Behind the Times of London Paywall

You could have seen this one coming. Everyone has been rushing to jump on the news that Rupert Murdoch’s paywall experiment in the U.K. has cost theTimes of London a substantial portion of its readers, a full two-thirds.

But the Financial Times explains that the paywall hasn’t been as bad as some expected and that much of the traffic loss is about retraining Times readers:

According to figures collated by Experian Hitwise, which monitors internet traffic, the most significant fall in visits was in the weeks just before the paywall went up, when visitors were asked to register before viewing Times articles. Traffic fell 58 per cent in the five weeks between May 22 and June 26, with The Times’ share of UK news and media web traffic falling from 4.37 per cent to 1.83 per cent.

In the week after charging began on July 2, the rate of decline moderated, although World Cup news might have boosted web visits. Between July 3 and July 10, visits fell to 33 per cent of The Times’ pre-registration level, or 1.43 per cent of the market. “The big drop off was actually during the registration period,” said Robin Goad, research director at Experian Hitwise, who collated the data. “But since the site has gone to fully paid there hasn’t been much more of a fall.”

The FT has it a little backwards there about the World Cup. Big events are exactly what drive paid media. You can’t take the Times‘ strength away from it by saying the World Cup was on. In fact, you have to look at the numbers as a base from which the newspaper can rebuild its brand value (the idea that it’s worth paying to read the journalists who appear in the Times).

Much has also been made of the fact that the Times is the first general interest paper to charge for content, as if the Wall Street Journal and Financial Times are successful in charging on the Web only because they’re business papers. That’s a fallacy that everyone passes off without examination or waves on with the idea that everyone expenses their WSJ or FT. Really? Where? What company hasn’t cut those costs yet in this recession?

No, the reason those papers can charge for their content online is that they’ve been charging for it online for a long time. They trained their readers to believe the content was inherently valuable and not a commodity. The readers responded with loyalty and subscription fees.

There was a good case for grabbing readership during the expansion of the Web. But now it looks like the smart move was to hold back your best content and make sure it remained accessible only to those willing to pay for it. In that sense, general interest newspapers undermined their own value.

But the Times of London’s initial experience shows that value can be regained in relatively short order (if the product itself is worthwhile).