The future of paywalls

In March 2011, the digital edition of the “New York Times” launched a paywall, forcing his users subscribe to read its content (the base rate is now $180). It’s been one of the most important cases – along with the English “Times”, the “Financial Times” and “The Wall Street Journal” – of transition from a business model based on digital advertising to a mixed one, where the reader is put the center as the main source of income.

The limit of free articles available on the “New York Times” is 10 per month (they started with 20): but it’s not a rigid cap, as the content shared on social networks – and Google News – remains readable without paying.

Within a month, the newspaper picked up 100,000 subscribers, a number that grew to about half a million a year after the launch (today there are almost 600,000).

In recent times, everything has become digitalized ad it is truly fantastic for the users. Even the newspapers are coming in digital edition and the people can just download the newspaper application in their platforms like smartphones, tablets or laptops and read the content online without spending a single penny from their pockets. The recent trending digital newspaper edition is “The Newyork Times”, one of the newspapers most of the people go crazy on. If you want to know how to download its software application, do visit this website and you can obtain clear information about it.

At that point the media expert Frédéric Filloux crunched some numbers, pointing out that the decision had been smart and sustainable, and praising the choice to maintain a certain degree of “porosity” of the wall – to keep strong readers without losing all the occasional ones (who can track an article by different routes – for example, by searching on Twitter or Facebook).

To reiterate the Filloux’s considerations, here comes a recent article by Bloomberg, which celebrates the paradigm shift from the very title: “The New York Times Paywall Is Working Better Than Anyone Had Guessed”. According to the analyst Douglas Arthur, the Times’ digital subscriptions in 2012 will generate $91 million: and above all, after one year of paywall, the sales of subscriptions has led to a revenue growth of 7.1% against a 3.7% decrease from online advertising.

Bloomberg’s summary is comforting, considering the collapse of the newspaper advertising in general, and the immense difficulties of digital advertising in particular (despite some new, interesting ideas). The fact that a model based on mere advertising return is falling apart is now clear: once broken the classic 80/20 rule (80% of revenue via ads, 20% of sales), it is increasingly important to look for alternative money making systems.

From this point of view there are many open roads for the smaller journals or local newsrooms, that in principle can monetize their audiences more easily (as they’re typically more engaged): they could also try a crowdfunding formula, or at least mix it with other forms of revenue. But for larger publishing realities, of course, such solutions are quite unmanageable: thereferore and again, a paywall looks like the only way out.

Of course, there’s a very common concern related to this model: that it is ill-suited to an ecosystem (the web) where information tends to move freely and unrestricted. In short: the more you raise barriers, and the more users will try to hack and dodge them: for some it is even a question of digital ethics and personal freedom.

But is it really?

In many ways, this approach sounds like an easy excuse: sure, we have become accustomed to enjoy digital content free of charge, but it’s not clear at all whether this behaviour is the most correct – not only from the point of view of the industry, but also (and more importantly) from the point of view of the whole users’ commeunity. After all, the issue is always the same:

  1. a) quality contents need time and resources;
  2. b) resources require cash;
  3. c) the cash coming from advertising is less and less.

So what do we do? Either we wait until the sad end, or we surrender to the evidence that the “everything for free, forever” model (in turn supported by the “ads a go go” model) will not work forever. It is no coincidence that 11 out of the 20 largest U.S. newspapers have implemented forms of subscription.

So, will 2013 be “the year of paywalls”? Maybe. But the situation is still very complex and should be considered in a wider scenario.

For example, returning to the “New York Times”: although the paywall worked well, at the beginning of December the newspaper has had to seek voluntary resignation from 30 senior editors. Why? Because, as Business Insider explained, the paywall is obviously not able to hold up alone printed newspaper’s crisis.

Of course, things could be even more dire without the help of online subscriptions, but the problem of managing an all-digital future is still here, and even more pressing (as some other examples have been showing).

Likely in the medium term paper and online will continue coexist, and the paper itself will survive for other editions or a more refined niche (monthly, quarterly magazines) relying on great design and selling more an experience than a normal, classical bundle of articles. But the future of classical, wire news – now available easily on Twitter – is inextricably linked to the internet.

More generally, paywalls would – at least hopefully – put again in the middle the quality of content itself. Instead of accumulating gossip photo galleries and short articles with yelling titles just to increase impressions, newspapers will have to provide great stuff, the one you’ll be happy to spend some money for: serious inquiries, beautifully written, with accurate fact-checking and professional comments.

In this regards, the Open Journalism Hub of the Guardian has proposed the idea of a “paywall 2.0”: behind this rather trivial expression there is the need to think not merely in terms of business models, but to focus primarily on the readers themselves as people: no more “as anonymous demographic statistics to sell to advertisers, but as customers who are willing to pay for something of value”.

In one sentence: to establish a stable relationship of trust and engagement. To create, in some way, a community of values.

 

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