Behind the paywall: Re-thinking traditional revenue models

John Cruickshank, the publisher of the Toronto Star, was thrilled to hear that the newspaper’s website was getting a ton of hits, especially those generated by unique users. He was a lot less thrilled to hear that he wasn’t making any more money from them. “I was thinking about my plan B – buying a hardware store in Haliburton,” he laughed. 

Cruickshank, Wayne Parrish, COO of Postmedia Network, and moderator Michael Lamb, a partner with the New York City based management consultants McKinsey and Company, discussed some of their experiences with paywalls during a special panel discussion at the INK+BEYOND newspaper conference in Ottawa on May 2.

The story by now is familiar. Newspapers, facing declining ad revenue in their print products, are trying to figure out how to make money from the increasing amount of people who access their outlets via computers, tablets and mobile devices.

The good news is that it isn’t all bad news. Research has shown that people are in fact willing to pay for access to news. Cruickshank related the Star’s finding that the percentage of people willing to pay to go behind the paywall has increased “dramatically.” It’s especially high with young consumers – “especially those with Apple products,” pointed out Lamb.

Lamb offered four strategies that could help newspapers achieve operational strength over the next few years:

  1. Build e-commerce excellence. This process will take a lot of testing and learning. You also have to be willing to invest in the skilled people who can make this happen. Lamb pointed to Inside ESPN, Spotify and Netflix as some of the organizations that have excelled at creating e-commerce systems.
  2. Re-tool your digital marketing. You want advertising that targets the right audience. While not speaking specifically to advertising, Parrish noted that you need to create content specific to the platform you’re working on. “You can’t just shove print on the web.”
  3. Upgrade analytics. Lamb was emphatic that understanding usage and the drivers of loyalty is what can create successful paywalls and online products. Parrish agreed wholeheartedly; “Analytics was the toughest mountain to climb [for Postmedia],” he said. It had to come first for them.
  4. Re-think distribution. The perfect time for someone to consider a tablet subscription is when they’re taking it home from the store. “Get in front of the digital consumers at the natural moment of purchase,” said Lamb.

While the overall attitude of the panel members was that paywalls represent a corrective step forward for the newspaper industry, all three were quick to point out that it’s not the only step these organizations have to take. “It’s just a piece of the puzzle,” said Parrish.