Because Paywalls Aren’t the Future

You pay for your content one way or another. Here’s a quick diagram to remind you of how.

There are some exceptions beyond what I’ve listed above, but generally speaking the media business is a pretty simple equation: High quality entertainment or information will exist only if the people producing it are paid. The market (the internet) has put the longevity of a variety of media industries in jeopardy, but let’s review the approach for content compensation in the past few decades. These are not mutually exclusive or in chronological order:

Scarcity Driven:

“Every day we are going to print newspapers, and every day we’re going to destroy them. The value of each article and ad will remain high because they will only exist for a moment in time and very few people have more publishing power than we do.”

Mass Advertising Driven:

“There are lots of places you can get content, but we deliver advertisers massive amounts of eyeballs and can charge a great deal of money for that. Sure…the internet is growing and content exists forever thus making every single new piece of content devalue the one before it, but as long as we keep pumping out new information you think is original, we’ll be able to survive on ad revenue.”

Guilt Driven:

“Without your support we can’t make this happen. | If you share content online you will go to jail! | Content creators deserve to get paid because they’ve decided that’s their job and they should make money at said jobs.”

Paywall Driven:

“Want to see this content? Pay the toll. Yes we realize most of you will just drive on a different road to get where you’re going, but we’re planning on milking this road for everything we can get out of it (for now).”

The publishing world continues to go through the above methods with short-term success. Advertising revenue (the predominant compensation model for the last couple of decades) is fading quickly for most “traditional” publications, and companies like Google and Facebook (aggregators of data and content) have scooped up far more cash than content producers have been able to.

Today the latest trend for publishers is to revert back to their roots: Paywalls. The original paywall was a kid selling newspapers on the street corner. If you didn’t give him a nickel, you wouldn’t get access to your news. This model thrived well when news outlets (and access) were scarce, but repeating this methodology 150 years later isn’t a recipe for success.

The Sun-Times recently announced they’ll be experimenting with Bitcoin payments, and apps like TinyPass and Pigeon are making it easy for publishers to sell piece-meal content (versus forcing people into subscriptions). Paywalls are certainly becoming more interesting, but they’re still not addressing the major issue at hand. Consumers don’t see content as a product they need to pay for upfront. News can be discovered elsewhere and entertainment is virtually unlimited.

Paywalls are velvet ropes blocking the entrance to a club no one is really dying to get into.

My hypothesis is that value-add driven publishers will be the ones who succeed in the next decade. Instead of paywalls, I see success in the adoption of “paystairs” where content is consumed for free, but premium benefits are given to those who are willing to pay more than the average visitor. Some call this freemium, but the idea of paystairs is that you’re slowly (or possibly quickly) bringing every single reader through the funnel of going from a non-paying reader to one who does pay (somehow). What does this mean in non-buzzword English? It means publishers will need to offer two main categories of value for readers who voluntarily support them:

  1. Truly unique content that can’t easily be attained elsewhere that only can be unlocked by climbing paystairs. For example: readers who are donating to high quality publishers get access to content that won’t be released publicly for several months. This isn’t a wall, it’s just a delay in gratification for people who don’t want to support the publisher monetarily. (Think going to a movie in theaters versus waiting for Redbox or On-Demand)
  2. Rewards not tied to content similar to what we all see with networks like Kickstarter or Indiegogo. Unlike those communities which are centralized around a crowdfunding site, publishers can create decentralized systems where specific pieces of content can be supported and over a long period of time readers can build up points they exchange for goods/services. The higher the reader goes up the stairs the more events, promotion, physical goods, etc. they can earn. Some may say this creates a lot of work for publishers, but the smart ones will be able to leverage their massive networks to build successful ecommerce businesses into their core product of delivering media. This is already happening, it’s just moving slowly because most publishers want to use their own proprietary subscription systems versus using a neutral payment system like Bitcoin, Dwolla, or CentUp. (Disclaimer: CentUp is my company)
Paystairs will turn into the rewards program of content. Much like mileage programs or hotel points, they will keep readers coming back not only because of high quality content, but because every time they read/support a single publisher, they’re building equity in their investment to that brand.

This piece is primarily a mental exercise for me. I plan on revising this over time and seeing where my predictions pan out (and how long that takes). Please leave comments to help add perspective by hitting the plus sign near the various sections here on Medium.

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