Getting people to pay for content is the major focus for online. The Financial Times is taking a big lead in this area with more than 120,000 paying customers forking out £4 a week = £500k/week revenues . They claim to have 1.9 million registered users as well. The FT is an interesting case study as it has a very loyal following, is globally respected and customers have money.(ok, so WoW has 11.5mm paying customers paying £7/month)
This move raises some interesting questions? Is 120,000 a large or a small set of customers? More to the point is £25 million in revenue a year a big enough number? For the FT as a publisher any cash has got to be good cash. They post 480,000 daily paper readers. They claim 55 million pageviews and 2.7 million unqiues. As a guess maybe the can monetize 75 million page impressions and yield £2.5 which is less than £200,000 month. The New York Times said back in 2008 that they needed 1.3 Billion pageviews to make online interesting-- they only had 173mm at the time.
What is the trade-off? Blocking traffic will certainly reduce pageviews big time. Fewer pageviews reduces click related ad revenue. Anyway for the Ft.com even if they lose 50% of their pagewviews--they only need 25,000 new customers in a year to break even on their paywall--which is less than 1% conversion on their uniques. The FT is really a sort of financial club, so is losing a bunch of non-payers even negative? More likely it will make their paying customers feel like they are getting inside track/info.
A bigger issue for FT has to be the cannibalisation of the newspaper subscribers. The better the ft.com offering, the less likely it is that busy jet-setters, captains of industry will buy the physical paper and just take the iPad versions. Probably 80% of the 120,000 paying ft.com customers also are within the 480,000 paper subscribers. Do you want the FT twice? Do those customers care? Or are the delivery mechanisms useful for different purposes?
The New York Times, which is not clubby and has much larger circulation and online viewership, is launching a premium content plus special viewer offering called the Times Reader 2.0. It is an interesting move to make the paper more interactive online -- cool enough crossword puzzles! Maybe they will have special first person shooter games soon -- play the Obama administration game of hunting up votes in Congress?
Dropping the free access also expands the market for their competitors--like Economist or Yahoo Finance. Economist is still trying to get their own paywall gambit lined-up. Bloomberg is free on tv also. The dual track access via google search is perhaps ok as tech solution to peek and pay, but really looks like bait/switch. Hitting the excerpt is more frustrating and I don't think will help FT eat their customer cake and sell the crumbs to the unwashed public.
In terms of online community -- is there something to consider about a closed community versus a public one? Perhaps this paywall strategy will do quite a bit of damage to the randomness of comments and the dynamic nature of what the ft.com could be otherwise?