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The rise of paywalls on news media websites  

 As of May 2019, News Corp Australia is celebrating 500,000 digital subscribers across its mastheads, including The Australian and The Daily Telegraph. 

“It shows more and more people are willing to pay more for our trusted, quality journalism,” said News Corp Australasia executive chairman Michael Miller.  

“Premium content that resonates with our expanding audiences… is what will drive our long-term success.”  

Another example: in the United States, The New York Times is celebrating 4.5 million paid subscribers across digital and print. 3.5 million of these are digital subscribers.  

In 2019 the news media company generated more than US$709 million in digital revenue and is aiming for US$800 million by 2020. 

Digital paywalls are an increasingly important part of revenue models, however the right model for a particular publisher can take some time to find.  

 

What is a paywall? 

If you consume any kind of content on the internet, chances are you have encountered a paywall; those pop-up alerts prompting you to sign in, subscribe or make a payment in order to access the site’s offerings. 

When it comes to content such as music, games and films, we seem reasonably willing to pay a monthly subscription or download fee: the success of platforms such as Netflix and Spotify make this clear.  

There is a certain amount of resistance when it comes to paying for news media. Perhaps we feel entitled to free news (especially in a digital setting), or that it can seem like publishers perform a public service rather than run a business.  

But journalists and editors have to earn a living, and paywalls represent a viable strategy for bringing in revenue.  

Not all paywalls are the same. There are three main types of paywalls used on news media publishing websites: hard, soft and dynamic.  

Hard paywalls require a payment (such as a paid subscription) before any content can be viewed. Hard paywalls generally only succeed where there is a loyal audience and content is considered sufficiently valuable.

Soft paywalls (also called metered paywalls) allow users to view a restricted number of articles before needing a paid subscription. The main benefit of this model is it allows light-user traffic to be retained. There’s also the added benefit of giving readers a chance to “try before they buy”.  

Another type of soft paywall might allow a preview of the article, or first half, to be viewed while the deeper analysis can be accessed by subscribers only.  

Dynamic paywalls (or variable paywalls) fall somewhere in between. These paywalls might be designed to hide some articles but not others, such as allowing access to breaking news and weather, but putting in-depth research content behind a barrier. This has been the strategy of choice for mastheads such as The Washington Post 

A dynamic paywall might also identify customers that have a higher propensity to pay for stories. Dynamic paywalls appear on Nine’s Sydney Morning Herald and other mastheads. This, says Executive Editor James Chessell, means “it is a lot harder now to get huge amounts of our journalism for free.” 

If an organisation chooses to implement a paywall, the next decision has to be which type of barrier to use. In making the selection, publishers consider the particular needs and habits of their audience: how much are they likely able to pay to view content? What are their motivations for accessing these articles? 

In the UK, The Telegraph places between 20-35 per cent of its articles behind a variable paywall, depending on the news cycle in a given period. The publisher adopted this strategy after initially using a metered paywall, reportedly seeing daily subscriber acquisition triple as a result of the change.  

“The pursuit of digital subscriptions is a business of marginal gains,” The Telegraph’s chief technology officer Chris Taylor told Digiday. “You increase a few percents here and there, and if you manage it well, you can accumulate strong subscriber benefits.” 

Timewalls  

The clue’s in the name: timewalls are paywalls that are triggered after a certain amount of time has elapsed. Sweden’s MittMedia makes content freely available for one hour after publication, after which the paywall pops up. This entices readers to come back to the site often to check for new content, driving retention.  

Another type of timewall lets paying customers gain early access to content, while non-paying customers must wait an additional day, for example, to view the article. This is a model that has worked well for video game publishers, but will it work for publishers? Clearly it won’t be suitable for breaking news content, but what about longform articles or exclusive investigations?  

  

The argumentin favour of paywalls  

If readers are willing to pay for a printed newspaper, the argument goes, why shouldn’t they be willing to pay for the same content in digital form?

But it’s more than just paying for content; it’s paying for premium, high-quality and professionally-produced content that is of a higher caliber than what anyone can access for free on other sites.  

Nine’s James Chessell says this is a pillar of the Sydney Morning Herald and Financial Review newsrooms: “If you’re asking people to pay, you need to ensure that the quality of your journalism is rather decent or better than decent standard, a high standard,” he told MediaWeek 

You have to be doing it in a way where people go, “You know what, that was really a quality piece of work, I don’t mind paying for that.” 

Articulating the points of difference is essential. There’s no comparison between a 50-word social media post and premium, professionally-generated content done in a newsroom. Journalists produce work to industry standards and are held accountable for what they publish.

