The newsonomics of the digital-only paywall parade

Nieman Journalsim Lab reporting:
Paywalls have taken their share of abuse since The New York Times reopened the digital circulation debate three years ago. But in those three years, my, how things have changed. Charging for digital access has gone from experimental to mainstream. In fact, you’ll be hard-pressed to find many daily newspapers in the U.S., Canada, Scandinavia, or Germany that won’t be charging something for digital access by the time 2015 rolls around.
But as 2013 begins, we see a new twist: Now it’s digital-only news and magazine sites and journalists who are about to launch their own digital circulation strategies. Yes, it’s one of few times that old, tired legacy media — newspaper companies — are the leaders and digital-only media the followers. There’s an irony to be appreciated in that, if only briefly. It’s also another reminder that anything you think you know about our digitally disrupted media future may be wrong; early in this revolution, we’re all reminded to be humble.

How much do top-echelon journalists need media brands? How much do brands need top-echelon journalists?

It’s Andrew Sullivan’s bold independent move — untethering his work and his business from a media company (The Daily Beast) — to go reader-direct and paid that has gotten the most notice. In the first 24 hours after he declared The Dish’s independence, he took in $333,000. That’s about a third of his $900,000 target, the amount he says he’ll need to sustain his small group of five staffers and two paid interns.  Among digital-native media, Sullivan’s not alone....
It’s true that digital advertising passed print (newspapers + magazines) in the U.S., Brazil, Russia, and globally last year. So we’d expect publishers to be looking at a bonanza, with digital ad spending still rocket-propelled, growing about 15 percent a year. Instead, most are struggling to generate significant digital ad growth. The very short story: (1) Five companies (Google, Yahoo, Microsoft, Facebook, AOL) take 64 percent of that digital spending (Google alone takes 41.3 percent), leaving a smaller and smaller “other” slice for everyone else in digital publishing; and (2) The near-infinite inventory of ad opportunities creates downward pressure on pricing, especially for imperfectly targeted display ads, the main play of most publishers. For some, advertising is simply worth less effort — or none at all. As Andrew Sullivan put it, “We have emphatically not ruled out advertising forever. It’s just that, right now, it’s more trouble for a site like ours than it’s worth.”
Reader revenue, on the other hand, is on the upswing. Newspaper publishers have seen double-digit and higher increases in circulation revenue if they’ve deployed paywalls well. More than 100 Press+ clients have added all-access (tablet/smartphone-plus) and increased their subscription prices an average of 20 percent, says Press+ cofounder Gordon Crovitz. They are seeing circulation revenue gains of 15 percent or more, even as they lose a couple of percentage points of subscribers and see 10-15 percent of the subscribers check that “opt-out” box, keeping the print coming at the old price. For some, then, circulation revenue (in the first year at least) will more than make up for ad revenue downturn....
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