Digital paywalls are the latest effort to save journalism from declining ad revenues and plummeting subscriptions to the paper product. But in Washington, this model has been around for decades. Venerable Beltway pubs such as National Journal, Congressional Quarterly (which has merged with the Capitol Hill newspaper Roll Call), and a slew of newsletters and trade publications have held dominion over the territory of paid content, selling deeply reported analysis to a sophisticated audience of policy professionals. And as their New York counterparts step into the paywall pool, Washington publications are experimenting with the best ways to balance between selling access to their content and giving it away for free.
Bloomberg, the financial-news giant, already conquered Wall Street by billing financial-services professionals thousands of dollars for up-to-the-second market data. Now, it’s making another huge bet on a paywall model with the launch of a political and policy news and data portal, Bloomberg Government, which aims to decode the mechanics of government for a business audience. A subscription to BGov, as it’s known, sells for $5,700 a year. Bloomberg has reportedly committed to spending $100 million to launch the new service, which resides strictly behind a paywall—no freebies for the general public.
Politico, the all-politics Web site and daily paper that’s never charged its readers a cent, is also building a paywall. Politico Pro launched this month, billed as an in-depth source for the “politics behind policymaking” on the health-care, energy, and technology industries. A subscription starts at $2,500 per year. And that’s just for one coverage area. Each additional area costs another $1,000. Politico Pro has hired a separate staff of 30 journalists, and plans to hire ten more.
National Journal, a veteran of the pay model, is also reexamining its approach after a redesign and a major buyout and restaffing effort that turned over about 50 reporters and editors. National Journal is effectively putting out two publications these days: One outside the wall, offering free news and breaking analysis, the other behind the wall, giving subscribers the kind of in-depth, sober reporting that commands an annual price of thousands of dollars. A subscription to the print version of National Journal goes for about $2,000 per year, and it includes access to the subscriber-only section of nationaljournal.com.
(Full disclosure: I worked for the magazine for nearly five years as a staff correspondent, and I was part of a team that recommended merging the magazine staff with that of Congress Daily, a twice-daily publication about Congress and Capitol Hill. That plan was largely put into action after I left to join The Washingtonian. I was not an employee of National Journal when staff were offered buyouts.)
There’s a renaissance in this old subscription business. And maybe that’ll be good for the news business in Washington. It’s far too soon too tell if paywalls will reverse a decade of decline. But the fact that so many big-brand publications are investing so heavily in expensive editorial products signals that media owners think there’s big money behind the pay wall.
And yet this time-tested structure is presenting its journalist-builders with a conundrum: How much content do they put in front, where anyone with an Internet connection can read it, and where the information is most likely to generate buzz? And how much goes behind, where it’ll be read by a narrow universe of consumers and generate revenues but maybe not a lot of attention? The answer to this question is central to the fortunes of every media company in town—now more than ever.
Washington’s information metabolism has changed. Politics and policies are incessantly scrutinized. Rapid response by officials and interest groups has become the only way to stay ahead of the information wave. To feed their appetite, journalists have to dig up more scoops and report the news as it breaks. Paywalls seems antithetical to the free-flowing, linking, buzzing “conversation” of contemporary media. They’re restrictive. But they’re lucrative—and that makes them indispensable.
Paywall or Perish
BGov has had the most buzz of any new-media outfit in the past year, much of it founded in other journalists’ fear of Bloomberg’s reputation for spending lavishly on its new ventures. They figure that if Bloomberg is in the game, it’s in to win.
So far, the product has fewer than 2,000 subscribers, which may include individuals as well as institutions. Considering that BGov only hired its first employees a year ago, and that trial users began testing out the site in the summer, that’s a respectable number for an expensive subscription-based service. But traffic to the BGov site is anemic, according to some recent internal reports obtained by The Washingtonian. The top stories in recent weeks generated only a handful of page views—usually in the dozens, and no more than 50.
To be sure, any early reports on Web traffic or subscription numbers should be judged cautiously. But BGov reporters say that as a newsroom practice, even their exclusive news stories aren’t put on the company’s public site, where they’d help generate some attention for the brand. Some of BGov’s journalists are starting to wonder if they can grow a sufficient audience from behind a paywall.
The paywall predicament is on the minds of National Journal’s editors, too. But unlike BGov, they’ve taken a mixed approach, trying to put enough information beyond the wall to get people talking and visiting the publication’s Web site, but not so much that paying subscribers feel cheated.
