As the saying goes information wants to be free. In this day and age the limitations of traditional media no longer apply and the dissemination of information across the globe can be achieved for a cost that is continually approaching zero. We can unequivocally trace this back to the permeation of Internet access across all developed worlds as it torn down the physical barriers that used to be in place. For the information gatekeepers of the past the Internet has been the most disruptive technology that they’ve had to deal with and even today after nearly 2 decades of cheap, consumer level Internet access being available they’re still trying to erect their gates like they did with all its predecessors.

Unfortunately for them, it’s not really working.

However taking a closer look at the traditional media outlet business model there really aren’t too many differences between the new and old worlds. For starters both of them had their primary source of revenue as advertising with the cost of a newspaper or magazine usually only covering the costs of printing and publication. The key differences that break this model appear to be a combination of expectation from online news sources (no one expects to pay to see something on the web) in addition to a trend away from brand loyalty (you would rarely read all the newspapers in one day, but you can conceivably do that now with online feeds). There’s still a market for print media as many prefer that form to its online counterpart, much like how people still prefer books to eBooks (although even that is changing),  but when it comes to online if you’re not doing it for free you’re likely to alienate those who were attracted to your online presence in the first place.

Of course this is all currently postulating on my part but it’s not without its roots in the real world. I’ve often held debates with my close friends and fellow bloggers that the subscription model for news is not well suited to the digital world and that any attempts to monetize in that fashion would be met with staunch resistance. Unfortunately for me the evidence was on their side since there were quite a few people (including themselves) who would pay for quality journalism in an online format so on an anecdote vs anecdote level they had the upper hand. Recently however there’s been more examples showing that my side of the fence might ultimately win out:

My sources say that not only is nobody subscribing to the website, but subscribers to the paper itself—who have free access to the site—are not going beyond the registration page. It’s an empty world.

The wider implications of this emptiness are only just starting to become clear. A Murdoch and Fleet Street veteran with whom I’ve been corresponding about the paywall reported to me on his recent conversation with an A-list entertainment publicist: “What was really interesting to me was that this person volunteered a blinding realization. ‘Why would I get any of my clients to talk to the Times or the Sunday Timesif they are behind a paywall? Who can see it? I can’t even share a link and they aren’t on search. It’s as though their writers don’t exist anymore.’”

Or to be more scientific about it The Times lost over 90% of its online readership after putting up a paywall:

These figures can then be used to model how this may impact on the number of users hitting the new Times site. Based on the last available ABCe data for Times Online readership (from February 2010), which showed that it had 1.2 million daily unique users, and Hitwise’s figures showing it had 15% of UK online newspaper traffic, that means a total of 332,800 daily users trying to visit the Times site.

If none of the people visiting the site have already registered, the one-on-four dropout rate means that traffic actually going from the registration site to the Times site is just 84,800, or 1.06% of total UK newspaper traffic – a 93% fall compared with May

The evidence thus far suggests that taking a free service and making it pay only is a sure fire way to lose your online readership. Any Internet startupwill tell you that getting people to pay for your product up front will make it an uphill battle to drive adoption and that’s why many of them have chosen to adopt a Freemium model instead. It makes quite a lot of sense when you consider the cost of changing news providers online is essentially zero and the value derived is almost identical. So why are some media outlets attempting to shoe horn their old business models into the new world? From my point of view there seems to be a few reasons why.

The first is that despite trashing their online presence by limiting it to pay only many of the online media outlets will still be able to generate a decent amount of revenue from doing so. Since a media site can arguably done quite cheaply it doesn’t take a whole lot of paying users to cover the costs and make a healthy bit of profit on top. Additionally if you provide a service that has free alternatives that just aren’t up to scratch, like say Wall Street Journal and Financial times with their stock information, you’re likely to attract quite a following especially if your users perceive that they’re getting a good deal.

For many of the larger media outlets it’s also about trying to regain some of the control that they lost when the world started looking elsewhere for their information fix. Erecting a paywall takes the medium of the Internet and attempts to make it behave much like a traditional media source with the gate keeper firmly in place. Whilst I won’t go so far as to suggest that blogs/Twitter/YouTube/Citizen Media will ever replace traditional journalism (although I’ll argue they’re a good enough alternative for many) reestablishing themselves as gate keepers in the new information conduit ensures that their traditional business models at least have some relevance in the new media marketplace. That would be rather reassuring for any media outlet that’s struggling to come to terms with the digital revolution.

The digital world has been a revolution in so many respects that its hard to find parallels in history books. Whilst there’s been many changes of similar magnitude none have been this disruptiveon so many levels over such a short period of time. It is then logical that traditional businesses, not just media outlets, would struggle to comes to terms with it. With my generation beginning to take over these traditional media streams I’m sure the trend of embracing the new world will continue and I’m sure that in a couple decades there will be another disruptive technology changes the game again.

And then someone else will write a post like this about how my generation can’t get it right in their new world. Ad infinitum.

About the Author

David Klemke

David is an avid gamer and technology enthusiast in Australia. He got his first taste for both of those passions when his father, a radio engineer from the University of Melbourne, gave him an old DOS box to play games on.

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