The Wonder Wall Part II

Posted on April 14, 2011 by Tony Uphoff

Last summer I wrote a post called "The Wonder Wall" where I mused about the future of pay walls for content sites. Since then The New York Times and other sites have launched pay walls to great fan fare. How are they doing? It's tough to tell given the scarcity of public numbers on pay wall revenues. Posts and analysis from insiders suggest that the NY Times spent a robust $25 Million creating their pay wall. I think it may be a good long while before they see a return on this investment.
Some sites with pay walls have seen their audiences shrink as readers previously able to access advertising supported content for free, now balk at being asked to pay. Less page views means less ad revenue, which puts even more pressure on the pay wall. "The good news is we generated paid subscriptions! The bad news is our traffic dropped and so did our ad revenue...". Wonder Wall indeed.
One of the things people pay for when buying a newspaper or magazine, is the functionality. In the case of web based content however, readers have already paid for the functionality. Their computer provides that. So readers now have to determine whether in addition to the cost of a computer and online access, the cost of content is worth it. In the case of online newspapers and magazines, so far they seem to feel it's not. In my mind the question isn't whether web audiences will pay for online content. The real question is will online audiences pay for newspaper and magazine content with increased functionality?
The iPad, iPhone, Droid and the application marketplaces demonstrate that people will pay for content with increased functionality. And the genius of the recurring revenue marketplace model of Apple becomes more and more impressive every day. Apple has announced their newspaper, magazine and book publishing marketplace strategy and given the initial steep 30% share, early publisher reaction was mixed. My sense is that even with the revenue split concerns, this model will become scalable and attractive to newspaper and magazine brands. Especially once they start to feel the pinch from cutting their audiences in half by instituting pay walls.

Let me know your thoughts. Are you seeing pay wall strategies that work? As a reader are you paying for online access to daily newspapers and magazines and if so which ones?,

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