As an Economics undergraduate and frequent newspaper reader, I have decided to focus the question posed on the newspaper industry.
“Newspaper economics used to be dead simple,” (Preston, 2014). The ways in which Newspapers generated revenue was two-fold:
- Receipts from the cover-price
- Payments from advertisers who used newspaper to host its advert.
Over the last decade, the news industry has accelerated rapidly towards the digital world. This has had a dramatic effect on the sales of print media. They have fallen steadily. With the decline in both the aforementioned revenue streams, some newspapers have decided to use a ‘paywall’ – A restriction on access to internet content often paid via a subscription, in order to recover the lost income.
Pros and Cons of Paywalls
Having to pay to view an article can have a number of effects on the industry (i.e. content producer). For every positive effect, there appears to be a negative, which perhaps explains why only some newspapers charge for their online content.
Paywalls are a way of legitimising content. Nolan reports that “sites offering very high quality proprietary longform journalism published on a frequent basis” are ideal candidates for a paywall because the alternative content available online for free is virtually non-existent (Nolan, 2012). However, if the content isn’t very unique or specialist e.g. reports on football matches, putting a paywall on content will simply facilitate the redirecting of web traffic to the competition who offer it for free.
Creating a subscription service can create a reliable revenue stream. Using a paywall creates a base of subscribers (who can then easily identify and target) who are consistently paying access fees, and thus, are a much more consistent source of income. On the other hand, revenue from advertisers will fall due to a decline in views. For sites with many visitors, creating web traffic to inflate the price of advertising on their site is a much more worthy of investment than a paywall is. This approach is used by Buzzfeed.
Paywalls are also a protective measure as well as a revenue generating one. It decreases the likelihood of work being ‘stolen’ and used without citation. That said, just a simple Google search leads to numerous results with descriptions on ‘hacking’ paywalls.
Conclusion
Paywalls exist on 70 percent of US daily newspapers’ websites, up from 47 percent in 2012 (Stroud, 2014), which is evidence of the benefits of their usage. This figure is still shy of 90% predicted however. (Lepitak, 2013).
If the idea of paying for news alarms you, you’re not alone as my video shows.
Word Count 415
References:
Image 1 – Retrieved from http://themediaonline.co.za/2013/05/read-the-writing-on-the-paywall/ [Accessed: 10/12/16]
Image 2 – Cohen, Z. Using data from the guardian article https://www.theguardian.com/media/2016/apr/26/uk-ad-market-booms-but-newspapers-lose-155m-in-print-advertising [Accessed: 11/12/16] (Created using Meta-Chart)
Video – Cohen, Z Retreived from https://www.youtube.com/watch?v=sxmAYfC-TLQ&rel=0 [Accessed: 11/12/16] (Created using PowToon)
Lepitak, S. (2013), 90% of online content to be held behind paywalls in three years media company survey suggests. Available at http://www.thedrum.com/news/2013/04/12/90-online-content-be-held-behind-paywalls-three-years-media-company-survey-suggests [Accessed: 08/12/16]
Nolan, H. (2012), Online Paywalls and the Future of Media: A few hard truths. Available at http://gawker.com/5966560/online-paywalls-and-the-future-of-media-a-few-hard-truths [Accessed: 10/12/16]
Preston, P. (2014), Is a profit worth the price of the Times’ pay wall? Available at https://www.theguardian.com/media/2014/dec/07/is-profit-worth-price-times-paywall [Accessed: 10/12/16]
Stroud, N.J. (2014), From free to fee: How U.S. dailies decide to use paywalls. Available at https://www.americanpressinstitute.org/publications/research-review/paywall-decisions/ [Accessed: 10/12/16]
Zachary Cohen 
Hi Zac, another interesting post this week!
Firstly, I would like to address the role of this ‘subscriber base’ which you suggest a paywall creates. How do you think these companies would generate additional revenue from these ‘bases’? Surely people are categorized as either willing or unwilling to pay for this content and therefore there is little room for revenue growth, instead an isolation of those who would be unwilling to pay and have to look elsewhere?
From a more personal situation, do you think that paywalls associated with education can be frustrating? When starting work at university, some websites requires a specific domain in order to allow the content. As a student I am able to access some content at university, however when coming home I am unable to access the same content.
Ultimately for newspapers, there will always be a decent level of free content ie. BBC online, do you think that people will deviate significantly from this when there is a financial thorn?
Look forwards to hearing your thoughts.
LikeLike
Hi Alex
Thanks for your comment once again,
In answer to your first question, a subscriber base, I believe, can be used to better target an audience for your newspaper. Suppose a newspaper’s subscriber base consists largely of a certain demographic group such as ‘males over 65’, the newspaper can then alter there material and/or target their advertisement at these groups, which will subsequently increase revenue.
In response to your second point, I do find paywalls exceedingly frustrating! Only yesterday I was trying to read some articles for my literature review and an article I read on campus published by the Financial Times. Access off campus is restricted without payment so I had to return to campus late at night. Have you had similar experiences?
Thirdly, I’m not sure if people will migrate more towards free media. Logic would tell you yes, but as shown in my video, the public see the merit of paywalls for niche content. I think this view will persist. That said, I only know of a few people who subscribe to digital newspapers, do you or anyone you know subscribe to an online newspaper? If so – Why?
