By Tien Tzuo, CEO

The Washington Post, one of the last holdouts of the old free model, has announced the likelihood of putting their content behind a paywall. But the Washington Post, as it unveils its paywall in 2013, would do well to learn the lessons of Variety magazine. A paywall does not equate to success in this age– but a strong customer relationship does.

It shouldn’t come as a surprise that The Washington Post is going to a paywall model. Large enterprises the New York Times, Wall Street Journal, and Financial Times have already moved their content behind a paywall. Good journalism requires money, and the advertisement model isn’t working anymore. Advertising revenue from print publishing hasn’t been this low since the 1950s, and publishers need other sources of revenue to fill the gap. Readers have proven that they’ll pay for quality writing.

But Variety proves that the paywall isn’t enough. Variety magazine has been an iconic fixture of the news magazine industry for decades, but has recently announced its sale. Why did Variety fail? Because Variety failed to understand their customer, failed to adapt to their diverse audience, and failed to provide a flexible, multi-tiered approach to pricing.

What the newspaper industry needs to do is realize that their readers are their real customers, not the advertisers, and that the only long-term way to dig themselves out of their business model ditch is to build and monetize relationships with their readers. This means understanding that different audiences have different needs, and designing offerings and bundles that give their audiences choice. For the Washington Post to succeed, they need to acquire a holistic understanding of their customers and the ability to manage those relationships from a commerce, billing and finance point of view. They need, simply, a customer-centric approach.

The industry needs to go beyond simple paywalls, to the era of Paywall 2.0. Paywall 2.0 is about building customer relationships, finding ways to build loyalty, having a range of offerings from free to paid-for that make sense. This means flexible, tiered, and targeted pricing options. This means using the right metrics to optimize your relationships.

For over 140 years the Washington Post has played a crucial role in our society and democracy. Though the journalism industry in general has suffered these last few years, the success stories of The New York Times and Wall Street Journal prove that people are willing to pay for good writing. We’re confident that The Washington Post can continue to play a vital role in our society and can adapt to the changing times. At the end of the day, what you really need is a customer-centric, flexible, holistic, and data-driven approach– and that’s what the Washington Post needs to strive for.