Paywalls – FT for, Telegraph against

Lionel Barber, editor of the Financial Times, was quoted in the Guardian yesterday as saying that paywalls are inevitable and predicting that “almost all” news organisations will be charging for online content within a year.

Barber said building online platforms that could charge readers on an article-by-article or subscription basis was one of the key challenges facing news organisations.

“How these online payment models work and how much revenue they can generate is still up in the air,” Barber said in a speech at at a Media Standards Trust event at the British Academy last night.

“But I confidently predict that within the next 12 months, almost all news organisations will be charging for content.”

Barber is the latest leading executive to suggest the newspaper industry has to radically overhaul its existing business model.

Rupert Murdoch said in May that he expected his News Corporation newspaper websites to start charging for access within a year…. Murdoch’s rival, the New York Times, could begin charging for online news within the next three to four weeks.

Barber said last night that the Financial Times had pioneered the concept of a “frequency model”, giving access to a limited number of articles on the web before asking users to subscribe.

“We are seeing sustained and growing revenue as a result of our strategy of premium pricing for quality, niche global content – crucial at a time of weakening advertising,” he added.

The Financial Times website, FT.com, has more than 1.3 million non-paying registered users worldwide, with another 110,000 paying subscribers.

In response, Shane Richmond of the Telegraph raised a few salient points. None are new, but they’re worth repeating:

At the root of all this is the argument that if you don’t pay for newspapers online then soon there will be no newspapers and then you will all be sorry. Or: if you don’t pay for newspapers online then soon there will be no newspapers and then democracy will die and it will be your fault.

The internet has allowed us to build enormous audiences and we have to turn that into a business. Advertising alone won’t do it, that seems clear. (However, if our competitors would like to retreat behind paywalls then that will certainly make the advertising market more pleasant for a free Telegraph.) And I’m convinced we can’t charge for content because it doesn’t have enough scarcity value.

However, we have known for years that readers will pay for niche services, such as Fantasy Football or crosswords. So what services, what products, what scarce goods can we provide to our regulars, our loyal readers, our community? I’m certain that the answer to our problems lies in the answer to that question.

More from Shane here.