Wall Street Journal Asia digital editor Adam Najberg on the business of paywall journalism

Adam NajbergAdam Najberg is digital editor for Asia at the Wall Street Journal, the first newspaper to charge its readers for content online.

In this interview, Najberg talks to Mumbrella Asia’s editor Robin Hicks about the era of “creative destruction” for publishers, what the WSJ has learned 17 years after putting a price on digital content, and how paywalls have changed the way journalists write.

How have the rules changed for publishers in terms of the content they can charge their readers for since WSJ first put up its paywall?

You’re going back a long way in history. We launched our site with a paywall in 1996. At that time, we were virtually alone. A lot of publishers stubbornly resisted the use of a paywall and launched “free” sites, supported by advertising. The problem with that is it’s then nearly impossible to walk things backward, once you realize the traffic isn’t what you expected, the ads aren’t bringing in as much as you hoped and readers aren’t willing to pay for something that you once gave them for nothing.

WSJ.com: paywall since 1996

WSJ.com: paywall since 1996

We’ve always believed that people place more value on something they have to pay for and less value on things you give them. We’ve accepted that WSJ.com isn’t going to be for everyone, though we have consistently expanded our offerings outside what you’d consider traditional WSJ fare – the business and finance news – and have grown our audience online. We now offer “softer” content, including New York coverage, lifestyle coverage, a couple of magazines, sports stories and more. We’ve been consistent. Ours is not the only way, the only business model, but it’s the best way for us.

You asked how the rules have changed. For us, they fundamentally haven’t. For other publishers, after flirting with free content, there have been paywall phases, dropping of paywalls again, experiments with “freemium” or “teaser” content. And the hunting and probing and testing of ways to make money from their news products continues. We’ve seen some papers go digital-only and reduce their print runs. And we’ve seen a lot of free websites and blogs from digital-only publishers fall on hard times, once their offerings get a bit stale or face competition.

Meanwhile, in the print world, the San Francisco Chronicle dumped its paywall over the summer. And just recently, the Dallas Morning News decided to drop its paywall and instead offer both a free and paid, premium site for those who really want that kind of content from the Dallas Morning News. I believe the Boston Globe also has two sites, one free and one for paying customers, though who knows if John Henry [an investor who owns The Boston Globe, Boston Red Sox and Liverpool Football Club] will continue that.

Eating your lunch?

Eating your lunch?

The biggest problem right now is there are no real rules. If you go with a free or ad-supported model, you risk chop shops like the Huffington Post eating your lunch. If you charge for your content, you better have something folks can’t find somewhere else or place enough value on to pay for. If you’ve flip-flopped over the years, you probably have – at some point – confused your customers about your value proposition. I like that Mr. Murdoch and Robert Thomson saw the value of keeping our news behind a paywall when News Corp took us over. News is, after all, a business. And that’s also why I have high hopes that, with the entry of other savvy entrepreneurs like Henry and Jeff Bezos, we’ll see sustainable models that consistently build up readership and revenue. It’s about time for that to happen in our industry.

What is the most important lesson WSJ has learned since putting up its paywall?

There have been many important lessons learned over the years, but I’d have to say one key lesson is to be honest with and fair to your subscribers. News – great, Pulitzer Prize-winning news, investigative news, important and timely insight into an IPO or a company’s death spiral – costs money to produce. We’ve never pretended that it doesn’t. Sure, lots of sites on the web have news. Some also have rumors masquerading as news, news lifted second or third-hand or coming from parts unknown. And it’s all free! Imagine that! Go ahead and read as much as you want. But when you really need to know something in a timely fashion, if you need it verified 100 per cent, many readers know they have to have a publication they trust. I’d say our growing subscriber numbers over the years are testament to our living up to the pact to deliver what they want and need.

In the same vein, you also have to be fair and predictable in how you build and implement your paywall. Some publications, like the New York Times, use a metering system, and I guess that works for them. After a certain number of free articles, you get a screen telling you you’ve hit your limit and that you’ll need to subscribe to read more of their reporters’ work. We put some select content in front of the paywall and “key” what we deem valuable content, giving everyone the headline and maybe a lede or second sentence, but limiting the full article to paying customers and offering non-subscribers the opportunity to become one of the family if they click on a “keyed” article. We try to be consistent with how we treat our online content, so that subscribers, over time, have come to know what to expect. The worst thing you can do is to unpleasantly surprise your subscribers. That risks alienating them.

A report from the World Association of Newspapers concludes that publishers “did not learn from the rise of other pure digital players and took far too much time to understand this [paid content] opportunity. And one could only regret that the essential driver for taking action has been losing revenue on core print business.” Would you agree with this?

I can’t speak for other publications, but let’s be honest. When you have a choice between selling a full-page color newspaper ad for the price of a small house in the U.S. Midwest or trying to grind it out on the ground with CPM revenue, it’s always easier to keep going for the big and easier money. Small, digital-only players never had print ads to rely on. They entered into a hyper-competitive online environment and had to find innovative ways to make money. Whether you like or loathe him, guys like Michael Arrington [the founder of TechCrunch] had to be extremely entrepreneurial and adaptive in a way that the ink-stained wretches never did – or never thought they’d have to. And then print advertising started a slide we’re still seeing, industry-wide. Digital ad revenue, though it’s growing, still requires a lot more shoe leather to sell and many more clicks to come even close to making that up.

So, here we are. There’s no doubt many publishers have come very late to the digital and paid-content party. And many are only there because they’re printing in red ink. But at least they’re there and still publishing. My hope is that they are able to step back and view this as an opportunity. So far, a lot haven’t. Instead of seeing this as a chance to invest in a new business, to double-down and add value in ways that digital subscribers are willing to pay for, a lot of publishers are cutting reporters and editors, shrinking their newsrooms and hampering their ability to cover news in new and innovative ways. They’re hiring web editors and young multimedia reporters, and that’s a good thing. But so many newsrooms I know around the U.S. have been gutted of seasoned editors and reporters, gifted storytellers and relentless diggers, that even as they regroup, that talent is never coming back. I worry that a rush by some publishers to slash costs means they won’t be able to offer a high-quality, paid online product.

