Digital First Media CEO John Paton has gone from one of the most notable pay wall skeptics to the latest convert. Sort of. Paton announced recently that Digital First is rolling out pay walls to its 75 daily newspaper sites across the nation. In the announcement, Paton first boasted that digital ads for Digital First had grown 89 percent – from 2009 to 2012. But, “we need more gas in the tank if we are going to complete this journey of print-to-digital transformation…After a lot research by our team, we believe an All-Access print-digital subscription initiative is necessary to buy us that proverbial gas in the tank.” But he makes it very clear that he doesn’t believe pay walls to be a silver bullet – for Digital First or for anyone. “Let’s be clear, paid digital subscriptions are not a long-term strategy. They don’t transform anything; they tweak. At best, they are a short-term tactic.”
Analyst Ken Doctor, on his Newsomonics blog, pointed to Paton’s comments – from as recently as April—when he said to PaidContent, “I don’t think pay walls are the answer to anything. If we’re swapping out print dollars for digital dimes, I think pay walls are a stack of pennies.” But Doctor makes a case that those pennies matter – especially considering that when Digital First puts up its pay walls, it will bring the percent of pay walled daily papers in the U.S. to 41 percent by his count. Doctor writes, “Circulation revenue was up 5% in the U.S. last year; I expect it to be up by that amount and more for 2013. Those are meaningful mounds of pennies, amounting to often a half a billion dollars for the industry.” The tide is turning, Doctor writes, to more reader-based revenue. “By the end of this year, we’ll be up to close to 30% in reader revenue, both because of pay walls and greater ad decline. The New York Times is already at 56% reader revenue…Strong dailies like the Star Tribune are in the mid-40s. Expect much of the industry to share similar economics by 2017.”
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