenue to support its journalism. So it has created an iPhone app with content focused on the Miami Dolphins football team. The news and business side worked together to create it, and it has become something of an annuity for The Herald because people buy it every year.
It goes [back] to your question about the challenge that is faced by general interest publications. There's nothing more general interest than a metro daily newspaper, but among the niches they have is sports fans who are passionate about Miami Dolphins. They drilled down into that particular niche, and the journalists and the people on the business side were able to collaborate on creating a product that generates revenue.
WAN-IFRA: What do you think the future of online news will be?
MITCHELL: The real answer is that I don't know. But I think key characteristics will involve experimentation and at least as much failure as success. I think that changes will be as significant on the journalists' side as on the financial side because of the essential challenge of creating new value if you're going to seek new revenue. They're going to be creating new forms of journalism that are, for audiences and communities, much better than before.