What’s impossible to calculate, of course, is the long-term opportunity cost of driving away people who want to read your content but aren’t willing to pay. MediaPass’s Mitchell told me that in most cases, the act of putting up a paywall is the act of “essentially harvesting revenue from a loyal long-term audience” — people who have been reading the publication for years, and have turned it into a habit they don’t want to give up. That’s fine, as a short-term means of maximizing revenues. But it’s dangerous in terms of getting new loyal readers. Which is one reason why online media startups almost never have paywalls: they want as many people as possible to discover them. My expectation, then, is that newspaper paywalls will become both increasingly sophisticated and increasingly expensive over time — but that paywalls are not going to migrate very quickly out of the newspaper world and onto the rest of the internet. In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.
I don’t know if Andrew Sullivan or Paul Carr would agree that paywalls are a last resort – both The Dish (which has a “leaky” paywall) and NSFWCORP (which requires a subscription to see any content) seem to be doing just fine with small staffs, small subscription fees, and relatively small audiences. I guess it’s just a matter of outlook: the big newspapers are trying to be as big as possible, while Sullivan and Carr represent the movement to build sustainable and profitable small enterprises.