How can a paywall improve revenue for publishers?

News Corporation’s The Times and Sunday Times newspapers in the UK will to turn on a paywall, permitting access to content only to those who have paid for the privilege.

If we agree with this business model for charging a fair price for access to products and services then we need to take newspapers out of the public area of our newsagencies and provide access only when we have been paid.  Distribution newsagents would also need to start charging a fair price for the newspaper home delivery service provided.

Publishers, newspaper and magazine, like the newsagency channel because of the ease of browsing. They know that free sampling, of a headline, part of an article or the whole newspaper, is key to sales. It appears that some publishers don’t agree that free sampling is key to generating sales online.

Newspaper publishers like distribution newsagents because they are prepared to provide a service for barely the cost, and often less, that the service costs to provide.  Publishers are not prepared to be as generous with their own money when they are funding the distribution channel.

Newspaper publishers go to extraordinary lengths to facilitate free or at a steep discount full copy sampling of their print products – at sporting events, shopping malls, through sporting clubs, to students and through other affiliations where you can take a year-long subscription for 10%, and sometimes less, of the usual price.

The newspaper cover price itself, $1.00 in Sydney for the Daily Telegraph for example, does not reflect the cost of the product. The 25 cents (or less) a newsagent makes selling it certainly does not reflect their cost. Yet, the publisher and newsagent subsidise this because it is seen as important to maintaining sales.  The few cents a day a newsagent is permitted by the publisher to charge for home delivery is often just a token of the real cost.

If the paywall approach is about building a sustainable revenue model from online because of a belief that migration from print to online will continue then there must be smarter revenue solutions than hiding the product behind a paywall.

The only people I can see paying to get through the paywall are those who know the product. New customers, the holy grail of any business, are not likely to pay to sample the product.

Back in the print world, the only people not happy with newsagents charging a fair price for newspaper home delivery and a fair price for each copy purchased at retail are the publishers themselves.  Surveys by newsagents show that consumers are happy to pay a fair price.

While the real discussion topic here is the introduction of the paywall at The Times, I see this through the context of how newsagents have been treated by publishers when it comes to charging for our services.

Jeff Jarvis (of BuzzMachine) has written an excellent piece for The Guardian, a competitor of The Times, about their move.