This past September, in a study I conducted in the US, a small but significant percentage of participants told me that Google’ Consumer Surveys (GCS) were the current real moneymakers. In their experience,  GCSs were much better than paywalls. The adjective current is key.

As I write this, the industry press is reporting that John Paton, Digital First Media CEO, that naysayer and arch enemy of paywalls,  has declared to the world the DFM will reap tens of millions of dollars in the next two years from those very same paywalls that could never generate more than pennies.

According to Paton, these digital pennies are not strategic but tactical. To make ten million dollars at the 75 daily papers will require roughly $67,000 per paper per year. Sounds like a low hurdle – 31 DFM weekly papers have already erected paywalls.

Two questions come to mind, if there is this much money, why leave it on the table so long? Or if it is so little money that the expected decrease in visitors is not worth the increased revenue, well, no that can’t be true. Clearly, there is a net increase in revenue, tens of millions of dollars.

In 2010, one of John Paton’s lieutenants spoke to me at length about how in our modern world the vast majority of readers would read pirated news supplied by other readers. Charging for content will drive those readers to acquire that same content for free from a pirated source. I listened to that explanation and thought to myself that there must be something I don’t understand.

Now, to be fair, there are many things I don’t understand. However, 41 per cent of US dailies will now have a paywall and that percentage continues to rise. The majority of income at papers like the NYT has tipped from advertising to subscribers, so paywalls are real to many papers.

Over the last six or seven years I’ve dealt with an increasing number of financial people in the venture capital business. One person graciously gave me a small amount of invaluable tutelage: Never pay attention to what is being said by a company heavily leveraged or owned by VCs, look instead for who they are trying to influence.

John Paton is a master marketer. His Ben Franklin initiative grabbed headlines everywhere: his organisation would publish their products using only free software. In an article written by Editor & Publisher, one editor commented, “there’s a reason this stuff is free.” At the time, Paton’s company was in the process of replacing all of their editorial and advertising systems throughout the chain. When I saw John outside his office door, I asked him how much of this Ben Franklin project was to put him in a better negotiating position with vendors? He replied, that was part of it.

This brings us back to the study.

The study was prepared for the American arm of a British company that wanted to look at newspaper digital strategy in the US. The details of the study are proprietary, but like the NSA I will share some metadata.

I was lucky enough to deal primarily with publishers, managing editors, directors and C-level executives. Those executives with a reputation for strong vision and success were generally the easiest to contact and engage in conversation.

There is a new generation rising: The leaders who were most comfortable with their vision were generally in their 40s and younger. There is also new, young blood: People in positions of power in their 20s. Their grasp on the realities of our time and technology was apparent in their confidence in discussing their technology and solutions to business problems.

Regarding paywalls, one executive early in the study told me to be certain to tell any publication putting up a paywall, that paywalls are not the answer. Once a newspaper has erected a pay wall the income from it will be flat, year-to-year.

A very senior executive in a family-owned Midwestern newspaper chain set aside an hour for me while he drove from downtown Chicago to his office. His company’s vision was clear, their track record remarkable, and as a family-owned they could make decisions quickly.

Almost as an aside, he mentioned Google Customer Surveys as the thing that was bringing in unexpected amounts of money, “well into six digits”.

During the study, most participants vaguely remembered having heard something about Google Consumer Surveys, also called Micro Surveys. But a small group answered, hell yeah, we’re making tons of money with them.

After the study was completed, I spoke with participant Christian Ramirez about pay walls. At 29-years old, Christian is the digital media director at Wick Communications.

Christian was clear that Google Consumer Surveys were producing four times what paywalls produced, and there was no significant drop in viewership when the surveys were introduced to papers that never had a paywall. Publishers receive five cents for every survey completed. At Wick’s Williston Herald there is one survey on every page. According to Christian, most are single question.

I asked another publisher about how he introduced the surveys to his readership and was there any negative response. He explained to his readership that he could put up a paywall and ask them to pay to access the content, or they could answer a survey and pay nothing. Not surprisingly, the readership greatly favored surveys.

For a contrasting opinion, I spoke with Steve Larson of ourhometown.com. Steve produces software that scans articles for locations and then builds a mapping database. He is having great success with his product and Digital First Media is one of their clients.

Steve said he thought Google Consumer Surveys sounded very much like AdWords: there was very good money in AdWords in the beginning, and that money trailed off to roughly ten per cent of what it was.

When I asked Christian about this, he said he wasn’t worried, there will always be the next thing. Among survey participants who were doing well, that was a recurring theme: Nothing we do today will last very long, we need to keep looking for the ‘next thing’.

Interestingly, Paton implemented Google Consumer Surveys, complained that they depressed traffic and had dwindling returns, in contrast to the experience of the participants in the survey, and then withdrew from the programme. DFM owns DigitalTaxi a company that markets digital advertising. One must wonder if that had anything to do with the decision.

And so, while John Paton has discovered the profitability of pay walls, they’re not the answer. They are an answer, but one that has no growth. Before they’re even implemented, it’s time to start planning what comes next. Among Google Consumer Survey users in the study, no one had second thoughts and all were pleased with the return. As you decide what’s next, look at Google Consumer Surveys as the next thing.

 

Note: Google Customer Surveys are offered only to publishers in the USA and UK.

• Newspaper systems industry veteran John Juliano writes regularly for GXpress Magazine. Contact him at john@jjcs.com