The Times paywall is going to work … for now …

July 2nd, 2010

[update : I've provided extensive feedback to @davidcushman's comments below, further elaborating on the ideas in this post]

When you click an article on The Times site you get confronted with the paywall

When you click an article on The Times site you get confronted with the paywall

The Times paywall is now active, I read this morning in a short piece on The Next Web. You know what? I’m going to make a bold prediction about this (which I always love doing). Contrary to what many Internet experts say, this is going to work.

Really? Yes, really. Of course, the best way for news companies to go forward is to leverage networks. In my opinion news companies should become platforms, engines of news as you will. Such platforms can be used in all kinds of new ways by 3rd party applications through commercial APIs (paid for API access).

Let me explain this a little bit further. 3rd party apps could wrap the content in such a way that readers do want to pay for it and could create an infrastructure around it that also creates value, directly for readers but potentially also for advertisers.

An example of wrapping content that adds value for users is an iPad application that makes reading the content very convenient, which in turn represents value that readers can be willing to pay for. A good example of an existing iPad application is Wired Magazine’s iPad Edition. An infrastructure that 3rd parties could add is obviously a social layer on top of the news content. Social data generated in this layer can be leveraged to better recommend readers new news content but also to better target advertisement.

Wired Magazine's iPad Edition

I think that an important property of this mode of operation is that a news-company-as-a-news-engine itself does not have it’s own site with content: the content is accessible via the ecosystem of 3rd party news applications; it’s these parties that pay a fee for news.

Of course, to brand themselves, news organizations can have their own sites and interactions with the outside world through social media. They can give background information about stories, their journalists, how they work, etc.: brand your news company by giving the employees (the journalists) more opportunity to engage with the outside world about their work.

Ok, so why is this back-to-the-20st-century paywall construction of The Times going to work now? Well, there are two reasons, of which the second one is the most important. First, The Times creates high quality content that is not easily repeated by others. Many readers (read here ‘many’ = ‘enough to pay the bills together with ad revenues’), specifically of the target audiences of The Times, won’t mind paying a small fee for it.

So, Mr. Snijder, aren’t you forgetting that we are living in the digital age, where all information can be copied for almost no cost? Well, it’s up to 35 degrees Celsius here in the Netherlands at this very moment, so focus is currently not my strong point, but just like many people ‘illegally’ copy music right now, there is also a substantial base of people who pay for music online! Sure, this won’t salvage news-as-cash-cows but I believe still a healthy business can be run like this, for now…

Which brings me to my second and most important reason: currently (as far as I know) there’s no news organizations, practicing high quality journalism, that use the kind of mode of operation as mentioned. So lower-cost, more convenient or more attractive alternatives might currently be limited for the specific target audiences of The Times.

But when finally (finally, finally!) the news industry starts to make the shift to the new reality of our networked society on a larger scale and distinguished news organization, targeting the same audiences, start to implement new modes of operation, better leveraging the network (for instance as outlined above), then The Times will need to catch up fast and also make the shift.

I know, it’s a bold prediction that my colleague bloggers might not like. But where’s the fun in following the herd? This is something I believe could realistically happen, change needs time. Obviously I hope that news organizations and media in general will start leveraging the power of networks much sooner, such we can tear down ‘the wall’ once and for all.

I’m Looking forward to hear your opinions. Oh, and if you have any references I should add to this post I would appreciate if you would let me know!

– Freddy Snijder

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This entry was posted on Friday, July 2nd, 2010 at 1:28 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • Sapm5
    By putting up the paywall, The Times has lost nearly 75%+ of it's online readers. Murdoch is committing Hara-Kiri
  • Jan Heemskerk
    I like your article, and you're right. It does fit in an ever growing complexity of business. And how can you manage the complexity? Yes, by making a business architecture, a network of 'simple, small' businesses.

    - Jan Heemskerk
  • Interesting point of view. You could indeed say that its also a strategy to reduce complexity for publishers. But mostly, an eco system of 3rd party news application companies can much more effectively innovate the publishing industry than the traditional publishing houses can themselves.

