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.
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
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]