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Guardian Media chief executive Andrew Miller is right that paywalls are limited; that’s why we need “paywalls 2.0″

In a recent post, Guardian Media chief executive Andrew Miller defends his newspaper’s decision not to put up a paywall, saying he doesn’t see paywalls as a “one-size-fits-all” solution to the media industry’s current woes. I think he’s absolutely correct, but perhaps in a different way than he meant. In a customer-centric world, consumers are more savvy and more demanding of the “brand” of their choice. Paywalls are not a universal solution because media companies do not have one-size-fits-all customers.

Miller is of course right that the traditional advertising model that media companies have depended on for decades is now broken in the move to digital. And he’s right that every media company is different, and should have different strategies to survive this shift. But I think he misses the larger point: in the search for the right business model that will enable them to survive the shift to digital, media companies need an approach that puts the customer front and center.

This means meeting customers where they want, which is access to compelling content on a variety of devices. It means giving them choices as to how strong they would like to signal their loyalty. And it means establishing a deeper connection between the consumer and the brand the media property represents, which may extend beyond traditional journalism. We call this “Paywall 2.0.”

newspaperMedia companies today remain trapped in a century-old product-centric way of thinking about their business. The printed newspaper is a product, the tablet magazine is a product. The name of their game is to ship as many units of the product as possible, by putting the product into newsstands, through home delivery, through “digital newsstands” on tablets and browsers. For the Guardian, the way to ship more of their product is to go international, hence the expansion into Australia.

Paywalls actually are a chance to shift this thinking. Rather than viewing the paywall as a toll booth, media companies should see paywalls as a chance to reconsider what their customers want. Do some customers want to simply view a few articles, while other customers want unlimited access? Do some customers want today’s news only, while others want the ability to search the archives? Do some customers want access only via an iPad, or home delivery, while other customers want to maintain context across all their devices? Do local readers want the same thing as readers that have moved to a foreign country, but remain loyal to their hometown paper?

Once they understand what their customers want, media industries can use the power of paywalls to design bundles and pricing plans that meet the customers’ needs, strengthening relationships with them to ensure they keep coming back for more. In fact, one of these plans can be a free plan — this is essentially the freemium model that technology companies have used with great success over the last few years.

We think one of the most interesting parts of the article is actually in the comments, where one reader says:

“Why is it that Miller thinks the future is America and Australia when Eric Schmidt insists that the future is mobile, social and… er, local.”

Indeed, the Guardian’s expansion into Australia sounds like the old saw where the way a company will overcome a broken business model is to “make it up on volume”. In this modern media era, success is not about how many units you ship or products you buy. Today, success is about how strong your 1:1 customer relationships are and how you are monetizing those relationships. In the long term, the media companies that do the best job of creating valuable relationships will be the ones that thrive in the shift from print to digital.

Photo courtesy of NS Newsflash under a Creative Commons license.