Recently, Globeinvestor (Canada’s leading business publisher) converted to a paywall which got a lot of people angry but with declining print circulation numbers, it was only a matter of time.
Paywalls have some elements of a prisoner’s dilema.
The best outcome for the industry would be for all providers to institute paywalls on consumers. However, the newspaper that remains only ad supported obtains higher traffic, increasing their profits at the expense of the industry.
There are a number of assumptions, the failings of which provides a clue for how to deal with the problem.
For example, it assumes a universal product. Many newspapers articles are simply press releases or reuters syndications which are widely available. Consumers are more likely to pay for content that has superior analysis or unique content. This unique content also explains why small town newspapers have had a slower decline than large city markets. As Warren Buffett mentioned on CNBC last month: “The bigger the community, the harder it is to have a community feeling.”
For more on the mental models Charlie Munger speaks so highly of, check out the Farnam Street Blog page.