2010: The Year of the Successful Online News Paywall?

January 5, 2010

My favorite newspaper is not going out of business! The article below shows financial models for the content industry. The key is economics 101, understanding supply and demand models.

Fast Company
January 4, 2010 12:53 PM
by Kit Eaton

2010: The Year of the Successful Online News Paywall?

Financial Times

Sweeping aside the controversy and nonsense surrounding the issue of online news content paywalls, the Financial Times has stepped up to the mark to note 2010 will see income from paywalls surpassing ad revenues.

The FT Group’s chief exec John Ridding is responsible for the news, unequivocally stating "we reckon [2010] will be the first year that revenues from content overtake revenues from print advertising." Since the online content is protected by a partial paywall, and many corporate subscribers pay for physical editions of the paper to keep abreast of financial news, its these figures that represent what Ridding is referring to as "content revenues."

And though the news seems small, it’s pretty amazing stuff: Advertising revenues are, for many, the one and only way to make money in a world where physical newspapers readership figures are dipping, and where the online publishing market is dominated by a free-for-all philosophy for access. Sure, the FT is a special case–which Ridding admits–and both its corporate subscriber base and the global economic downturn have, ironically, driven its sales up over the last year (30% more digital subscribers, for one). The model the FT is pursuing may even be one that works uniquely for this particular new publication and, despite Ridding’s claims otherwise, there’s no guarantee it’ll continue to be successful. But this news will no doubt put a smile on Rupert Murdoch’s face, as the old chap’s been banging on about paywalls and the "evil" of Google for ages.

The FT data is also a sign of a potential upswing in the economy–particularly when you read about the dire woes the rest of the news industry suffered last year. And it comes at just the same moment that another big news publication, Politico, is also shrugging off the air of doom and failure, and reporting record profits from both its physical and online editions.

According to calculations made by the guys over at PaidContent, Politico may have ended 2009 with over a million dollars in operating profit. Which is impressive, given that owners Allbritton Communications only started the paper off three years ago. With revenues for the year of $20 million, Politico even surpasses the Huffington Post’s $15- to $17-million statistic. And that’s even more astonishing when you think that the paper was expected to suffer very severely from public interest turn-off after the close of the Presidential elections–in an environment when long-established news organizations were already going to the wall. Even more interestingly, it looks like the majority of the profit may have come from the physical paper edition too, which definitely flies in the face of the prevailing industry trends.

So, will 2010 be the year of the successful news site paywall? Not for everyone, perhaps, though it might work for some. The physical newspaper also isn’t quite dead yet, so don’t expect to see them disappearing this year. Unless, that is, some upstart newcomer with revolutionary digital content distribution on a paradigm-breaking piece of hardware comes along. Apple Tablet anyone?

[Via PaidContent]

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