Pay Walls And Advertisers: Do News Orgs Have To Choose?

wsj222.jpgWhen Long Island local newspaper Newsday decided to put its Web site behind a pay wall earlier this year, it seemed like an obvious conclusion that there would be less people visiting the site. If you start charging for a previously free item, your consumer-base is going to drop.

If this seems like common sense to most people, did everything in its power to convince the media that the 34 percent dip in its traffic once it enacted a pay wall was due to anything but the obvious $5 a week premium charge.

So why all the denial? still keeps advertising on its Web site, which creates two potential revenue streams for the publisher. Unfortunately, without readers swiping their cards for the site, Newsday‘s advertisers aren’t getting what they paid for in potential consumers.

After Rupert Murdoch took over control of The Wall Street Journal in 2007, speculation swirled over whether he would lift its pay wall curtain. At the time, PBS’ Mediashift blog asked “whether the Journal can make back the loss of $65 million in online subscription revenues — and likely more losses in print subscriptions — by getting more people onto a free site to serve up and sell more ads. The social media question is whether is losing out on all the blog-link love and conversation online by putting up its pay wall.”

We predict this question will come into the forefront even more in 2010, but in the opposite direction — and isn’t it funny that Murdoch is again at the center of the debate? Now we wonder, will news organizations be willing to give up their blog-love and those tenuous advertiser dollars in exchange for guaranteed subscription fees? Or will companies not have to choose, wooing advertisers to still pay out despite the steep decline of unique visitors?

Perhaps by marketing their sites as consumer niche spots for specific types of products, a publisher can keep both its pay wall and advertising dollars coming in. (Perhaps too late for it now, but papers like The Washington Blade could have used this formula to sell gay-targeted advertising space while potentially charging a wider audience than its print readers.)

But it will be a hard sell, both to the advertisers who will have a smaller audience to cull from, and the readers still wary of paying for previously free content.

Previously: Newsday Prepares To Go Behind Paywall Next Week, Sees Pay Wall-Induced Drop In Traffic