Since I’m lightly employed these days, I enjoy keeping up with the news. In recent weeks, I’ve been blocked by the paywalls of the Wall Street Journal, Globe & Mail (closest thing Canada has to a national newspaper), the Times/Sunday Times (of London), the Telegraph (also UK), Business Insider, and Bloomberg. Recently I got a bit of inside info on how these publications think about the economics, and I’m here to explain why they’re wrong.
Here’s a table of a few publications and their subscription prices, normalized to US$/year, sorted in order of ascending cost:
|Wall Street Journal||$119.88|
|New York Times||$221.00|
|Globe & Mail||$272.61|
|Times of London||$665.60|
Discovering these prices was nontrivial; many are hidden behind an “intro rate”. Also, they’re quoted per week, per month, per quarter, per four weeks (really?!), and per year. Where multiple rates are quoted, I took the yearly one.
Looking at this, I think I see an immature market; which is to say, the mapping between price and value is not orderly.
How they think about it · Earlier this year, I had a lot of chances to talk to journalists. More than once, this happened. Journo: “I’ll send you a link when this publishes.” Tim: “Yeah, but I won’t read it, you’re paywalled.” On these occasions, if the journalist seemed capable of hearing, I gave them a lecture about how, since I wasn’t going to subscribe, there should be a way for me to pay a bit and read their piece. One of them, I forget who (sorry), explained How Management Sees It.
First of all, they’ve got a figure in their mind of how much they’re going to make if they can get me to click on that “Subscribe” button. They’ll have a model where a certain number will unsubscribe during the initial-rate period, a few will drop off later in the first year, and some will become long-term subscribers. This journo suggested that the figure in management’s mind looks something like half a year’s subscription. Which, looking at the table above, is a figure in the rough range of $50 to $300. Part of the calculation includes the fact that most of us are lazy and administratively incompetent and just won’t get around to unsubscribing, even if we want to.
The next step in their thinking involves an estimate of how much they could get for an individual article view. It’s hard to imagine anyone being willing to pay more than a buck. Minimum price… Who knows? Our current bank infrastructure isn’t good at micropayments, which makes it harder. Of course, you could imagine some sort of intermediary service which pools per-article payments to many publications and could probably do micropayments, but nobody’s gotten traction with one of those yet. Furthermore, this intermediary starts to smell like Doordash, a service that controls access to your clients and charges you an onerous revenue slice. Every restaurant hates them.
Thus we get to The Ratio. Let’s be generous and assume you could get a buck for access to your article. Then ask yourself, “How many of those to I have to sell to make as much money as I would with a subscription?” Dividing that dollar into the that half-a-year-of-subscription number, the subscription is going to be worth somewhere between 50 and 300 times more valuable than the article.
So, says Mr Manager, “Why on earth would I invest in selling individual articles when a click on the “Subscribe” button gets me a hundred times the revenue?”
Why they’re wrong · Their arithmetic didn’t consider their chance of getting me to click on “Subscribe.” In my particular case, that chance is almost exactly Zero. I subscribe to enough things and I am acutely reluctant to give anyone else the ability to make regular withdrawals from my bank account. I don’t think I’m unusual. People may not be financially sophisticated, but they’re smart enough to see through the “initial-price” flim-flam and a lot of us are highly conscious of our own administrative futility and the fact that we might just not get around to unsubscribing. I’ve seen this called “Subscription fatigue” and I think that’s a decent label.
“But wait,” says Mr Manager, “you already subscribe to five publications, so you’ve proved you have a propensity to subscribe! You’re exactly my target market!” Wrong. It’s exactly because I’ve done some subscribing that I’m just not gonna do any more.
“Hold on,” he says, “I’ve got an excellent publication, full of great journalism and delicious writing. I should be able to compete with those other things and maybe displace them!” He’s got a point, and it’s not fair, but he’s still wrong. Maybe it’s just that those other guys got there first. Maybe it’s just my administrative inadequacy. Maybe you’re just not quite as valuable as those others just yet. But de facto, your chances of replacing any of them are pretty damn small.
The way forward · Note that this section will, like the rest of the piece, completely ignore advertising. The life has been entirely sucked out of advertising-based publishing by the Facebook/Google duopoly, and absent vigorous antitrust energy from various governments, it ain’t coming back. Actually, I think there’s hope. But hope isn’t a business strategy.
So I think the only way forward is to figure out how to sell articles. It’s not gonna be easy, and if I were the publications I’d also really not want the equivalent of a Doordash getting in the way.
It dawns at me that if I were still at AWS, I might propose offering Digital Content Volume Sales as a Service. “Simple Article Sales Service”, SASS. Maybe I should write a PR/FAQ.