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Newspaper paywalls are freemium business models

Newspaper paywalls have been criticised by many people in geek communities across the world and also by popular journalism bloggers such as Clay Shirky, Jeff Jarvis and Jay Rosen — but they follow the best practices of “Freemium” business models used by thousands of tech startups.

Freemium has been a successful strategy used by many tech companies. Please see: Emergence Capital: Profitable Lessons From Freemium Business Models – SVW. And: Case Studies in Freemium: Pandora, Dropbox, Evernote, Automattic and MailChimp

Freemium is based on a simple plan: Give away a great service for free and upsell some users to a paid subscription service.

Yet strangely, newspapers are facing huge amounts of criticism for trying to follow a freemium business model.

Clay Shirky at The Guardian:

“Everyone’s waiting to see what will happen with the paywall – it’s the big question. But I think it will underperform. On a purely financial calculation, I don’t think the numbers add up.”

Jeff Jarvis at BuzzMachine:

“Rupert Murdoch has declared surrender. The future defeated him. By building his paywall around Times Newspapers, he has said that he has no new ideas to build advertising.”

Surely, it is good for newspapers to explore new business models and they should be encouraged. I’ve long been an advocate of what I call a “Heinz 57” business model for newspapers. Their future will be defined by how well their publishers can manage multiple revenue streams from a range of sources from advertising to virtual currencies.

Please see: The “Heinz 57” Media Business Model – SVW

Tim Gentry, head of optimisation and effectiveness at the Guardian:

“It’s all about working out what’s right for different businesses. There isn’t one right and one wrong path, the fact we are committed to keeping our main site free doesn’t mean we don’t charge for some digital features.”

David Mitchell’s recent column:

“Rupert Murdoch may be evil, but that doesn’t mean his paywall is. The media mogul has been dismissed for introducing his Times paywall, but what if it actually works?”

If newspapers are to survive they should be encouraged to try many business models.

Author | Tom Foremski: In Silicon Valley

Tom Foremski: In Silicon Valley
Tom Foremski is a former Financial Times journalist and the Founder and Publisher of Silicon Valley Watcher, which is an online news site reporting on the business of Silicon Valley and the culture of disruption. More
  • Adam

    That's because they don't work. Show me a paywall with a substantial user base and I'll show you a unicorn riding a unicycle.

  • You keep repeating this, Tom: “Surely, it's good to experiment.” Yes, if one isn't experimenting with driving one's car off a bridge to see what happens. Experiment away. I'm merely suggesting what will likely happen: lost audience, lost discovery, lost revenue, higher marketing expenses. But, by all means, experiment away. Here's the bunsen burner. Have at it.

  • Andrew

    What about FT.com? They seem to be making some bucks….

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