Thursday, December 10, 2015

Tear down those paywalls!

The newspaper publishers who put paywalls on their websites in the last few years should declare victory and tear them down before the barriers become more trouble than they are worth. 

It’s true that paywalls slightly ameliorated the 40% dive in the industry’s aggregate revenues in the last decade. But the continued use of pay systems is bound to limit audience growth at a time when fully 79% of the traffic to the typical news site comes from casual visitors, instead of people navigating directly to NewspaperSite.Com. 

More on that in a moment. First, the background: 

After giving away their content for free for more than a decade, a growing number of newspapers in the last few years began putting paywalls on their websites.  In all, about 450 of the nation’s 1,300 papers operate paywalls, according to News & Technology Magazine. 

Publishers opted for paywalls, in part, because they wanted to emphasize the value of the content they invest in producing. Even though 2 of 5 newsroom jobs has been eliminated by expense cutting in the last decade, newspapers still put more journalistic feet on the street than any other medium. 
The primary reason publishers installed paywalls was to help offset a catastrophic collapse that took industry sales from a record $60 billion in 2005 to an estimated $34 billion in 2015. (The revenue statistics cited in this article are from the Newspaper Association of America. After publishing detailed data since 1950, the trade association stopped issuing sales reports as of 2013, requiring folks like me to project performance in subsequent years from the financials of the publicly traded newspaper companies.)

When publishers launched their paywalls, they hoped to attract bazillions of new customers itching to pay for digital content. Unfortunately, that didn’t happen. In but one example, the Gannett Co., the biggest newspaper publisher in the land, reported a while back that it had acquired fewer than 60,000 digital-only subscribers – a sum equal to about 2% of the 3 million print copies in sold on an average day.  

Yes, the Wall Street Journal and New York Times each has about 1 million digital-only subscribers. But they are unlike the typical newspaper in that they are mission-critical reading for the international elites in government, business and academia, whose readers for the most part pay with the boss’s credit card. To put those achievements in perspective, 1 million paid readers represents a puny penetration of 0.03% of the 3 billion Internet users in the world.  Further, 1 million paid subs pales against the 65 million subscribers of Netflix and the 20 million subscribers at Spotify.  

Even though newspapers failed to sign up significant numbers of digital subscribers, they usually coupled their paywall launches with hefty increases in the price of their print products. To ease the pain of the rate increases, publishers gave print readers free access to paywall-protected content. 

Fortunately for publishers, most print readers accepted the rate increases, so the industry’s collective circulation revenues climbed to almost $11 billion in 2013 after slipping to a bit less than $10 billion in 2011. The extra billion took some of the edge off the revenue dive. But not much. 

Now that publishers have conditioned their print subscribers to paying an ever-greater share of the costs of producing and delivering the paper, they should declare victory and turn their attention to building robust and loyal digital audiences. They’ll need ever more digital readers to sustain their franchises as their superannuated print readers – the median readership at most papers is 60-plus – head toward the demographic cliff. 

The digital pivot won’t happen very effectively if casual readers encounter pop-ups that either block, or threaten to throttle, access to the content they want to view. With so much news available for free on the web, paywalls are distinctly inhospitable – especially the young cosnsumers coveted by publishers and their advertisers.  Repelled once or twice by paywalls, most incidental readers depart and seldom return. 

As much as editors and publishers believe readers venerate their brands, the truth is that most of the traffic to a typical news site comes from incidental readers steered to the site via social media, a search request or another external source. 

In a recent study, an audience-analytics firm called found,, that 79% of referrals to 400 media sites were from external sources. 

With more people than ever relying on news-aggregating apps from Google, Facebook, Apple and others, newspapers in the future are bound to get even more referral traffic than they do today.  They can’t afford to let paywalls antagonize the new readers they desperately need. 

© 2015 Editor & Publisher


Blogger Gadfly said...

Well, I often think Mutter is right, but on this, he's dead wrong. Of course, a smart paywall focuses on local, non-wire news, but, that should all remain paywalled. Alan's simply wrong on this.