That’s the doom-and-gloom scenario, but I’m actually an optimist. I’ve been a journalist for nearly 25 years, and this industry has been dying since before I even wrote my first story. It’s the longest death spiral in history. We whine and wring our hands a lot, and there’s no doubt the news business is suffering. But tell me something: If things are so bad, why is Warren Buffett buying newspapers? Why did John Henry buy the Boston Globe? Why does Jeff Bezos have the keys to the Washington Post? And for that matter, why did Rupert Murdoch buy a 120-year-old newspaper? These are all smart guys. They smell opportunity and know that with a great product, with innovation, a new approach, a better business model, you’re going to make money. I hope we look back at this period one day and refer to it as one of “creative destruction,” if I can take some liberties with Joseph Schumpeter‘s concept. Or maybe we’re just witnessing a much-needed changing of the guard.

I’m not saying it’s easy to make money in the digital world. News is tough, both because folks are so used to getting online news for free that they place no value on it and because it costs a lot of money to provide good, well-written, interesting and reliable news. I think these smart, innovative guys who have become the new Hearsts and McClatchys just need time and they’ll find a business model or models that work.

How have paywalls changed the way journalists write the introductions to their stories, if at all?

I’m not sure exactly what you’re asking or why, but a paywall hasn’t changed things at The Wall Street Journal. Sure, web editors pay attention to the H1 and H2 fields and want our headlines more SEO-friendly, and we think about metadata and key words, but our reporters still pitch stories the same way, report them the same way and write them the same way. You may see more flagging of great – and paid – stories via our blogs, but we don’t hold things back in either headlines or story tops. If anything, we hope a great headline and significant lede will make readers who are seeing our “keyed” news want to subscribe.

I have seen other publications and sites try to add sex and glamour to their web offerings and others go more dry and factual to ensure a solid ranking on search engines, to attract more eyeballs or to convince more people to subscribe, but we simply haven’t done any of that in our shop.

Are there certain types of content that people will and will not pay for?

If you look at our Dow Jones product offerings, you’ll see something interesting. We think as much about the timeliness of news delivery as what content bucket a piece of news is in. Did you know that professional traders make the bulk of their money in the first couple of minutes after a piece of news breaks? That’s where we offer a higher-priced professional digital news product. Depending on what the news is, paid subscribers of WSJ.com will find much of the same news on our site slightly to somewhat later – we’re talking mostly minutes. And we find that people are willing to pay — sometimes for both — knowing that we offer a lot of other things on WSJ.com, including photos, multimedia, graphics, lifestyle piece, blogs, sports and the like. And of course, many of those same people buy or read the print newspaper the following day and find still more interesting things they didn’t know, as they sit at the breakfast table or head into work on the train. Globally, we have newsrooms that provide all kinds of news to all our platforms.

To answer your question more directly, we know from the success of purveyors of pornography, betting and gambling sites, music sites, movie and TV sites, niche and enthusiast publications and some subscription sports sites, like MLB.tv, that people are quite willing to spend on vices, obsessions, passions and entertainment.

News, as we know it, is always going to be somewhat of a harder sale. For many, because they’re used to publications offering it for free online, they place no value on it. And while you can listen to your Miley Cyrus song 1,000 times or watch Mission Impossible as often as you like, a news story often ends up on the bottom of a digital bird cage, sometimes just minutes after it comes out. So how do you get folks to place value on your news and pay for it?

I think our strategy of segmenting news by timeliness is fantastic for ensuring maximum value. I also think a prestigious publication like the Journal has other things of value, for which subscribers will be willing to pay. That includes exclusive content, stories and videos and other multimedia that offer virtual access to people and places most subscribers, themselves, would not be able to get and helpful, unbiased and expert guidance in areas, such as real-estate purchases and personal finance.

In the future, will more or less content be paid for by those who consume it?

I’m mindful that I’m not Alvin Toffler [writer, futurist and former associate editor of Fortune magazine], and I have this nightmare of someone sticking your article in my face 20 years from now, when I’m sitting in a retirement home or standing in a breadline and reminding me of my vainglorious prognostications.

But I’d have to say – no, I have to hope – that it will be more. If there’s no money in journalism’s future, why are some of the biggest tycoons in the world, folks with really no prior journalism experience, jumping into a dying business? Businessmen like John Henry and Jeff Bezos may be philanthropic, but these are for-profit businesses for which they paid serious cash money. They’re not corporate raiders. There are no bones to pick clean in the newsrooms they bought, no more debt they can load news companies up with. And forget our underfunded pension funds.

I’m no businessman, but I am an avid consumer, and there are some things I will not pay for. Commoditized news is one of them. To me, for a news provider to survive online, you need multiple revenue streams. You need CPM money and sponsorship of different kinds of content. Events, TV deals, custom content are also good ideas. But at your core, the key things for a viable paid-content business are to have a brand and a news product that people place value on and an electronic subscription or micropyament service in place that makes it as easy and seamless for paid consumption as possible. It works for Spotify and iTunes and the Google Play store. Why not for news?

Everything has a price. We have a subscription price that’s quite fair. If you think a news provider should start charging by the article – and I’m just speaking generally here, not about the Journal – I don’t know if the price for a single news story is a penny an article, or five cents. Is it a dollar for a scoop? What if a piece of news could make you millions if you got it faster than readers of Yahoo! News. Do you see where I’m going with this?


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