Newspaper Digital Paywalls: A Test of Consumer Loyalty

April 14, 2011

11:00 am

For the past few years, the newspaper industry has been under pressure to stem the rising tide of readily free content available on the Web.

While most newspapers have generally offered their online content for free to help build their online brand, as well as learn more about the usage patterns of its readers, the time has come for these companies’ recently created “Digital” departments to show a profit in their P&L.  So far, the print side of the house has helped fund the digital operations, but now the tables are turning.  Over the past few months, a variety of newspapers have began charging for access to their content via non-print channels.

The key question to be answered over time boils down to: How loyal are readers to specific publications?  If you have free access to newspapers like the WSJ through your university or employer, you don’t think much about the fact that most people are paying for that content.  

However, once you need to pay for it yourself as a consumer, many people find other alternatives that are free.  There are talented and entertaining journalists across most major publications, so unless you have a favorite writer or enjoy a specific component of a particular newspaper, there are a variety of sources to find compelling content without taxing your wallet.

In addition, it’s tough to pay for something that was once free.  As consumers, the expectation is that things get cheaper over time.  These new costs for digital access are making news content more expensive.

The New York Times launched their digital paywall on March 28, to an outcry of confusion over their pricing plans.  While it certainly was confusing, NYT may have done themselves a disservice by over-explaining the charges and freebies that can be had by accessing articles through social media and search engines.

Free access via social media is a smart strategy on their part to continue to drive awareness and new subscribers, but the hard-core readers who are ultimately going to be the ones who pay for the stuff don’t necessarily care about those details.  They are the ones who want direct access to their content and don’t rely on friends posting links to articles.  Full disclosure is great, but it’s also something NYT could have just allowed quietly.

While many people have been bashing the complexity of the NYT pay model, it is only the first iteration of the program.  With so many access and pricing options for their consumers, the overall program will act as a series of experiments to see which platforms consumers find most valuable and provide initial insight into how different the price elasticity may be across Web, phone, and tablet.  I expect NYT will have a plethora of data to analyze and will quickly iterate their offering once their internally defined launch period runs its course.

In the end, it will be interesting to see what consumers deem as the value that justifies paying for digital access to news.  Is it the enhanced user interfaces that apps like Flipboard and The Daily are creating to enhance the discovery and reading experience?

I’m sure many of you have had to deal with flipping physical newspaper pages on the train or plane while trying to avoid grazing the back of the head of the person in front you.  Do these little inconveniences make it worth paying for access on your tablet?  Or will loyal fans decide content remains king and the voices of their favorite journalists are the primary motivator for digital subscriptions?

Image courtesy of The Huffington Post.

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Anuj Agrawal (@anujagra) is a digital media enthusiast in the DC area, with a passion for understanding what makes consumers tick. From the fundamentals of designing products that are engaging to understanding the psychology of the buying process, he has helped companies develop innovative consumer experiences.

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