Don’t build a paywall, create a velvet rope instead

As the newspaper industry continues to flounder, paywalls and other subscription models are becoming more common, with everyone trying to imitate the New York Times or the Wall Street Journal. Is there any other other option to putting up a turnstile around the news? We’ve argued before that there are a number of options, and Guardian editor-in-chief Alan Rusbridger described them fairly succinctly during the paper’s recent “open weekend” event: in a nutshell, readers can contribute by providing their time, their information or their money. Ideally, a truly interactive digital-media outlet would make use of all three of these, in order to build relationships with readers that are about more than just a cash grab.
With the possible exception of Media News Group under CEO John Paton and his “digital first” approach, the Guardian (please see disclosure below) has made by far the biggest bet on the benefits of an “open journalism” model, by trying to increase the ways in which its readers can contribute to or become involved in news stories — including opening up its story-assignment schedule to the public for commentary. The Guardian has also made a pretty big bet on the value of alternate distribution methods, with the “open platform” project and also a Facebook social-sharing app that has proven to be fairly successful.

More traffic is great, but that doesn’t solve the revenue problem

According to a Guardian executive, thanks in part to the growth of the Facebook app, social sharing is now close to generating as much traffic to the paper’s website as search does — a fairly incredible statistic, considering that social produced just 2 percent of the traffic to the site as recently as six months ago. The Washington Post has seen similar success with its social-sharing app, and the paper’s ombudsman recently described how the Post sees these kinds of tools as a better short-term response than a paywall: in other words, a way of increasing readership instead of trying to restrict it.
The problem for both the Post and the Guardian is the same as that confronting virtually every other major newspaper: print-advertising revenue, which a majority of papers rely on for the bulk of their income, continues to fall off a very large cliff, and so far online advertising hasn’t even come close to making up the gap. So the fact that their social-sharing apps on Facebook are producing millions of extra pageviews for the Guardian and the Post is great, but monetizing those readers is still problematic. How do these papers survive without putting up a paywall like everyone else?

One answer is to think of the relationship with readers as being about more than just money, and then let the monetization flow out of that relationship, rather than the reverse. So instead of just hitting all users with a request for cash when they consume some artificial number of stories (the NYT recently ratcheted this number down to 10 from 20), why not try the “reverse paywall” method suggested by Jeff Jarvis and former Washington Post managing editor Raju Narisetti? This model avoids the fact that news has become a commodity and sees the interaction with and engagement of readers as the main benefit — but there are arguably just as many revenue-generating opportunities.

Build the relationship first, then let the monetization flow from that

So instead of just hitting a wall after a certain number of stories, readers who contributed comments or moderated the comments of others — or provided other forms of useful data or labor — might get a benefit that others wouldn’t, whether it’s access to certain content or an invitation to a real-world event they might be interested in. In that case, readers might actually volunteer to pay, because it would no longer be seen as a duty but instead would be something useful to them. Among others, The Atlantic and the Texas Tribune have made good use of real-world events as a revenue-generating addition.
As Charlie Beckett of the London School of Economics notes in a blog post, this model is focused on encouraging readers to see themselves as members of an exclusive club that has certain perks or rewards, so it’s a lot more like a velvet rope than a paywall. The outcome is arguably the same as a paywall, but it starts with the benefits instead of starting with the turnstile and a request for money. Would you rather have a relationship with an outlet that is always asking you for money, or with one that sees you as a partner and gives you membership benefits that sometimes involve having you pay for things?
Efforts like the New York Times‘ revamping of its commenting system, which gives “trusted” readers the ability to post comments without moderation, are a small step on the road to this kind of relationship — one that encourages readers to “level up” and provide either more information about themselves or more effort in a variety of ways, and then gives them benefits as a result. But too many papers seem to be ignoring the velvet-rope option and simply throwing up paywalls out of desperation.
Disclosure: Guardian News and Media Ltd., the parent company of the Guardian newspaper, is an investor in the parent company of this blog, Giga Omni Media
Post and thumbnail images courtesy of Flickr users Brian Snelson and Giuseppe Bognanni