Topple the Paywalls, Ban the Banners

You’re a mafia kingpin.  Money’s been steady, allowing you to build villas and acquire economical wetlands in New Jersey.  Over the years, though, you’ve grown complacent, and business ain’t what it used to be.  Revenues are shrinking.

To recoup losses, you raise the cost of the protection your local small business owners have been enjoying for years.  It’s a sound plan, right?

Well, no.

When news media companies try to make up for their ad revenues with online paywalls, they’re putting the squeeze on valuable readership.  As Rich Julius, CEO of iMedia Revenue, writes in his blog, “publishers have rarely derived significant revenue from news consumers; most revenue has been from advertising, and will continue to be.”  Online news sites that build paywalls risk alienating their base; it’s jarring to find out one day that the content you’re used to is being guarded by two surly, middle-aged men.

But what about the Wall Street Journal?  It’s been dandy.  Julius has an interesting point about that publication (full post here):

Pundits (and desperate publishers) like to cite The Wall Street Journal as an example of a paywall that works. Well, unless you are publishing a financial journal, forget about the comparison. Subscribers themselves rarely foot the bill for their WSJ subscriptions: the subscription fees are subsidized. How? Because you can take WSJ as a corporate expense. Heck, you can take it off on your taxes as a business or professional expense (in the US, it’s a legitimate “unreimbursed employee expense” for many people).

Gilman Ciocia Incorporated, a tax/investment advising outfit, uses the Wall Street Journal as a specific example of an “investment-related expense” in the last item of its Tax Deductions FAQ page.

Rather than pointing to the success of the Wall Street Journal and attempting to imitate it, Julius suggests that news media companies improve their advertising.  The response to the dollar-dime rule shouldn’t be to shake down readers, suggests Julius, quoting John Paton, but to “‘start stacking the dimes.'”

Julius offers some interesting strategies to do so (full post here), two of which I will mention and complement with uninformed commentary.  Let’s begin.

One strategy Julius offers is page sponsorship, wherein online news sites vertically integrate ad servers into their business and–get ready for it–offer local businesses sponsorship of certain pages.  Bypassing banner ad networks, sites can, in Julius’ words, “sell ads directly to local advertisers–at 10 to 20 times the revenue that you would receive from CPM based banner networks.”   I like this idea.  Any publication worth its digital quills should already have its own server for news; having a server for ads–for similar reasons–is a logical step.  If you want something hosted right, host it yourself and host it better than the competition.  Reap the profits.

Mobile coupons are another of Julius’ suggestions that I like.  An impressive 44% of American adults own a smartphone.  My phone looks like this:

(Taken from the ironically-named Don't go there, though, because it looks shady.)

But yeah, mobile coupons.  For news consumers with phones that can meet the minimum standards of modern living, those might be appealing.  People often don’t want to click on ads because they anticipate being transported to hellish marketing dimensions.  A coupon in one’s inbox is a better association than that.  The idea’s even more appealing if these coupon-for-click ads don’t actually take you off the news site.  Mobile browsers aren’t the fastest.

One Response to “Topple the Paywalls, Ban the Banners”
  1. JB says:

    Uninformed commentary is right. Even smaller papers can benefit from a metering system. Combining different types of meters to service the right demographic is key. Of course most people don’t convert in most paywalls when about 50% (being generous) of all vistors are “just stopping by” and never hit a second page of your site. Why would you even bother asking them to subscribe; but maybe an interactive ad wall (like what social vibe sorta does) would be better for these fly-by-nighters.

    Every paper out there has to stop comparing itself to other papers because the secret to a monetization plan isn’t about what paper x was able to do but what you’re able to do with the resources you have. Every paywall solution is an apple and oranges situation.

    You can read more about my thoughts on this on my blog — to which I’m very informed.

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