    This is not strange, or a big omission of publishers: they should be good at their core business, creating high-quality articles/content: 'serving' content in a networked world requires different knowledge & skills and most importantly a different culture.

    Cheers,

    Freddy
  • A couple of thoughts. Unless and until a publisher containing and constraining their content can curate it for me as well as my friends can - then they are likely to lose. I see no sign of that from the Times.
    2nd. I'm not even sure Murdoch wants success from this. It could be that he wishes to make the political point that while the BBC (perhaps similar public service organisations globally) make content available free he cannot make money with content online. ie it may be more about forcing the hand of governments to intervene in the market for news/content. After all in a networked, p2p distributed world, all it takes is one source of 'quality news' for everyone to share it out.
    I agree that wrapping value around is key - ie make the user experience and curation excellent - save me the time and trouble of discovering what's relevant for me. But, like I say, there's no algorithm yet employed that can do that as well as adhoc self forming communities of purpose.
  • Hi David,

    Thanks for taking the time to share your thoughts on this.

    Concerning your first remark:
    Indeed, publishers can’t curate content for you, at least not as good as you and your peers can in communities. However, my point is that the paywall move is a transition to other business models where publishers can earn money with their content while not constraining it.

    ===
    As an intermezzo, to elaborate on my post:
    in these future business models, consumers don’t pay for the content, but how it is wrapped, delivered and what infrastructure and functions are provided around it for users (e.g. to curate and enhance it in a social setting), etc.. Please note that ‘paying’ can also be through attention to advertisement (not necessarily in the traditional sense). In my vision it’s the ‘wrapper’, ‘deliverer’ and infrastructure provider, the ‘3rd party news applications’, who will pay the monetary value to the publishers for accessing the content. So, it’s a business-to-business transaction and not a direct business-to-consumer transaction.

    Could ‘4th’ parties copy or link to content from the paying 3rd party news applications? Yes they can, but these 3rd party news applications won’t simply publish new content they get through the APIs (i.e. static link); they will most likely serve content based on the context of the users and in a way that is personalized. This implies that non-paying parties can find new content but much later, because there is no static link to the content; for them relevant content can only emerge over time.
    ===

    Like it often happens with large corporations: they don’t create the next breakthrough innovations, its starts in small niches, started by small(er) companies (publishers). Until there is no proven alternative, large publishing corporations such that of Murdoch will stick to what they know in my opinion. They have to do that to survive and, in my thesis, they can because there aren’t a lot of alternatives for their core audience.

    So, yes, I agree, they can’t keep this up forever, but I think their strategy is actually a patch until a better model comes a long. Most likely, the Times and its mother company are strong enough to sit this one out.



    About your second remark, I think it’s highly unlikely that Rupert Murdoch does this to force the hand of governments to intervene in the market for news/content. I think most governments apply the philosophy of markets reinventing and stabilizing themselves, something Murdoch must know himself.

    In this view, the fact that in a networked, p2p distributed world, all it takes is one source of 'quality news' for everyone to share it out is something the market needs to deal with, reinvention is required. Murdoch & Co. might not be ones inventing it but, as said, they can sit it out: other, smaller, parties will show that’s it’s not about the content but about how you wrap, deliver, enhance and contextualize it – but now I’m really repeating myself. Sitting this out is most likely the real conscious strategy of Murdoch.

    Further, if the paywall works governments won’t intervene, if they don’t work it’s an indication that legislation won’t work either, since (effectively) it will also constrains the content: users will go to other sources they are allowed to copy. So government intervention is unlikely in my opinion, I can imagine Murdoch and his strategists might also see it that way.

    Concerning your last comment:

    Yes, I agree that adhoc, self-forming, communities of purpose can best deliver you content that is of interest to you, with all the meta data and conversations emerging from it. In my opinion it’s these third party news applications that can provide the wrapping, delivery, infrastructure and functions to facilitate the emergence of such communities of purpose around news content.

    Publishers should stick to their core business of creating great content, it’s the 3rd parties who should make the innovations that can convert the energy of publishers back into value, like it did in the past.

    Let me know what you think!

    Cheers,

    Freddy
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