The Wonderwall

Posted on August 2, 2010 by Tony Uphoff

"I said maybe, you're the one to save me. And after all, you're my wonderwall". The chorus from the hit song "Wonderwall" by the band Oasis seems to have been written for today's daily newspaper industry. The New York Times went public this week with their plans for a paywall starting in January 2011. The Financial Times an early pioneer in creating paywalls for online content claims that content revenue will surpass advertising revenue this year. Rupert Murdoch's experiements with online paywalls have gotten mixed reviews. Tough to articulate a 60% drop in traffic as a positive.

Different than all other print media, daily newspapers have always been marketed at impulse buy prices. To this day $1.00 is the average newsstand price for a daily newspaper. This low-cost/high value tradition for daily newspapers creates a particularly challenging dynamic as they look to create paywalls for their online versions. Newspaper businesses continue to claim that readers have always “paid” for their news by purchasing a newspaper. This is false; readers pay for the convenience of having the content delivered — advertisers have footed the bill for content creation.

So now daily newspapers have to convince you that the content value is actually higher than you thought. Or they need to appeal to your sense of fairness, that based on a changing media landscape, you need to pay more. Trying to convince people to pay more; or pay at all, for content they have gotten for a relatively low, or no, price simply doesn't scale. I'd argue that other than perhaps The Wall Street Journal, the Financial Times and the New York Times, there are few-if any-daily newspapers that will be able to make this transition. And it's not entirely clear what the business on the other side of this transition will look like either. Murdoch's sabre rattling with Google and other search engines is not without logic. In the early 1980's people laughed at the idea of paying for television. 30 years later cable television rules the airwaves. Will there come a time when carriage fee models emerge online as they did in cable? It's possible. I wouldn't hold my breath however.

Perhaps Oasis was writing about the newspaper business after all. The next verse of Wonderwall: "Today was going to be the day. But they'll never throw it back to you. By now you should've somehow realized what you're not to do. I don't believe that anybody feels the way I do about you now". ,

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