LikeLike
Hi Zac,
Demographic analysis leading to a increase in a target audience does seem the most beneficial for a newspaper company to adopt given that there is free content available. Do you think that there is a limit to the percentage of people who would pay for this service?
This links to the third comment you make surrounding knowledge of actual subscribers. Only my father and his parents are the three people I know who subscribe and that is more because old habits die hard coupled with a preference of certain online newspaper services. I cannot see myself continuing this family trend however!
The personal experience you raise is one which I am more than familiar with. It does have me rolling my eyes when I realize. To combat the blocks in place I try and download any pdf files or documents as opposed to having them open through internet access, however I am aware that this isnt possible with all sources.
I guess when you look at these points together, I am more likely to pay for articles if needs must. More of a ‘fine… if I have to’ as opposed to a want to access. After university I think that academic sources will fall into the past and instead as you mention, news sources will be at the forefront of my experience with paywalls. I guess that I cannot make a fully reasoned judgement because I have been lucky enough to be at a university when most things are prepaid. When I have to pay myself, who knows, maybe a certain online newspaper will capture my attention to the point of being worth a subscription.
LikeLike
Hi Alex,
There certainly is a limit to the number of people who are willing to pay. This is considered when pricing the service. My belief is that if market share (the proportion of the market which is dominated by yourself) is the main objective of the newspaper, they would make their newspaper free. But as I have said, I think profit is the driving force and so the fact the number of viewers of their work is less of a priority.
My views are as the print industry slowly dies, the pressure to pay for content online will grow and inevitably, I will give in and give Rupert Murdoch my money.
Subscribing tends to be more cost effective than simply purchasing the print version on a daily bases anyway.
LikeLike
Hi Zac,
Another superb blog post, I’m upset it’s the penultimate one!
I personally didn’t realise that the US media much more commonly adopted paywalls than the UK. Why do you think this might be? Is it a difference in culture between the two countries? Is the UK an anomaly to the worldwide norm, should we perhaps encourage subscription fees in order to maintain a high standard of journalism?
The point you raise about how newspapers previously generated revenue is very relevant to this topic, would it not be more beneficial to all parties if newspaper websites adopted advertising rather than charging readers a subscription fee? I do understand that many people use advert blocking software which could hinder this plan, however from my experience some websites (ITV) demand that you remove any such software, which I believe could be a sustainable alternative (as long as the advertising is non intrusive).
151 word
LikeLike
Hi Arthur,
Thanks for the comment,
In the US, the attitude to paywalls from society must be more accepting than the UK’s otherwise their widespread usage would be profit-maximising thus wouldn’t be implemented. The reasons for this, in all honesty, are known by me. But i’d suppose its a cultural difference. US attitudes towards paywalls are highlighted in this report: https://www.statista.com/statistics/238775/attitudes-towards-paywalls-in-the-us/
Why do you think their attitudes differ?
The point you make about advertising is a question I asked myself. Surely revenue generated from advertising on a free to access website would exceed paywall revenue. If it did, it would be used more widely. This is assuming a financial gain is the only objective of the newspaper. A new paper would find it more beneficial to release their content for free initially to expose the publishing to as many as possible. A similar concept to free samples when a new product is put on the market.
What are your attitudes towards paywalls? Do you subscribe to any newspapers?
LikeLike
Hi Zac,
I don’t personally subscribe to paywall using newspapers mainly because the information or reports I require are widely available, such as football reports which you mention in your blog. I think the argument you make about advertising generating more revenue for newspapers is very relevant, and leaves me questioning why more newspapers (in the US especially) don’t adopt it? You interestingly raised the point about financial gain being the only objective for newspapers, but in some cases (particularly broadsheets) quality of journalism may be more important, and therefore reader subscriptions are more helpful?
Regarding the difference in UK and US attitudes to paywalls I believe it’s probably related to the embryonic stages of online newspapers. I imagine in the US the majority would’ve adopted paywalls and stuck to them, whereas in the UK few may have adopted them or could have swiftly decided it was a mistake to use them. The article below suggests that many newspapers will in time realise that paywalls are unsustainable, with reference to Australian newspapers:
http://theconversation.com/why-some-newspaper-paywalls-are-simply-unsustainable-59577
LikeLike
Hi Zac,
Really good post! I liked your easy to follow structure and how you were able to clearly outline the pros and cons of a paywall. Your comment on paywalls confirming the legitimacy of content is a concept I haven’t thought about before, perhaps because in a society where anything and anything can be so easily accessed I don’t fully think of it in this way; separating quality from the large quantity.
I made a comment on my own post about being a student and being almost oblivious to these things, because almost everything is handed to us on a silver platter. Do you think though, that this leads to a lack of appreciation for good quality research and information, and do you think that paywalls will lead to an increase in the respect for it and its creators by people who might not think it’s worth money?
Also, I definitely agree with your point about advertising charges being a better system for certain platforms like Buzzfeed rather than subscription services like The Economist, for example. I made a similar point about sites like YouTube using the same methods, but after reading your post and seeing some comments on mine, I’m starting to think that this is because they are slightly more entertainment focused forms of media rather that educational, What do you think?
Davina
LikeLike