I know I promised a post on global copyright laws, but this is much more fun: The New York Times recently announced that it is attracting more readers, despite putting up a paywall. Surprise!
Everyone who’s anyone in new media punditry agreed that the Times paywall was an awful idea. Michael Wolff ridiculed it. Jeff Jarvis saw it as a sign of failure. And Cory Doctorow, who manages to be taken seriously as a business pundit even though he doesn’t seem to believe anything can be sold online, questioned whether it was “wishful thinking or just crazy?” Doctorow even thought the Times might restore to “planting secret permacookies;” if it did, he predicted, “the FTC will probably be unamused to learn that the Grey Lady is actively exploiting browser vulnerabilities (or, as the federal Computer Fraud and Abuse statute puts it, “exceeding authorized access” on a remote system — which carries a 20 year prison sentence, incidentally).”
Not only have New York Times business staffers avoided jail, the paywall strategy sure seems to be working. (Disclosure: I used to write for the Times as a freelancer and I probably will again; I’m also happy to see the paper do well because I like reading it.) As Journalism.co.uk reports, unique users are up – by just 2.3 percent, but that’s pretty good considering that some of those users are now paying to read the paper online. And while the number of page views is shrinking, most of that decline is overseas, where the Times isn’t as effective at selling ads. So most of the page views the paper lost probably weren’t worth very much in the first place. In their place, the Times gained 224,000 digital subscribers who are worth real money – not only for the fees they pay but for the premium advertising that can be sold once more is known about them.
Even Times executives sound surprised at their success. “I really worried that we’d lose a lot of our younger readers who we had really aggressively courted with a bunch of innovative ideas, social media use etc,” says Jim Roberts, the paper’s assistant managing editor for digital.” But that didn’t happen. And, quite frankly, the paywall is far more important to the paper’s financial future than any of its other innovations. The problem with the journalism business isn’t attracting readers – the Times always has, and it continues to do so online. The problem is making those readers pay – figuratively or literally. And since no one has figured out the first – online ads are usually worth less than a tenth of what they would be in print – the Times will need to depend on the second.
What’s even more interesting is how wrong the conventional wisdom was – yet again. Advertising just isn’t worth much online, and that won’t change anytime soon. It’s easy enough to show this. In the U.S., the percentage of GDP spent on advertising hasn’t changed much since the fifties; in colloquial terms, the pie isn’t growing. As media moves online, more ad spending will go to ads based on search and social networks that newspapers can’t duplicate. That means less money for everyone else. And while there’s almost certainly enough pie to go around for low-cost rewrite businesses like the Huffington Post, it’s hard to imagine there’s enough to fund serious investigative journalism.
Pundits like Wolff, Jarvis, and Doctorow don’t see this. They feel that free is THE FUTURE and that newspapers need to REMAIN RELEVANT. (The second point is fair enough, but relevance doesn’t pay the bills; for that matter, papers forced to undertake mass layoffs lose some of their relevance as well.) The question is why they so rarely acknowledge they’re wrong. Wolff, at least is an excellent writer who offers nuanced arguments. Jarvis and Doctorow seem to believe in open business models with unquestioning, almost religious fervor.
And their Holy War has consequences. Jarvis advised the Ann Arbor News, which closed its print product and became a Web site (as well as, technically, a new company.) Some months later, the new web site laid off reporters and announced it would reduce its journalistic ambitions yet again. Doctorow champions Creative Commons licenses, which let artists sign away their rights without receiving anything in return. (The organization’s board consists of anti-copyright advocates and a single artist.) Some of his business ideas work, such as selling deluxe physical products; but creators who pursue them don’t need to give up their rights in order to do so.
How long can these guys like this keep being wrong? And when will journalists start calling them on it?