“Information that’s worth paying for” is National Journal’s mantra, says editor-in-chief Ron Fournier. Justin Smith, the president of Atlantic Media Company, which owns National Journal, says readers are looking for “an insight edge,” a piece of news or analysis that gives them a competitive advantage in Washington. This is journalism as arbitrage. It’s a model that Bloomberg perfected on Wall Street, where brokers and traders depend on having data literally seconds before their competitors, but it hasn’t really been tested on a political audience before. This may be the moment, because Washington readers are demanding insight—or at least access to news—faster, on more devices, and through more outlets, particularly social media such as Twitter, where National Journal and its reporters have a growing presence.
Last fall, National Journal relaunched its flagship magazine, its Web site, and it’s brand in order to compete more aggressively in the daily-news space. The company hired the Boston-based advertising firm Arnold—which created the daffy auto-insurance saleswoman Flo for Progressive—took the space out of its name, and reengineered the entire newsroom, orienting it toward breaking news and fast-paced, often on-the-fly analysis. The weekly magazine is still published, and it still costs a lot of money, so editors have tried to make the information inside feel more urgent. They’ve added a section to the back of the publication called “Need to Know,” a kind of magazine-in-miniature, covering a range of policy areas and issues.
Each day, National Journal’s editors decide which stories to offer for free and which to give only to subscribers. So far, most of the stories are landing behind the paywall. The company reports that prior to the relaunch, about five original pieces of journalism were published on nationaljournal.com each day. Today, that number averages between 60 and 80 pieces, and about 75 percent of them are available only to subscribers. Judging by stories posted over the past several weeks, the free content is usually a news scoop or reported analysis on a story that’s widely covered by other media.
National Journal’s free coverage of President Obama’s 2012 budget, unveiled Monday, was a case in point. The multi-media package of stories, graphics, and videos was extensive, broken down by subject area, and it was all free. National Journal also launched a full-court press on the revolution in Egypt, one of the most widely covered stories in recent years, with reports coming from its White House and national-security teams.
Living a Dual Life
If National Journal’s paywall strategy is judged purely by Web traffic, it’s arguably been a success. The company reports that traffic to nationaljournal.com doubled from October to January. National Journal also seems to have recovered from what Smith characterizes as a “slight decline” in subscription renewals during the recession. Today, renewal rates are between 85 and 88 percent, a healthy range.
It was the dip in renewals that helped prompt National Journal’s leaders to ask readers about what more they wanted from the publications. Their response was instructive, Smith says: “They said reaching me once a week,” the frequency of the magazine, “isn’t helping me.” He adds, “People told us that National Journal often started the conversation [about policy] but wasn’t always in the conversation and the news flow.”
The other factor in National Journal’s decision to reexamine its business was the rise of Politico. By giving content away, and by breaking news, Politico managed to capture much of the “mind share” of politics coverage, according to current and former National Journal staff. It became the publication that everyone in Washington seemed to be reading, or at least discussing. It also attracted a national audience in large part through TV and radio appearances by Politico reporters and editors.
As the buzz around the publication reached a fever pitch, it put National Journal’s advertising sales team in a particularly tough spot, sources say. Companies and advocacy groups wanted to place their ads in the flashiest publication. National Journal’s counter-argument was that their readers are among the most influential class in Washington; the very exclusivity that a paywall created made its readers a more attractive audience. In effect National Journal was the smarter, “up-market” buy for those who wanted to reach decision-makers in the capital. Politico, by comparison, was less serious and attracted a following of less-important people.
Yet Politico holds the largest share of the Washington advertising market. Its competitors are quick to charge that it got that distinction by undercutting the rates of other publications in town, effectively low-balling them out of their position. But Politico’s success on the advertising and editorial fronts has been instructive, and it may point to a larger truth for all other companies: In order to be a media player in Washington today, a publication has to have a life outside the paywall.
Smith is measured in his strategy: “This isn’t a war of snowflakes,” he says, speaking of quick-hit news stories whose importance vanishes almost as soon as they’re published, like a snowflake melting when it hits the ground. Coverage outside the wall will continue to be a point of focus, but the action behind the wall is what will keep National Journal in business.
“We’re going after stories that matter to our customers,” Smith says.
And there’s a big difference between a customer and the general reader. It’s measured in dollars.