Paywalls have dramatically failed journalism.
In an attempt to adapt to the Internet, American newspapers of all sizes have erected digital paywalls to charge readers – virtually assuring that most people will never see their reporting online.
At the same time, they’ve jacked up their print subscription prices, accelerating print’s economic death spiral.
The result? Local journalism in retreat, trying to reinvent itself but without the growth model and mindset that’s required to succeed online. And worse, a loss of faith in journalism by the general population – as trusted local voices disappear into layoffs and behind paywalls.
How bad is it? Here’s one example.
Take for example The Sacramento Bee, a mid-sized metro paper which as recently as 2000 had an average print weekday circulation of 289,000, yet today has only 15,000 digital subscribers, according to this must-read letter from its editor. The Bee charges $130/year for a digital subscription (too high I think, but that’s a separate issue).
Fifteen thousand digital subscribers is a disappointingly small number, when your prior readership was hundreds of thousands. It’s the difference between a whole community reading your product and just a small subset. Between mattering, and not mattering.
Granted, The Bee still claims a daily print circulation of 122,000. But that number’s heading to zero faster than anyone would like to admit, with a diminished editorial product and plummeting ad revenue.
Only the digital numbers are important now. They are the future and the future has arrived. Bee parent company McClatchy’s market value has gone from $2.5 billion in 2006 to only $75 million today in recognition that print is on its deathbed.
This same tragedy is playing out for newspapers in almost every city.
Time to switch to a Robin Hood paywall.
It’s the eleventh hour, but not too late for brands like The Sacramento Bee to switch back to a growth model – which I’ll call the Robin Hood paywall – and become relevant again.
Consider this: The Bee, despite its puny online subscriber base, still has thirty million monthly visits to its website. That’s a lot of people getting turned away at the paywall door (after a few free articles).
Here’s what The Bee should do: let most visitors read unlimited articles on Sacbee.com for free, while forcing only ‘affluent’ readers to pay the annual subscription. Sacbee.com’s online readership would explode, and its journalism would again become relevant.
Digital ad revenue would grow, and so would the subscriber base – the strong brand boost from becoming mainstream again would increase the overall ‘funnel’ size, drawing in lots more potential (affluent) subscribers.
Technically, this could be accomplished using cookie data from a network like Google, which can convey in real time the likely household income of a web visitor. The Bee could decide whether to show the paywall to only the top 10% of visitors by income, the top 20%, or whatever.
The tricky part would be telling users transparently what was happening and why it was critical to local journalism’s survival. But that should be doable… because it’s the truth.
Local journalism must find a model which enables it to get growing again, and sustain that growth. One way or another, the affluent are going to have to subsidize everyone else’s digital news experience now that the print ad monopolies are gone – that is, if we want the whole population to have access to quality journalism.
Asking the affluent to pay up for local journalism via a voluntary membership model is one approach. Forcing them to do so via a Robin Hood (growth-oriented) paywall is the other. The latter may be a more painful ask, but the former may not be ambitious enough to fund the large newsrooms needed for deep, high quality journalism.
I hope that for-profit newspaper companies (like McClatchy, which owns The Bee) will give the Robin Hood model a try, before they shrink themselves into oblivion.
If their newsrooms disappear when the economics of print stop working, the big losers will be their communities, and all of us.
Dave Margulius, an entrepreneur based in Berkeley, CA, is researching ways to finance and promote the future of local journalism. He previously co-founded and ran Quizlet Inc., a leading education software company. He also co-founded Boston.com for The Boston Globe, at the dawn of the online era.