Great Analysis of Newspaper Paywall Economics

Forbes has a terrific essay by Greg Satel in which he analyzes the economics of paywall models such as the one adopted fairly recently by the New York Times, vs. non-paywall models such as the Washington Post. According to Satel, while subscription revenue is up at the NYT their advertising revenue fell considerably. And at the Post, during the same time, advertising revenue ROSE 13%. As he notes, “Marketers will pay more for consumers than consumers will pay for content. Once you accept that, the possibilities are limitless.”

In other words, don’t trade off wringing a last gasp of subscription revenue from your existing user base at the expense of demolishing your future business growth. He also points out that traditional newspaper subscribers haven’t been “paying for content” in the sense of those subscriptions alone operating in the black. Rather, newspapers were subsidizing paper sales and delivery in order to CAPTURE eyeballs but that the real money has always been in advertising. So why turn away eyeballs that want to read your content. Instead, focus on improving advertising models and educating marketers.

I agree entirely and have had similar conversations with publishers and editors-in-chief of some of the biggest media outlets in the country. As I said to them, the so-called death of publishing is way overstated. Publishing is thriving. Reporting is even thriving. What they need to recognize is that clinging to old business models will result in failure and that innovation is inevitable.


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