The “paywall problem” isn’t particularly complex, either in economic or technological terms. General-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem. Everything else is a detail.
The classic description of a commodity market uses milk. If you own the only cow for 50 miles, you can charge usurious rates, because no one can undercut you. If you own only one of a hundred such cows, though, then everyone can undercut you, so you can’t charge such rates. In a competitive environment like that, milk becomes a commodity, something whose price is set by the market as a whole.
Owning a newspaper used to be like owning the only cow, especially for regional papers. Even in urban markets, there was enough segmentation–the business paper, the tabloid, the alternative weekly–and high enough costs to keep competition at bay. No longer.
Why is it so hard for general news outlets — newspapers, broadcast, websites, etc. — to get this? Is it hubris? Ignorance? Desperation? The insanity and inanity of this is why I’ve had to limit my exposure to future of news / future of journalism discussions. I’m at the point now where I believe the whole news industry needs to be ripped down and rebooted. The folks in control are too far gone. There’s nothing to save.