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Video Paywalls? A viable options for newspapers?

It is an interesting time for newspapers.  Their traditional revenue streams are drying up and the new emerging digital streams are not growing fast enough to offset losses.

It is not surprising that newspapers are exploring all options including paywalls.  Most consumers are still resistant to paying for news content online, but most Canadian newspapers have launched or will launch some sort of paywall.  Long term, it remains to be seen whether this will be a successful strategy for newspapers.

I have been watching with interest a new trend where accessing premium content can only be seen after the user watching a advertiser video.  Selectable Media allows users to choose what type of video they get to watch.  The idea is that if users choose the video, they are more likely to pay attention and remember the advertiser message.

Looks like Sports Illustrated is experimenting with this new paywall format.   While Selectable Media is excited about the possibilities of the trial, as the Adweek article states, Sports Illustrated is less talkative about the trial.

What is interesting about this idea is that it addresses the major issue with online advertising.  Users can easily tune-out digital ad spots that appear in the same place on every page.  This new video pre-roll format puts the advertising in front of the users.  The question is how will users feel about being forced to watch an video advertisement in order to read content.

This is a pretty intrusive form of advertising.  It is not all that different from the more common interstitial advertising.  Will users be accepting of this forced advertising model?  Will advertisers see benefit from the same mode?   Paywalls inevitably force users to choose between between paying and reading the news.  This new model forces users to choose between their time and the content.

On a recent trip down south, my wife and I were offered a free couples massage if we were willing to sit and listen to the resort tell us about their premium VIP offer.  For a half an hour of our vacation time, we would be able to take advantage of a fantastic spa experience. After a few minutes with my iPad researching the what other had said about the offer, we chose to give up our spa experience to avoid the half an hour sales pitch.   I kind of wonder if I would make a similar choice if I was force to watch an ads to read a story. Would that trade-off of 30 seconds of my life in order to spend a few minutes reading a particular piece of content?  Would it make me choose differently about where I get my content?

As I said in the beginning, it is an interesting time for Newspapers and paywalls.

Who are the customers of newspapers?

I came across a tweet today that triggered an interesting series of thoughts.  Who are the customers of newspapers and will online pay walls keep them out or in?  Here is the tweet:

From  @boatload on Twitter “”newspapers, we talk about them being critical for informing the public; we never say they’re critical for informing their customers” #shirky”

Is there a difference between serving the public and serving paying customers from the newspaper’s perspective.  I do believe that a newspaper’s business model depends on serving the needs of it’s advertisers.  Does it serve the advertisers for a typical town/city newspaper to only “inform” their customers?  In print these days, newspapers actually talk about their readership rather than circulation.  Readership assumes that on average x number of people read each newspaper circulated.  So, for a newspapers with a circulation of 100,000, their readership number might be something like 280,000 (or 2.8 readers per paper).   That number is what newspapers promote to their advertisers.  What is more valuable to advertisers:  The 100,000 paid circulation customers or the other 180,000 people that chose to pick up and read someone else s copy?

What about the content created for a typical town newspaper? Is the content targeted to inform a paid audience? Or do editors find content that is relevant to the larger community audience.  Clearly, unless a newspaper is known for niche content only, it creates content for the larger community rather than only their paying customers.  Obviously, the best strategy to grow paying customers is to create a product that appeals the broadest possibly audience.

Now let’s talk about pay walls. To begin with pay walls, will force newspaper back to tracking their audience according to subscription numbers and not readership. Online pay walls don’t lend themselves to sharing content  as one can do with a printed copy of a newspaper. For local newspapers, can a pay walled online web-site generate sufficient value based on broad community based content?  If so, what prevents free online alternatives from within the the community taking advantage of the low cost of online publishing?  Even if the  start-up product was inferior to start, it could easily eat away valuable audience from  a pay walled newspaper site.

This leads to the final question.  Can a pay walled community newspaper ultimately survive?  If so, what conditions would need to be met in the face of a competitor based on free access?

What do you think?