Are newspaper paywalls a corporate recognition that the end is near?

If you aren’t concerned, you should be
The debate about paywalls continues as more and more newspapers gravitate toward requiring online subscriptions to their websites. For me, the debate grows more fascinating at each turn, and in the past several weeks, I have come across some interesting reading material related to the debate, whether directly or indirectly.

Steve Buttry has written much about paywalls in his blog, The Buttry Diary, which I consider a treasure trove of experience and knowledge covering an array of journalism-related issues. In recent years, he has focused heavily on digital journalism, community engagement and the use of social media to gather and disseminate news and to draw out discussion among readers and their journalists. Frankly, his blog has been a resource that has helped me to continue to mature in the rapidly changing field of digital journalism during 18 long months of un/underemployment. He and his wife, Mimi Johnson, also a fantastic writer, have been an encouragement to me from afar during that time.

One last plug for Steve: If you are a journalist and you’re not taking advantage of the nuggets in The Buttry Diary, you are missing out. Period. Steve offers a great mix of practical guidance on a variety of skills and resources, as well as focused discussion of headier issues, such as journalism ethics, career planning and acquiring new skills.

Last week, Steve offered a short post about the paywall issue, in which he introduced a link to a piece in the Columbia Journalism Review written by Howard Owens. The context for Owens’ piece is that it was written in response to another author’s submission in support of paywalls.

Newspapers need little urging to jump on the paywall bandwagon, even though it has failed before. Print revenues havebeen declining at a faster pace than the growth in online advertising. Also, online advertising generates a drop in the bucket compared to print ads. Columnist Peter Preston, of the Guardian and the Observer, wrote in August 2011 that online ads bring in “between 10 percent and 20 percent of the price of the same ads in print.” That’s an alarming difference for an industry that, after virtually ignoring the Internet for 15 years, suddenly understood that is where the future is, and that the future started … 15 years ago.

So, at a time when many online businesses over the years had established business models that worked for their particular products or services, newspapers were starting anew without a clue, desperate for revenue.

They threw together websites, sometimes hastily and often with little understanding or without planning for how users would want to navigate through their Web pages. There was little understanding about how to be effective online and with its broad selection of digital platforms and capabilities. There is video and audio, animation, the written word — including blogs (like this one) and microblogs like Twitter, to other social media such as Facebook, Google+, LinkedIn, Digg, and Quora, to name a few of the more popular in an ever-increasing swarm.

Entering the game late is bad. More alarming is that newspaper publishers, while panicked by their revenue declines, still may be taking comfort in their ability to continue to make a buck in print, even though readers spend much less time with their newspapers.

Poynter ‘s Jeff Sonderman wrote a May 30 piece, The one chart that should scare the hell out of print media, which indicates that ad spending in print is fairly high in comparison to the number of people looking at those ads. At the same time, because ad spending online — mobile and Internet — is lagging behind print, publishers appear more inclined to focus on print revenue, even though history demonstrates that cannot last.

The chart Sonderman references is a comparison of ad spending levels by medium (print, radio, TV, Internet and mobile) alongside the time viewers/users spend with that medium. Publishers, Sonderman’s piece makes clear, should be alarmed that print advertising is continuing to bring in a significant share of their revenue when readers’ time spent with their product is so small. But, as the subject in Sonderman’s piece, venture capitalist Mary Meeker points out, that ad spending follows those media which attract the most users. That is a troubling forecast for an already troubled product.

By way of illustrating the historical validity of Meeker’s point, newspapers once had a virtual monopoly on advertising. Radio came along and cut into that. Television came along and cut out its piece of the pie. The same scenario began playing out again, this time with the Internet beginning in the late 1990s with the emergence of Craigslist, which offered free classified ads to people who once paid newspapers for that service.

Companies also are creating their own websites and promoting themselves using social media, instead of paying a newspaper to promote them via advertisements. The popularity of mobile platforms — still Internet-based, but in an age when devices like cellphones and tablet computers, when users no longer are confined to home or office computers — is adding to the drag on print revenues.

None of this is going away.

Which brings me back to Steve Buttry’s post about Howard Owens’  Columbia Journalism Review piece. Owens’ 10 points against paywalls were, as Steve wrote, “the most detailed, reasoned, fact-based analysis of the paywall issue I have read, certainly more so than any I have written.”

As much as I’ve read about paywalls in the past 18 months, I agree. But there was one point Owens made in particular on which I intend to focus, particularly in light of Sonderman’s piece.

Of the 10 points Owens makes, No. 8 is quite salient and more than a little disturbing.

He writes that “on the whole, a lot of the push for paywalls is being driven by old-school journalists and executives with publicly traded newspaper chains. The irony is that these two traditional rivals have come together in a conspiracy to, in reality, kill newspapers.”

Owens pegs these individuals as the same group of executives who in the 1990s had labeled the Internet a fad. I have met some of these people. He also writes that paywalls are a bean-counter’s method of slowing down the revenue loss. That sounds legit, until Owens quotes author Phillip Meyer, who wrote in his book The Vanishing Newspaper, that paywalls are part of the “take-the-money-and-run” of newspapers’ corporate owners plan to “harvest” the papers.

“No newspaper company is instituting paywalls to protect journalism,” Owens writes. “They’re doing it to protect profits, or at least slow the bleed out.”

Look around at the examples. James Tyree rallied a group of investors to buy for a pittance the financially strapped Sun-Times News Group, which became Sun-Times Media. Everyone received shiny new mugs with the company logo because we had been saved when we were within days or weeks of closing. Then the new owners began selling the company’s assets — selling off real property, which had real value in spite of the times. They shuttered some operations, outsourced services and trimmed the workforce, saving plenty of cash even as they were making cash selling those assets. Then they sold Sun-Times Media to a new group of investors — and at a profit.

And instituted paywalls.

The Arlington Heights-based Daily Herald also has implemented paywalls after years of struggling. There likewise have been pay cuts and layoffs during its period of pain.

I am not certain how either company feels about the success — or lack thereof — it is experiencing with its paywalls. But I think it’s right for readers and journalists to be concerned, for if the conclusions of Owens and Meyer on this issue are correct, these companies already know the end is in sight, and they don’t care.

Under such a scenario, they simply want to suck out as much revenue as possible from their operations before they collapse entirely.