Is 10% the magic number for paywalls?

Steve Outing wrote a useful post about the recent Aspen Institute conference, “Of the Press: Models for Preserving American Journalism.”

He said discussions about business models were more realistic than he’d expected. “My fears were largely abated. I can’t predict with any certainty that the newspaper industry will deploy some of the best ideas to come out of Aspen, but my sense is that most news executives aren’t planning to drive off a cliff with a last-ditch effort to fight back against the nature of the Internet and its free-distribution ways. I’m a bit more confident that they’ll adapt, though I still expect to see more newspapers go out of business.”

Two points he mentioned that stayed with me were this suggestion from Jeff Jarvis:

Jeff Jarvis suggested that newspapers, as they lay off their talent, would be wise to offer buyout money to fund the former employees’ news-related start-ups. Rather than severing the relationship forever, the publisher could invest in those who depart to invent new media businesses. Don’t view this as “funding the competition,” but rather as maintaining a working relationship with the new entity, probably partnering with it in some way, and taking a financial stake in it.

And this magic number for paywalls:

10% is the limit
Will news publishers charge for content online? Almost certainly, yes, for some of it — actually, for a very small part of it. I believe there is consensus among most (not all) news publishers that they can and should charge online users (and mobile, too) for the extra-special, can’t-find-it-elsewhere, this-will-make-you-more-money-or-improve-your-life content they produce. And most of the news content that is the traditional fare of newspapers will remain free online, supported by advertising and additional revenue streams, and benefiting from, as Jeff Jarvis would say, Googlejuice.

If a news publisher can get 10% (probably less) of their most loyal online users to pay for something, then that’s one more significant revenue source to make up for the lesser value of online ads and newspapers’ losses in classified advertising.

The 10% amount is significant as an upper limit of how much of a devoted audience might be convinced to pay. Vivian Schiller, currently CEO of National Public Radio but formerly a digital executive at the New York Times, told fellow Aspen panelists that what she experienced at NYTimes.com during the TimesSelect experiment was nice growth initially, as the Web site asked its users to pay an annual fee for “premium” content like Op-Ed columnists’ work and archive access. But the growth stopped at around 225,000 paying subscribers, meaning TimesSelect was worth about $10 million a year. Times management concluded that they’d make more money from advertising on the formerly hidden-behind-the-paywall content, so the 10% growth cap confirmed the wisdom of shutting TimesSelect down.

Much more in Steve Outing’s post.