With the Washington Post, San Francisco Chronicle, and The Telegraph (U.K.) all jumping on the paywall bandwagon recently, Felix Salmon says, "It's paywall season right now":
There are three big drivers of these decisions. The first is that there's no hope that online ad revenues will ever grow to replace print ad revenues. They're barely growing any more, even as they're still only a small fraction of total ad revenues. The second is that for various reasons, newspapers need to "cling to the mantle of quality at near insane costs", as Sarah Lacy puts it. If costs are stubbornly high while revenues are shrinking, then the only possible solution is to try to raise new revenues by any means necessary — or go bust.
Lacy adds, "What the groups on either side of [the old/new media] line share is a tacit admission that online ads simply don't work when it comes to journalism, at least in the current incarnation."
What's it look like when a news outlet goes all in on online ads? Ernie Smith points to the Seattle Post-Intelligencer, which went online-only in 2009 and has "taken its sizable legacy as a West Coast hub of great journalism and turned itself into the West Coast version of the Daily Mail — a news outlet in service to the internet."
Here’s a company that had a four-year head start to reinvent its model, its journalism, and its overall mission. And here’s what the business side has apparently been doing the whole time — figuring out new ways to run advertising on top of advertising on top of advertising. You want to root for them — for their mission, for their potential status as a trailblazer — but, this is what they’ve spent the past four years doing. To put it simply, it’s a bummer. It disrespects the journalists who lost their jobs and the ones that have barely skated by. It shows how bereft of ideas the business side is for making money from journalism on the Internet.
Consider: The number of people covering state legislatures has declined by at least a third, and most of these have not been replaced by reporting-oriented bloggers. In 2003, 39 people covered New Jersey government; in 2009, 15 did. Georgia had 14 full-time statehouse reporters in 2003; in 2009 it had five. In Pennsylvania, 40 correspondents covered the legislature in 1987. In 2011 there were 19 and Matthew Brouillette, president of the Harrisburg-based Commonwealth Foundation, says "You can swing a dead cat and not hit anybody in the state Capitol newsroom." It's hard to say what exactly is not being reported, and surely some of those correspondents were doing duplicative or frivolous work. But do we really think such a drop has improved matters?