Erecting the Great (Pay) Wall for Newspapers

(From RealClearPolitics - Media Watch)

Let's face it, pay-per-view will be returning to newspaper web sites with a vengeance in the near future. If not by the second half of this year, definitely 2010. Ad revenue is way down - for both print and online - and the recession isn't going anywhere soon.

By now, everyone's shared their own ideas about how to rescue the business. But lately, it's become apparent that we've run out of new thoughts. Most everyone has returned to some variation of a pay scheme.

No one except the Christian Science Monitor dares to do the obvious, which is to shut down the print edition altogether. Newspapers are still too afraid to embrace the new world by leaving the "paper" part of their legacy behind. Since that's the case, a paywall seems to be the only thing that might keep more newspapers from going out of business, for now.

But if we must erect a paywall, let's not make it just any wall. Let's build a Great (pay) Wall that's strong enough to keep the barbarians at bay.

Let's start by creating a cooperative, managed by the NAA (Newspaper Association of America). Every paper that's part of the NAA may participate in this cooperative, which will serve as the clearinghouse for the new great paywall.

Then, with ample warning to the readers, put up the wall on September 1. Why September 1? Because the summer is over, kids are back in school and adults are back at their computer terminals. But more important, it's the dawn of the football season, when web traffic typically spikes for news sites.

Once the wall is up, every newspaper web site is accessible only to paid subscribers. Each paper may decide to allow some free content daily, but it must be extremely limited. The index page for every paper's site should be so full of teasers on the good stuff that a reader just can't help himself but to pay to see what he's missing.

So how do you subscribe? There would be two kinds of subscribers. Anyone who subscribes to the print edition of any paper would be granted a complimentary online subscription. If you don't want to subscribe to your local paper - or any paper, for that matter - you may become an online-only subscriber, at say, $50 a year for the privilege.

Your unique username and password would allow you access to every newspaper site that's part of this cooperative. But here's one catch - you could only access it from one computer at a time (like how an AOL account works) so you won't be so inclined to share your account with dozens of your buddies. Educational institutions and large companies may purchase corporate accounts so that individuals using school or company terminals will be able to bypass the wall.

So how would the money be distributed? Papers get to keep all of the print subscriber money, so it makes sense for individual papers to work to drive up circulation. As for the online-only subscribers, half of the money would be equally divided among all members (socialism), the other half would be distributed according to web site traffic (capitalism), so papers would have an incentive to drive in more traffic to their own sites.

Let's do a little, and very crude, math. According to the NAA, its 2,000 member sites average about 75 million unique visitors. About 25 million already subscribe to a paper, so leave them out. If we may extract 50 bucks out of the rest of the 50 million heretofore freeloaders, that's $2.5 billion. Counting conservatively, at $1 billion, that means under the 50-50 scheme, the smallest of the papers would make about $250,000 annually. The New York Times, on the other hand, would make about $90 million, Wall Street Journal $33.5 million, San Francisco Chronicle, $38 million.

This model may tide the papers over the tough times until they figure out just what needs to be done for long-term survival. And there are challenges to implement this scheme: The Justice Department may have to sign off on the cooperative. There may be fierce pushback initially by the consumers. An independent auditor would be required to referee disputes.

And finally, the newspaper business has to be ready for the potential that this concept may be more like the Berlin Wall than the Great Wall of China - merely a flawed stop-gap rather than something that brings about stability and longevity. At some point in the future, the papers must accept the new reality and act accordingly.

That starts with stopping the presses.