Can a paywall pay for News International?

cash, paid out, no sale by Thomas Hawk

Lots of people will voluntarily pay for things they could take for free. In Freakonomics, Steven Levitt gives the example of a bagel seller who left baskets of bagels in workplaces, with unmonitored cash boxes alongside so people could post in the small price of the bagels they ate. And most people paid – the payment rate hovered just under 90%.

As Levitt points out in the book, there were plenty of influences on that behaviour. For example, the bagels were left in staff canteens, so any potential bagel thief would have to weigh the value of the bagel against the cost to their reputation if they were caught thieving. But, despite what we might expect about other people’s propensity to steal, the bagel guy was able to build a business on the honesty of the vast majority of people.

Having the option of free doesn’t mean necessarily mean that consumers will become totally averse to paying. (And sometimes, the keenest consumers of free are also the most willing to offer their money.) So the existence of masses of free news content – and the ease with which paid content can be copied and converted to free, especially in the case of text-based information – isn’t necessarily fatal for the Murdoch plans to charge for access to all News International websites, starting with the Sunday Times.

Obviously, there are lots of ways in which the news is not a bagel. It’s not a physical commodity, for one thing, so people may feel less uncomfortable about taking without paying; online news is also something that’s taken in private, on your own screen – so even people who’d never self-identify as an information warrior can enjoy a little piracy without being seen. Still, the evidence from music suggests that though people expect to pay less for a digital product, and sometimes to pay nothing at all, they still pay for some digital products, some of the time.

There will always be more leakage of a digital product, but when the distribution overheads are so low, the losses can probably still be absorbed at a relatively low price-point. And besides, finding pirated material can be a pain – it often has to be hidden from copyright holders, which means it has to be partly hidden from potential users too. Many people would rather skip the annoying search and go straight to the source. Of course, News International won’t be happy to leave their profits at the mercy of other people’s convenience, and you can expect the company to partner its paid model with more aggressive copyright lawyers and lobbying for legal changes in their favour.

That’s one reason for considering that news piracy might not be enough to do in the Murdoch plan, but what about free competition? The Times has already stepped up its agitations against the BBC’s free-to-access service, so it’s clear that it’s considered a threat within News International. And free services probably will consume the demographic of people who only want information, and who are satisfied with the information they can get from free sources. But buying a paper has alway entailed buying into the paper too – people choose the brand as well as the content.

If the Sunday Times can persuade enough people to think of themselves as “Times readers”, it can probably retain them as readers. And if it can do that while offering attractive content – not just original and high quality journalism, but an attractive and adaptable interface too – then it may be able to attract plenty of less attached subscribers too. (The problem for the Sunday Times is that, for this to work, the paper will have to be both better than, and different from, all its free competitors – and at the moment, it just isn’t.)

These are my reasons, anyway, for being wary of damning the paywall experiment too soon. I think it can work. Whether News International is the company to make it work, I’m less certain. They’ve got all the failures and limitations of any news organisation that grew up with the privileges of paper – but then, as Mark Pack points out, Rupert Murdoch’s always been good at making money out of news, and if he’s experimenting with payment models, it’s because he’s got even better reasons than bagels for thinking it will succeed.

© Sarah Ditum, 2009. Photo by Thomas Hawk, used under Creative Commons.

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