A paywall is a digital mechanism to separate content that one has to pay for from the rest of the content on the net. Think of it like the Internet equivalent of the Berlin Wall: a few unknowns, stifled by their overlords, exist on the inside–yearning to join the free world beyond.
Boingboing revealed some of the problems with using a paywall around an everyday news venue, in this case New Zealand’s National Business Review. As you can see from the Nielsen data (shown above), they were running at a fantastic clip as of April 2009: they were on track to double traffic and engagement metrics. After the paywall was implemented, they’ve dropped to about half of April’s numbers, and the trajectory is pretty clear.
The history of paywalls is pretty negative. The largest prononent of pay-to-play online content is News Corp, and early this month their COO Chase Carey admitted that he was disappointed by the results of the Wall Street Journal paywall. Two years ago, the New York Times dropped its paywall and opened up its archive of old content. Startups like
Contentville, which attempted to create micropayments for online content, haven’t fared well either.
Meanwhile, professional journalists continue to snip at newer forms of media, like blogging. Bijan Sabet rightly points out that bloggers are uncovering a lot of news that others are not, despite a few (or maybe a lot) of bad bloggers. However, I think the big thing that traditional journalism is missing is that the online experience is not just about the content. It is about the relationships. Relationships are why blogs (and social networks) are more valuable than traditional publish-and-forget media.
Furthermore, loss of relationships has the potential for devastating the content behind paywalls: not only are customers going to engage elsewhere, becoming part of communities elsewhere on the Web — but the journalists writing behind paywalls are being cheated of the opportunity to build their own broader notoriety and personal brands.
I’d hate to be at a newspaper company today. I really sympathize with how challenging it must be. But I don’t think that trying to take a centuries-old business model and apply it to the Web will work, either. What we need are business models that simultaneously leverage the role of the professional writer/report and takes advantage of community, relationships and the real-time nature of the Web.
One type of paywall does appear to be flourishing: the type around online games like World of Warcraft. The big difference here is that games are more scarce — I can’t just wake up one day and decide to launch an MMORPG, but anyone can decide to start blogging. That said, some of the fastest-growing games are the social games on Facebook (e.g., Zynga’s products) and these use a hybrid model of free-to-play with the option to pay for virtual goods that enhances your experience. Maybe there’s a lesson there for traditional journalism?
The history of paywalls is still being written. When we look back in a few years, will they fall into the same bucket as the pay-by-the-hour online models of CompuServe that collapsed back in the mid-1990’s?