Analysis-Paywalls versus advs business model

By Peter Preston, The Guardian.com

Key paragraphs:

The most important dissenter, of course, was Mr Rupert Murdoch; which is perhaps why praise for this performance seems somewhat muted. Rupert, you may remember, was a leftover relic with acid and printers’ ink in his veins. He decreed – five years back, when the Times and the Sunday Times were billed as losing nearly £70m a year between them – that all his journalism must command a fair price. It couldn’t be given away free, dependent on ads for survival. It would be guarded by steep, non-porous paywalls. Stump up if you want to peer inside.

That meant no clicking trails across an open net, no entry points via burgeoning social media, no mammoth totals of unique visitors round the world, no pulsating communities of comment and influence. It meant – almost everyone said – obscurity, disappointment, a barren future. And who knows? Everyone may be right in the end. But not just yet.

Was the £70m loss ever real? Is the £1.7m profit real? Transparency, as so often with newspaper accounts, is elusive. You can’t quite tell how many subscriptions were abandoned as well as confirmed. You may find separate enterprises rolled mystically together. There’s no absolute certainty. But there is, nevertheless, a broad, underlying truth that matters – symbolically, and practically. The Sunday Times, staggering back from recession and the digital blight that wiped away most of its classified job advertising, is profitable again. The Times – tucked behind its paywall – is much closer to viability. Perhaps, one day, as on so many days before, it will be sold to a new owner. The staff are pretty twitchy. But there’s no obvious Rupert reason to unload it fast. Five toiling years have built new foundations. It won’t be a fire sale.

Paywalls have other advantages as well. Because every copy, online or off, has a price, figures for total paid circulation have a neat, engaged feel: 545,000, up 3% year-on-year. And because paywalls keep the constant clicking of 24-hour updating away, so that the news and comment within the walls don’t need to change constantly, staffing levels can be kept lower, too. The walled approach is more akin to that of a conventional newspaper, plus digital bells and whistles. It isn’t a running news service competing with Reuters, Bloomberg and the rest. It is something much more familiar, something staider: a day’s news and thoughts sealed in time for those who want them that way.

Of course you can’t declare the economic argument between free and paywall policies over any time soon. The walled Sun’s current subscription level – around £18m to £20m – isn’t particularly impressive. The free Mail Online, with its 193 million unique browsers worldwide, took £62m in ads last year – but wants to push this up to £80m and then £100m by 2016. If it does that, there’s seriously transforming ad money to be made down the free road. And the Guardian, boasting similar digital revenue figures for the moment, will have great expectations as well.