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The Newspaper Paywall Delusion

NEW YORK ( TheStreet) -- When I first moved to Atlanta three decades ago, I was told the city had one "monopoly" newspaper.

I had to laugh. I came here to work for a competitor to that newspaper, a weekly business paper. We also had a legal newspaper, an entertainment newspaper, a gay newspaper, papers for towns or counties in the metro area and several newspapers focused solely on African American people. Since then, we've had sports papers, Hispanic papers, even a local Korean paper.

Yet, friends who worked at the daily, mass-marketed, mass-distributed paper insisted they held a news monopoly. It was a sense of entitlement I found galling. They were telling themselves something that wasn't true.

That false sense of entitlement lives on in this nonsense about paywalls. The New York Times (NYT) claims great financial success with its paywall. News Corp.'s (NWS) Wall Street Journal does, too. The Washington Post (WPO) is about to erect one.

Never mind that Internet circulation could decline 90% with a paywall, as Monday Note warned two years ago.

The same is true today: Most papers today use "metered" paywalls that allow a little free use, but even these are not halting the industry's slide. As Michael Wolff wrote recently in The Guardian, they don't solve the problem of losing younger readers, or ad revenue.

A Columbia Journalism Review article from last June says the Dallas Morning-News circulation dropped 9 million/month after it instituted a paywall. The Memphis Commercial Appeal saw a 30% decrease in traffic to get 1,000 paywall subscribers. The Columbia Tribune lost 25% of traffic and a shift to a local, free rival in order to secure $80k in revenue.

In a recent profile of Henry Blodget, who runs a competitor to this site, Ken Auletta of The New Yorker repeats the industry script that it's inevitable, that "content must be paid for," that "you can't give it away."

Nonsense. Newspapers "gave it away" in print for a century. The price never covered more than the cost of distribution. What do publishers think is going to happen on the Internet when they all erect paywalls? Do they think the news won't happen, that it won't be published, that people won't somehow find out about it?

The way they run their paywalls shows this isn't so. Newspapers syndicate their stories to other Web sites, which aren't behind paywalls. They talk about their stories on TV. Markets, like nature, abhor a vacuum, and when a local newspaper goes behind a paywall, the TV stations and all the other specialty publications in town fill that vacuum.

Maybe their stuff isn't "as good." Maybe it's not "authoritative." But the nature of news is that it's widely reported, that everyone knows it. Writers want readers, the more the better, and will naturally gravitate to sites with high circulation. You can't hide the news by putting it behind a paywall, any more than you can control a market by claiming to be a "newspaper monopoly."
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