 

The arguments against paywalls and why some publishers avoid them  

The major argument for avoiding paywalls seems to be ideological: is restricting access to information and journalism bad for democracy?  

As Mumbrella notes, “a paywall will create a form of socio-economic class of people who can afford to read quality journalism vs those that cannot.” 

“However,” it counters, “unprofitable and unsustainable journalism would be even worse for democracy.”  

Another argument against paywalls is that people will always want to find a way around them. Be it paywall-blocking browser extensions or private browsing windows, internet users seem to love the challenge posed by barriers to content. However, publishers have shown a similar determination to fix the gaps in paywalls such as the “incognito loophole.”

 

Paywall alternatives: survey data, crowdfunding, micropayments 

Fairfax (now part of Nine) launched digital subscription in 2013. Recently, subscriber numbers have been boosted by more efficient bundling of products, such as digital access and weekend papers.  

Bundling seems to be a popular option when working out how to attract subscribers, as are other perks such as special membership and rewards programs. Back at Nine, there’s also talk of bundling products such as news media and video streaming services.   

These are all part of the larger conversation around revenue diversification and “multi-revenue models”.  

Of course, paying for content doesn’t have to mean paying with dollars and cents. Digital platforms such as Facebook and Google have proved that you can provide services for free by leveraging the value of consumer data. This trade of data, at least, doesn’t lock out customers who are unable to pay for the content.  

There’s also paying with attention: give readers the option to continue to content if they agree to watch a 30-second ad or take a short marketing survey.  

 

An example of a ”paywall” where users complete a short survey to unlock content. 
 

Brands such as Spotify and YouTube have normalised this experience for consumers, as has the smartphone app marketplace. Digital natives in particular are comfortable with the idea that free content comes with ads you’re forced to watch, and to remove them a premium has to be paid, hence why “lite” and “premium” versions of apps and software exist.
 

Two more alternatives are crowdfunding and micropayments. For the former, smaller publications might benefit from using platforms such as Patreon, which calls itself “the best way for artists and creators to get sustainable income.” But as “sustainable” as this model proports to be, knowing whether your members will be there next year is a question mark hovering over your publication’s future. 

While micropayments/microtransactions represent uncharted territory for publishing, their use has established success in other creative branches such as video game publishing. One example from news media comes from South Africa, where digital-first publication Daily Maverick offers “microsubscriptions” to bypass paywalls. As an alternative, the user is asked to remove adblockers so that revenue can be generated through website banners and pop-ups 

“Instead of a paywall, we went with a voluntary membership plan,” Daily Maverick CEO Styli Charalambous told Journalism.co.uk.  

“We designed it around the reader choosing the amount they wanted to pay without blocking access to content. But that necessitated offering benefits to those members to entice them in.” 

 

A rose by any other name? Subscriptions vs membership programs 

INMA reports that 111 news organisations around the world have membership programs, 60 of which are for-profit.  

The line that separates subscription and membership models is hard to define, but generally makes content available to all as a result of the generosity of a few. Readers sign up to become official supporters or members, providing payment that goes towards the funding of the publication.  

The Guardian is one of the most often-cited examples of a successful membership programMembers contribute an amount of their choice, which can be on an ongoing or one-off basis. The paper reported on May 1, 2019 that it had broken even for “the first time in recent history”, thanks to 655,000 regular monthly supporters, as well as 300,000 one-off contributions in the last year alone. 

Anna Bateson, the paper’s chief customer officer, said that the paper’s philosophy of having content open and freely available meant that a membership program was the preferred route.  

“It matters that our journalism is read as broadly as possible, but it shouldn’t just be available to those who can afford it,” Bateson told a November 2018 conference.   

 

The verdict 

Paywalls are unlikely to be going away any time soon; they’re too effective to be dismissed as an option for news media organisations 

At the same time, audiences may push back against the introduction of paywalls to previously open websites. This provides news media organisations with an opportunity to discuss the funding of journalism with their readers.  

And paywalls aren’t the only option out there. Diversifying the revenue model can see organisations choose any number of directions, not all of which will work for every type of publisher.  

If companies are offering premium, professionally-generated content, that content has value. Be it a paywall, a membership program or donations scheme, publishers need to maintain funding in order to continue generating the standard of professional content their audience expects.  

Quality content doesn’t grow on trees, after all.  

 

 

Read more about revenue models
 

Should news media subscriptions be tax-deductible? 

How subscription programs are engaging news media consumers  

INMA: Membership versus subscription models: Which one is better? 

Inside the Economist’s data-driven paywall evolution 

Reuters: Pay Models for Online News in the US and Europe (Report) 

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