Last week, the editor of the Winnipeg Free Press wrote an article making a (rather poor) case for their upcoming “innovative” paywall experience. Harvard’s Neiman Journalism Labs even picked it up and wrote a great article breaking down the nitty gritty. Simply put the Winnipeg Free Press plans to charge every single reader $0.27/article (billed monthly). Nobody in North America is doing this and nobody in the world has tried anything quite like this, so in that regard, it truly is an innovative idea.
However, there is a fine line between an innovative and a bad idea.
As far as I can tell based on the information they’ve released, Freep’s plan falls on the bad side of that line. Whatever committee makes these decisions at The Free Press seem to be misunderstanding some fairly basic principles about how the web works.
For starters, any sort of road block that requires a user to create an account before getting to content is a significant barrier to entry. As usability pioneers Neilsen Norman Group put it “Login walls do not belong in the initial experience.” If a user clicks through to a news article from social media and is presented with a login wall, that user will just leave, period. I have a hard time believing that the Free Press’ research would show otherwise. The news market in Winnipeg has a lot of viable free/ad-supported content. Three daily newspapers, a vibrant sub-reddit and blogging scene. If someone wants to find out about something on the internet, they are going to visit the first site that actually displays information without making them jump through hoops.
There is a reason that successful paywalls like the NYT’s show users X number of free articles before ever asking them to sign up or pay. It’s not because these papers don’t need to maximize their online revenues. Precisely the opposite, they understand that presenting a paywall to every; single; drive-by visitor is going to do more harm than good.
$0.27/article is hardly a “micro” payment.
$0.27/article is outrageous, maybe even just plain greedy!
Anybody who’s dealt with online advertising can come to this conclusion fairly quickly. The revenue earned by a individual webpage (ie. the cost to advertise) is calculated in CPM (cost per thousand views), $0.27/article works out to $270CPM. The going rate for the an ad on a highly popular website with a good audience in a desired demographic $70 – $100CPM, possibly upwards of $150 – $200CPM for a large takeover type ad. When The North Face advertises on wired.com, they’re looking at advertising budgets in that ballpark. On the other hand, an ad on Facebook or Google AdSense will cost an advertiser $0.50 – $5.00.
If I had to guess, the rates for advertising on winnipegfreepress.com are likely in the $50CPM range. So from that perspective the Winnipeg Free Press is attempting to charge their readers 2-5x as much as they charge their advertisers!
When compared to other media/entertainment the Free Press’ pricing model doesn’t make a lot of sense either. In the article, the editor writes “If you are a Winnipeg Jets fan, then you can assemble a month’s worth of game stories and Gary Lawless analysis that will cost you as little as $8.00.”
One month’s worth of hockey analysis costs as just shy of a Netflix or Rdio subscription. The pricing is totally out of whack.
Ad-Support. You’re the Product.
When a business is based on an ad-supported model, the reader is not the customer. The readership is the product, the advertisers are the customers. When you read an ad-supported website, you may not be handing over any money, but not getting the content for free either. Every time you load a page you are handing over valuable demographic information. I think most people understand this by now, but it’s worth reiterating.
Normally, when an industry experiences increased production costs, they pass those costs on to the customer. When the price of fuel goes up, airlines increase the costs of fares, grocery stores increase the cost of produce.
If a business is losing revenue, will try to present their customers with new and innovative products. Charging readers for access is doing nothing to create a more innovative product for the Free Press’ real customers, the advertisers. If anything, it’ll turn potential readers aways, decreasing the Free Press’ ad inventory.