That said, the AP board was wrong 20 years ago. The "TV model" ignored, already in 1995, that pay cable channels like HBO had existed for more than 15 years.

Beyond that, if he thinks something as simple as removal of paywalls will generate that much additional digital revenue when half of Americans use ad-blockers, Apple's adding ad-blocking to its mobile OS, etc., then Mutter needs to re-examine his QuickBooks and revenue ideas.

7:00 AM  
Blogger John Montgomery said...

Alan, I get what you are saying, but what about metered paywalls? Can't we remain open to the "casual" visitor but still say to the readers who need our content on a daily basis that we are a paid content producer, whether in print or digital-only? That we ask you to subscribe to receive our content on a regular basis, whether in print or digital only? That our content has value no matter where it is consumed? Do we really want to wind back this clock? Music artists and other content-producers asked to be paid for what they do. Why not journalists? I acknowledge that the digital-only subscriber numbers are low, but still.

7:10 AM  
Blogger Gadfly said...

What I said above is even more true for non-daily community newspapers. Any local newspaper that has a website and is giving away the news on that for free is an idiot.

7:36 AM  
Blogger Steve Ross said...

Alan has a point. Beware generalization, but many small papers have really stupid paywalls that block access to content they generate that really does have national interest. My wife does a year-end cookbook roundup for one small daily that no one can see unless it is shared on Facebook, of all things. The paper could be getting ad revenue from book publishers for that. The webmaster of the paper in question knows there is a problem, and has known for years, but has no budget or knowledge to get it fixed. Few readers actually pay for the site -- they get access as part of a subscription on paper. So, yeah, killing the paywall could generate more revenue.

5:19 PM  
Blogger Bruce McKinney said...

What newspapers need is a potpourri paywall--one that allows a subscriber to mix and match a number of clicks from different papers. I can afford to subscribe to a national newspaper, but not to every national newspaper. The Washington Post and New York Times both want me to be their exclusive customer, but I don't want to be. And the way I consume news doesn't lend to having one exclusive news source. But if I could buy a subscription that allows me an average of ten clicks per day from any participating newspaper, I'd be happy to subscribe. The papers could split the revenue from my subscription according to which papers I click. That's a kind of competition that still rewards better news production. But newspapers need to recognize that the days of paper loyalty and news monopoly are over.

5:34 PM  
Blogger Unknown said...

Any specific data behind this claim? "Repelled once or twice by paywalls, most incidental readers depart and seldom return."

5:59 PM  
Blogger Rodney said...

I agree with Bruce McKinney: I advocate a wide-spread micro-payment scheme. I'll happily pay for each piece I read, but I can't and won't subscribe to the many newspapers whose contents I skim occasionally.

6:43 PM  
Blogger Muhammad Abd al-Hameed محمد عبد الحمید said...

There are a very large number of readers (students, journalists, researchers, writers, etc.) who cannot afford to subscribe to newspapers like The New York Times and The Washington POst and magazines like The Economist, London, and Time, even the digital editions. But many are potential subscribers and may pay as soon as their income rises. By removing paywall, you keep the door open for them. For example, I have been reading The Economist for decades whenever I found it in a library. I do intend to subscribe to it if and when when the rate comes within my range.
An example will be relevant. Getting a US visa has been very difficult for Muslims since 9/11. Some people do get it and some hope for it. If a total ban is placed, as Donald Trump wants, Muslims will stop even thinking about ever visiting the US. America will become a forbidden land as Soviet Union was during the cold war.

12:31 AM  
Blogger S Litvin said...

Paywalls are nothing short of subscriptions, and that's what's wrong, not the concept of paying for news. The problem is that no one wants to pay for multiple subscriptions. That's why a model similar to netflix, hulu, itunes and spotify is what will need to take hold. The problem with most paywalls is that instead of providing a unifying service, all they do is provide a subscription with a third party. Where's the value in that? So yes, until you offer a way to pay that gels with the viewers, they will bounce off those paywalls, off the adds too mind you. If they respect their content and reader so little as to put an add while someone is reading and interrupt their attention during a mind intensive action like reading, the reader is not likely to stay on that website for long.

7:30 PM  

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