As Techdirt has been pointing out for years, newspaper paywalls make no sense. By stopping people from reading your stories unless they have a subscription, you diminish your influence in the media world, drastically reduce the number of readers and thus make it much harder to generate revenue from them. Paywalls are also a gift to your competitors, as this story in the Guardian indicates:

This really isn’t rocket science: if you make it harder to read your stories, your competitors would be foolish not to take advantage of this fact to encourage people to move across and read their freely-available reporting instead. Some may call this a race to the bottom, and it is as far as how much you can charge is concerned — that’s just basic economics in the digital world. But that doesn’t mean there’s a race to the bottom in terms of the quality of the journalism. Indeed, skimping there would be unwise, since it would allow competitors to match you on price and beat you on quality.

The challenge is to use a larger readership to pay for that journalism by earning revenue in other ways — advertising is currently one of the most popular approaches, but others are possible. However, introducing paywalls makes it much harder to generate money, since the online readership is much smaller — as the experiences of Murdoch’s Times, Sunday Times and the Sun all demonstrate. The subscription revenue produced by the paywall rarely compensates for this loss. It will be interesting to see whether Rupert Murdoch sticks with the paywalled approach, or is forced to remove them in order to compete with flourishing titles like those from Trinity Mirror.

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