Variety to Lead Old Media Back to Pay Wall Ghetto

Variety, the Hollywood trade newspaper with its only secret language based on words like "ankle" and "boffo" into its copy, has confirmed that it plans to put most or all of its web site behind a paywall.

Nikki Finke broke the story ("TOLDJA!") on Wednesday, but the paper has confirmed the rumor. (She also, incidentally, reported that Variety's chief rival the Hollywood Reporter planned to kill its print edition, a claim that the Reporter's parent company has flatly denied.)

The return to a subscriber-only site is the end of a three-year experiment in free content for Variety, which charged for web access until early 2007. But the increase in traffic (it claims about 2.5 million visitors per month) didn't drive a sufficient rise in ad revenue: Publisher Brian Gott told the Associated Press that "the more traffic you get, the lower [rates] an ad buyer can demand and it's diminishing returns."

At first that made no sense to us—more traffic might mean a CPM discount, but it's more traffic, so ad revenue should go up. But Variety's traffic bump consisted of an audience of non-Hollywood rubes out there in America that none of its insider advertisers cared about reaching, while the brand advertisers that do want to reach all those rubes probably aren't interested in doing so via an elite niche publication.

So while the Los Angeles Times and AP suggest that Variety is a coal-mine canary and situate the move within the ongoing struggle for newspapers to make money online, we think it's more of a return to the mean for a paper that needs to charge a lot of money to a very few people in order to make any money. Niche works great online, but the number of advertisers who find an audience like Variety's useful is finite, and they're already paying to advertise in the print edition.

Anyway, now instead of linking to Variety's insider breaking news, a whole bunch of blogs will just be cutting-and-pasting or rewriting it.