Why Raising The Pay Wall May Be An Impossible Dream

The worsening advertising climate is forcing many publishers, facing only modest online gains after a decade of digital investment, to consider charging for content. *News Corp* is considering a strategy that may involve e-readers, GMG is mulling charging for MediaGuardian.co.uk and doubtless others are wondering how to finally start making real profits from online traffic. But there are risks and challenges – here’s a rundown…

You can’t charge for abundance: First thing’s first – there is still a healthy market for business-critical information. WSJ.com has steadfastly stuck to subscriptions, FT is profiting nicely and there are still dozens of B2B title serving niche communities with premium-access websites – it’s the kind of unique information decision-makers will pay for. But for the raft of general-interest consumer news sites whose stories differ only slightly from the next publication along, the prospects for premium are less rosy. That’s why sites like Times Online, Telegraph.co.uk and others are unlikely to ringfence themselves entirely. Instead, paidcontent will be piecemeal – publishers are looking across their networks to identify which individual sections and features might be chargeable (how about new, value-added services like databases and research?).

The genie can’t go back in its bottle: Web users have enjoyed 15 years of free content. That can’t be reversed easily, and it can’t be changed by any one publisher alone. No-one should want to blink first – any producer of consumer news that erects a pay wall will quickly find its audience migrating to rival sites offering a similar service. That’s why any paidcontent initiative must be an industry-wide effort. Can bitterly opposed newspaper owners, so used to knocking lumps out of each other, join to all jump together? There’s no sign of it – but perhaps increasing industry consolidation will get us to a consensus by default. Or perhaps a joined-up approach would attract dreaded competition scrutiny.

BBC News is the gorilla in the room: Even if publishers manage to raise the pay wall together, they will be competing not just with alternative grassroots sources like bloggers but also with a well-staffed news site that appears to be “free” and enjoys unprecedented brand loyalty. It’s a problem that some publishers have already voiced but, for all their protestation, the notion the BBC’s public service remit should stop at TV just won’t fly, especially with Digital Britain fixed on securing an online public remit. Besides, BBC News already has an invisible pay wall – it’s funded by a £142.50 TV licence.

Advertisers would hate it: Erecting the wall would instantly shut out a significant percentage of current users – in a downturn, perhaps the majority. That’s not good for advertisers who want reach above all, and won’t serve well when advertising is projected to recover late next year. So publishers had better be sure such a move would bring in more money than would be lost in ad sales. In this economy, it probably would. But which is more attractive – the short-term financial uptick, or the ability to inform and influence a mass audience?

E-readers are a white elephant: The continuing belief by some publishing execs that, eventually, some mythical e-reader standard will rescue the business is misguided. In a quest for reach, newspapers have spent the last 10 years divorcing their bits from the shackles of atoms. Now that their intrinsic content is freely available via any number of outlets, there