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Tearing down the paywall
Published on April 15, 2008
In September, 2007 The New York Times took what many considered a drastic step. It pulled down its paywall service and offered its entire archives of content for free on the web. Two months later, it was reported that their monthly traffic jumped by nearly three million visitors and was still climbing.
In the months since, Rupert Murdoch expressed interest in taking the Wall Street Journal completely free (though action is yet to be taken). The Sacramento Bee dropped their very expensive, paywall service as did The Atlantic.
All across the world, paywalls are coming down. News sites are opening up their content to users for free. And while it may seem somewhat counter-intuitive, many news organisations stand to make more money by giving their content away than they would trying to get people to pay.
Although some sites still have paid sections or paid archives, it seems that overall, the paid subscription system has failed as a business model for online journalism.
The Problems with the paywall
In the print world, subscriptions are generally not seen as a major source of revenue, but as a way to track readership. Advertisements ensure that those who receive the printed copy read what is inside. This makes the selling of advertising easier and more lucrative.
On the web, however, the paywall system turned this model on its head. Although ads would be served outside of the “walled garden”, paying users would typically not see any advertisements. This made the subscriptions earned a major, if not the primary, source of income.
The goal was to encourage users to pay a token amount for premium content or, even better, encourage readers to subscribe to the print edition by offering a free pass through the paywall to those who receive the print version. However, the problems with the paywall system, for most sites, quickly began to outweigh the benefits.
The problems included the following:
- 1. Search engines can’t see behind paywalls: Search engines do not have access to protected content. If they can’t see it, they can not direct visitors to your site by using keywords found in those articles.
- 2. The web is not local: Local news outlets are unlikely to draw many subscribers from outside their immediate area. However, the web draws visitors from across the globe and, even with targeting, only a percentage of your visitors will be locals.
- 3. Your content appears elsewhere: Inevitably, the material hidden behind the paywall will be copied illegally and posted to other sites that are free and open to the public. While the paywall may slow the rate of copying, it will still happen, especially with popular works. And since the search engines can not see your version, other sites will receive all of the search traffic.
- 4. People are used to free: For the most part, the web has taught users that there is no need to pay for information. For better or worse, people are not used to paying for content on the web. They will usually seek out a free alternative, even if it is seen as lower quality.
- 5. Readership is Easier to Track: Subscriptions were useful for tracking print readership, but on the web there is a slew of statistics available including server logs and analytics services. Getting accurate numbers on readership with the web is a much easier and eliminates one of the bigger functions of subscriptions in the print world.
It is easy to see why more and more news sites are struggling to justify their paywalls, especially as their competitors are gaining popularity by pulling theirs down.
Welcoming the readers
Tearing down the paywall does not mean that a site has given up on monetising content, just that its operators are not doing so directly.
Currently, advertising is by far the most popular means of monetising recently “exposed” content. However, since advertising rates for the web currently do not match those of their print counterparts, this has caused web sites to generate only a fraction of the income of their print counterparts, even if they have many more readers.
One way to counteract is to offer advertisers package deals that include both a print and a web portion. This not only helps to keep advertisers that have often been diverting advertising away from print and to the web, but also offers new opportunities to upsell and cross-sell current customers.
However, even if the web element lags behind the print in the amount of money earned, it is important to note that web advertising will likely increase in profitability and may catch up to or outright surpass print expenditures sometime within the next few decades.
Should that happen, a strong position in the web market is going to be vital. It is important to build that position now as the competition for it is only going to grow.
Conclusions
While it seems odd to think that the best way to make money from something is to give it away, that is exactly what journalists have been doing for hundreds of years. Free newspapers are common, broadcast television is delivered at no cost to viewers. Users pay no fee for terrestrial radio.
Free, or almost free, has been the business model of journalism almost since its inception.
While paywalls can work on some sites, such as those with highly specialised content In which only a few will take interest, most news sites do not benefit from having one.
Free has been a successful business model for journalism in almost every format. It seems that this will be even more true on the web. Furthermore, in these uncertain times for print and broadcast journalists, being a leader in an emerging market is critical to ensuring the long-term viability of both the organisation and the medium.
However, it is very hard to be a leader if most of your potential readers are locked out.
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