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Paywalls: A real 'fiscal cliff' for a plunging news industry

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P.T. Barnum

As was so famously observed, or not, by Phineas Taylor Barnum, the 19th Century American self-promoter, showman, scam artist and newspaper publisher better known as "P.T.," "There's a mark born every minute."

We refer not to the minuscule group of newspaper readers who have actually paid online subscription fees to the likes of the Globe and Mail, but to the credulous newspaper publishers who have been persuaded by technological hucksters and scamsters to invest millions in "paywall" schemes in hopes of resuscitating the lost era when readers actually paid for news.

Alas, those days are gone like the manual typewriters on which I used to write my newspaper stories -- for which readers happily paid a dime, quarter, four bits or even a whole dollar -- and the 8-track tapes I enjoyed as I drove in to work.

I mention this again today only because the Globe and Mail proudly and self-servingly trumpeted yesterday how the entire newspaper industry now seems to have made the decision en masse to retreat behind "metered payrolls," and if you want to read news on line, by golly, you're just going to have to pay for it.

But the reality is that thanks to the metered paywall idea -- a system by which one supposedly can allow online news readers to look at a few stories each month, and then try to force them to pay for more -- many North American newspapers are about to plunge over a real fiscal cliff while they tell their remaining readers to worry about the mostly imaginary one in Washington, D.C.

The arrival of the metered paywall, the Globe's stenographer explained, "means 2013 could be a make-or-break year for many in the industry, as they scramble for alternative streams of revenue to make up for lost print advertising."

Well, it's likely true that 2013 will be an importantly unhappy year for the newspaper business. What's more, it’s obviously a fact that a lot of newspapers are indeed slipping behind paywalls. But there is little evidence to suggest wholesale adoption of this dubious technology by newspaper owners will amount to anything more than mass suicide by a once-profitable industry.

There are numerous economic and practical reasons for this reality. These include:

Readers won't pay for a product they can get somewhere else for free. In other words, unless you're a publisher like the New York Times that can make a believable case your product is superior and unique, consumers will be reluctant to pay for the same wire stories they can read online on publications that for business or other reasons have made the decision not to erect paywalls.

It may be a business like Metro Newspapers, it may be an ideological, religious or political group, or it may be a national broadcaster like the BBC, but it's a given that the same stories are going to remain available for no cost on line.

The Globe and Mail may be able to fool a few readers into thinking its product is different enough to pay for online, but does anyone seriously think anyone will pay for the right-wing drivel produced by Sun Media's understaffed tabloids and myriad other publications of their ilk? If you do, take a deep breath right now!

Moreover, the high cost of printing presses served as a barrier to entry that kept the publishing club tiny -- and hugely profitable -- for years. But even if paywalls work, and they won't, those days are gone. The price of admission is as cheap as it was to one of P.T. Barnum's freak shows.

Back in the day, most newspaper readers subscribed to only one newspaper. Online readers read dozens -- and dozens of subscriptions simply cost too much. I might be crazy enough to subscribe to the New York Times, but the Times, the Toronto Star, the Globe, the Edmonton Journal, the Guardian, the Independent, the L.A. Times, my local weekly and so on? Get real!

And if you can only afford to pick one or two, so sorry, but they're not very likely to be the low-quality local rags in most Canadian cities, are they? This is especially true when they’ve been giving it up for free for a generation -- during which you discovered the product wasn't really worth paying for!

Psychologically, it's said here, it's one thing to throw down two bits for a newspaper you can also use to line you bird's cage, quite another to use your credit card to commit to paying two bits a day for a year to a low-quality local paper with almost no real journalists on staff.

Indeed, the rush to paywalls has some of the characteristics of a Ponzi scheme -- the first papers in might be able to get a return on their investment, although it's doubtful they'll ever really pay for themselves in most cases. (The Globe article claims the New York Times has managed to sign well over 560,000 subscribers -- although they’ve only done it at a promotional price of 99 cents a month.) But late entries are going to find subscribers are unwilling to spend more again for essentially the same thing. Saturation point is coming already in this game.

And then there's the matter of the ability of those leaky paywalls to actually keep readers out. Right now, just at the moment so many newspapers are racing to get into the paywall business, they are laughably easy to circumvent.

Indeed, last night, commenters were cheerfully chattering about how easy it is to overcome the Globe's paywall in the comments section under the Globe's story. Their advice boiled down to this: delete your cookies and read to your heart's content.

Finally, there is the serious question of whether newspaper advertisers will pay for ads behind a paywall. Some will, but it is said here that many more won't.

Anyone who is not selling the equivalent of Rolex watches to millionaires will be reluctant to place on-line ads behind a paywall -- or, indeed, in any online news publication that makes an effort to drive away non-paying readers.

So it is predicted here that advertisers will abandon on-line news organizations that employ paywalls in droves -- leastways, they will if they're using their heads.

Remember, paywall technology isn't cheap. The New York Times has been widely reported to have paid $40 million US to set up their system -- although some estimates put that figure as low as $25 million.

Regardless, that's a lot to spend on a technology that in the end is likely to drive away more revenue than it generates for most news businesses.

Well, good luck to them. It's a shame you can’t make big profits running a newspaper any more and it would be nice for the folks who own these big businesses if that could all be miraculously turned around.

But if paywalls are the best they can come up with, by this time next year, more of them will be gone like the wind. And, frankly m'dear, who'll give a damn?

This post aso appears on David Climenhaga's blog, Alberta Diary.

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