New revenues hold much greater promise than paywalls

Buttry Diary reporting:
My basic view about paywalls hasn’t changed since I wrote any of the pieces I cite at the end of this post. All those pieces and this one come down to this: The potential revenue paywalls will yield isn’t worth the damage they cause. And they cause twofold damage:

1. They divert energy and investment from development of forward-looking revenue streams with far greater potential.
2. They limit your audience, especially among the young adults on which any business of the future must be based.

My update is simply to share some new information that underscores (again) those points. But I’ll add this point in the international context: I don’t pretend to understand the market dynamics or cultural factors that might influence the success of paywalls in other nations. My views apply strongly to the U.S. market and culture and to a large extent as well to the Canadian market and culture. My experience and expertise beyond those countries is minimal.

New revenue sources have greater potential

The Newspaper Association of America’s revenue profile, released April 8, does not provide dollar figures for digital subscription (paywall) revenue, but says digital-only subscriptions totaled about 1 percent of total circulation revenue, which was $10.4 billion. So digital-only subscriptions totaled about $100 million.
NAA does not give a figure for “bundled” or “all-access” subscriptions, where people pay for print and digital subscriptions together, though it says revenue from bundled subscriptions grew fivefold from 2011. That’s a nearly meaningless number, since lots of places were just launching bundled subscriptions in 2011 and 2012.
Ken Doctor is an optimist about and advocate for paywalls and he projects $300 million in revenue from U.S. paywalls in 2013. That’s gross revenue, so you need to subtract the substantial fees paid to paywall operators such as Press+ and MediaPass, as well as promotion costs.
The NAA report for the first time broke out the newspaper industry’s revenues from “new revenue sources.” The specific categories cited here included two that were growing rapidly: Digital agency and marketing activities, up 91 percent during the year, and e-commerce and transactions (a service I advocated four years ago in my Blueprint for the Complete Community Connection), up 20 percent. The other three “new revenue sources” actually aren’t all that new (I guess they’re newly counted) and all were declining: events, commercial delivery and commercial printing.
http://stevebuttry.wordpress.com/2013/04/26/new-revenues-hold-much-greater-promise-than-paywalls/