Newspaper paywalls can work, but need fresh thinking

Newspaper publishers struggling to make money from on-line advertising see reader paywalls as an obvious way to boost revenue.

While paywalls work well for specialist financial publishers, we still don’t know if making general news readers pay is realistic.

Readers happily paid for their print newspapers. Some still do. New Zealand’s daily newspapers cost around NZ$2.

So you might think NZ$2 a day for the online paper is reasonable.

Here are three reasons why it isn’t:

1. Print newspapers are made and distributed. The cost of running a print plant and running trucks is higher than the cost of moving pixels around. Newspaper sellers take a cut of the cover price. Any on-line sales would be direct. The potential cost savings are huge. Readers expect publishers to pass on some of the cost savings.
2. Readers who buy print newspapers generally read a number of stories. They could conceivably read the paper cover to cover then do the crosswords and Sudoku puzzles. Nobody reads like this on-line. As a rule on-line reads skip from publication to publication grazing on content.
3. Print newspapers don’t have realistic free competitors. Broadcast radio and TV news is free, but it doesn’t directly compete with printed papers in the way, say, Radio New Zealand’s web site is just a click away from Stuff.co.nz.

For all these reasons, newspaper publishers are asking considerably less from on-line readers than print readers pay.

And rightly so. Instead they sell subscriptions. The Australian charges A$3 a week for an online subscription. You can’t buy one day’s on-line paper, nor can readers make a small payment to reach a single paywalled story. In fact, while the price is advertised as dollars per week, customers have to buy a whole month’s access at a time.

The Australian does many things right. The price is reasonable, the bundle of print paper plus on-line access is exactly what I would choose if I needed to read an Australian newspaper each morning.

Yet asking readers to pay in advance for a whole month at a time seems wrong. Sure, many readers already subscribe to a daily newspaper delivery, but many others don’t. They buy a print paper as and when they feel a need. There needs to be an on-line equivalent requiring less commitment.