Are social media and paywalls compatible? How the WSJ is making both work

Just this week, a newspaper from New Bedford, Massachusetts, The Standard-Times, owned by the Dow Jones Local Media Group, started charging for the local news coverage offered on SouthCoastToday. But that is just the tip of the iceberg. In the coming months, we could see the Times of London and the Sun introducing paywalls on their websites, while the New York Times ponders a similar move. They would join other online versions of newspapers such as the Financial Times and the Wall Street Journal, which already have paywalls for at least some of their content. This exodus towards paid content has prompted the British weekly magazine, the Economist, to call 2010, the "Year of the Paywall".

With so many newspapers providing their content behind a pay wall, how can newspapers effectively engage with social media? More importantly, how can users "share" stories through social networking sites, like Facebook, if the content they click on will be unavailable for free? How can newspapers still benefit from distribution through social media in a paid content model?

For the Wall Street Journal, social media is at present a comparatively small source of traffic, according to MediaShift. However, social media has the potential to drive readers who could eventually become paid subscribers.

In an interview published on MediaShift, deputy managing editor for the WSJ, Alan Murray, said the paper relies on multiple sources of traffic and that three of the major social media platforms - namely Facebook, Digg, and Twitter - are among WSJ's top 20 referrers. Thirty percent of their traffic comes from Internet giants, Yahoo and Google.

Although WSJ can't promote and share the content created on the website, the paper has worked to incorporate social media in other ways. Last year, Murray interviewed U.S. Treasury Secretary Timothy Geithner during a "Digg Dialogg" where Geithner answered questions that had been submitted and voted on by Digg users.

Murray also created a Future of News Twitter List which consists of a "list of top tweeters discussing the future of news." The paper uses this project to recommend the best Twitter sources within a particular niche, and some of those sources are Journal staff members. This helps promote the Journal's work because the staffers often talk about and link to their work on Twitter. This is another way to share material, without explicitly sharing locked news stories.

Although WSJ used to offer a Facebook application that showed users what WSJ stories their friends had read but took it down because of performance issues, Murray disclosed that WSJ is in the process of closing a new partnership with Facebook. Details of this partnership were not revealed.

In addition to these initiatives, the WSJ is developing social applications internally. These will include widgets to highlight related and contextual content, in addition to its iPhone and BlackBerry apps.

However, we may see traffic for many of these online newspapers drop, as they make the move from free to paid content.

After New York's Newsday locked most of its content behind a paywall, its web traffic dropped by 21 percent, according to MediaShift. However, it is possible that the newspaper's revenue from subscriptions made up for the lowered traffic and lowered online advertising revenue. Newsday claims to let users share stories by clicking on the "share" button above each story, but will users keep sharing stories that are locked down for other readers anyway?

As more and more newspapers make the switch to paid content, we will probably see more changes in how newspapers distribute their news through social media, as well as the way they engage with them.