What's the outcome of a newspaper paywall? Ask ITV

6 August 2009 18:41 GMT / By Stuart Miles

Want to know what happens to a site that puts up a paywall in an attempt to gain extra revenue? Ask ITV.

ITV has finally off-loaded struggling website Friends Reunited for a rather low £25m and in the process losing £150m.

Travel back 5 years and Friends Reunited was the future of the Internet, the first foray for most of us into the world of social networking, it allowed you to find old school friends and once again realise that 10 years apart still meant they were annoying.

As social networking wasn't even a term then the business model was still to be created.

Friends Reunited founders decided the best way forward was to give limited access for free, but if you wanted to contact your old school chums you had to divvy up £5 for the privilege.

While the youngsters (that's probably you and me) bulked at the idea, the more mature, lets say less tech savvy audience, saw a fiver as a chance to rekindle a relationship with the girl they once had a crush on.

The site was going well, it gained massive amounts of press and then lured in an old school media company (that would be ITV) who had no idea what it really wanted and fell for the gag.

The problem was, that by the time the company sold to ITV, free social networking solutions such as MySpace and Facebook were already starting to appear on the scene.

All of a sudden, you could connect to more than just people from your old school and you didn't have to pay for it.

Fast track to 2009 and Friends Reunited is nothing more than a mailing list struggling against Facebook and its 240 million users.

Place that same model onto newspapers and you can see, while a paywall might solve a cash flow problem in the short term, long term it will stifle the growth, and therefore the influence of the site.

The content has got to be very compelling for you to want to read it over the same story from another competitors version which is free.

Nobody disagrees that newspapers are expensive to produce. The sheer amount of copy they produce on a daily basis is huge. The staffing costs are high and the production costs astronomical.

Having worked at The Times in London for a number of years, I know what it's like to be on the inside. I also know that at one point the company's photocopying bill was more than most small business' annual turnover.

Compared to websites, keeping that bloated system running is not justifiable in an age where ad revenues are falling and costs are going up.

Today a newspaper can't just be seen to have a daily publication for you to hand over your 90p and get a bundle of papers in return. It has to be a news provider, a radio station, a video production company, oh and a website.

The problem comes, therefore, when you've got to work out how to pay for all this, however insisting that people pay to access content when so much content is free is a tough call.

People pay for the Wall Street Journal and the FT because it's a business publication that isn't really paid for by the masses of people that read it. I bet you nine times out of 10 the access costs are expensed.

But The Sun is a very different matter. Is your average Sun reader going to want to pay for access to the stories online? Likewise with The Times. Is its sports or business coverage that much better than what's available elsewhere that you would be willing to pay for it?

Newspapers can put up their paywalls, they can make some short term cash, but I believe that those that stay free will have greater audience and influence in the future.

Which, let's face it, is what most newspaper barons want in the first place.

Via: guardian.co.uk

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