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Where paywalls make sense

The smaller your audience, the smaller your publication, and the more you get for each copy.
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Written by Dana Blankenhorn, Inactive on

Many reporters are turning handstands over the failure of the pay wall at The Times of London.

That failure was predictable. But I see paywall and registration wall "successes" all the time, in my work for ZDNet Healthcare.

Nearly every medical journal, from tiny ones published by Wiley to the giant Nature and New England Journal of Medicine, live behind registration or pay walls.

So do vertical market publications like Modern Healthcare that don't feature complex-sounding content "ordinary people" might misinterpret.

There are two reasons for this, both valid in their way:

The Inverse Square Law

It's something I was taught in journalism school over three decades ago. The smaller your audience, the smaller your publication, and the more you get for each copy.

Back then everyone knew a four-page newsletter might draw a subscription rate of $395, against $20 for a magazine and $10 for a newspaper.

The newsletter had only a few hundred readers, the magazine tens of thousands, the newspaper hundreds of thousands. Amortize costs against the larger reader base, add in revenue from advertising, and most publishers would be wise to give the away all but the newsletter.

In fact, when I started in this business that is just what they did. Magazines might carry a cover price, and they might accept subscribers, but most went out free to the "right" people. It was worth the publisher more to give copies away and add those influential subscribers to the circulation base than take money.

This law was not repealed by the Web. Even if a publisher loses 90% of their audience on a small vertical publication, they make enough from the remaining 10%, in both ads and subscriptions, to make up for it.

Exclusivity

Advertisers don't like wasting dollars on readers they don't need. Publishers are wise to prune the list. Expecting permission for a subscription, whether in the form of registration data or hard cash, can increase the value of your content.

It's now inside stuff, known only by the select. No circulation is wasted by an advertiser. Every reader is qualified to be seeing the ad. This means a higher cost per thousand.

This works for nearly any vertical, business market. Just as pre-Web publishers wanted to add the right readers, so vertical publishers today want to eliminate the wrong readers. The wrong readers are whoever might not want to buy the goods being advertised, whether a hot new advertising shop or a $250,000 medical robot.

None of this excuses the stupidity of The Times. Their news isn't special. They're not a vertical publisher. They're horizontal. They want mass market attention, because that's what gives their news value.

I know "news wants to be free" and it does. But what's news to me isn't news to you. Some things are special to me, as they're special to you. I'm special to some advertisers, as you're special to other ones. Wise publishers know the difference and set their policy accordingly.

But charging people for the same stuff they can get for free on any other news site? Only if everyone does it and no one breaks the embargo against the public interest.

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