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Why Pay-walls won't work

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Wednesday, Dec 16, 2009

Last week, the Wall Street Journal had a good scoop about Apple and their purchase of the Lala service but WSJ also made news in another way that they (and especially Rupert Murdoch) didn’t intend.


When Apple bought up Lala (a service that offered limited free streaming and shared playlists), the big question in the music biz was ‘why?’  WSJ seemed to have the answer in a December 11th article, saying that Apple was merely using Lala to retool their iTunes architecture.  Like many WSJ articles, this story was stuck behind a pay-wall which let you read the first few sentences and then asks you to subscribe (pay) to read the rest.  Murdoch is ultimately planning to put all Newscorp publications into the same framework of pay-to-read. 


There was one little problem with the Apple scoop that WSJ had- you could read about it without paying Murdoch.  That’s because both the Yahoo! Tech blog and Ars Technica had their own stories about the WSJ article itself, quoting and referencing it several times.


In a way, it’s a feather in the cap for WSJ to make news themselves but it also points to the problem of pay-wall- you can keep people from getting direct access to the stories themselves via search engines but the info can just as easily leak out to other legit sources and be read without any pay toll in your way.


So does that defeat the whole purpose of pay-walls and make them useless?  As this happens again and again, Ol’ Rupe might raise a stink and demand that other publications will have to pay him to quote his stories but unless a huge chunk of the articles get copied elsewhere, the law ain’t on his side.  He and other publications have said that they’re ready for a drop in readership (and thus ad dough) as they demand money to read their articles but if the material is getting filtered out to other sources where you DON’T have to pay, what’s going to be the incentive to pay up for the original articles?


But give Rupe a little credit- at least he’s not as stupid as Variety magazine.  According to Folio, they’re gonna use a pay-wall too.  Variety is more hardcore in its demands for its readers though- 10% of the online readers will be prompted to pay up after reading 2 pages.  The price?  $248.  That’s about $50 more expensive than an iPhone.  Which one of those do you think will be more useful to you and a better value?  And which one do you think will get more sales?  And by the way, Variety’s price is about $100 more than a WSJ subscription for both their print and online edition.


UPDATE: According to this article from The Wrap, Variety’s decision might be a last ditch desperation move.

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