Will Paywalls Finally Win Out In The US?
More and more American publications are charging for access to online content, even though users are resisting.
Paywalls are becoming increasingly prevalent at newspaper websites across the United States. Eleven of the country’s largest-selling 20 newspapers are either charging for access or have announced plans to do so.
They include America’s top four titles: the Wall Street Journal, USA Today, the New York Times and the Los Angeles Times.
Gannett, the largest US chain, expanded its paywall to almost all of its 80 groups over the last 12 months. Other chains charging for content include Tribune and MediaNews while McClatchy and EW Scripps will do so this year. Last month, the Washington Post said it was exploring the idea of rolling one out in 2013.
More than 35% of US newspaper readers are regularly discovering some restrictions in their online surfing, though most papers allow visitors to access several articles for free before hitting a wall. This so-called “metered model” is the most popular form of charging.
In 2012, all of the major Canadian newspaper publishers also decided to throw in their lot with the paywall crowd. Postmedia Network is planning to expand its digital subscription plans to its entire chain. Quebecor’s Sun Media division has already erected a wall.
The Globe and Mail introduced a paywall in late October. Soon after, the Toronto Star announced it would do the same early this year.
The north American industry’s lodestar is the New York Times. Since March 2011, when it introduced its metered model, it has signed up 566,000 digital subscribers to either the Times or its sister publication, the International Herald Tribune.
According to a recent Bloomberg story, the investment firm Evercore Partners, the NY Times’s digital subscriptions will show a yield of about $92m (£56.6m) in 2012.
That represents about 12% of the total $768.3m (£473m) the Times is expected to earn in subscription revenue in 2012. More significantly, the digital subscription revenue – alongside a price rise on print copies – will make 2012 the first year the Times has earned more from circulation than from advertising, which is expected to pull in about $715m.
Critics complain that the Times, and other papers, could make more from advertising if they didn’t have a paywall, because far more readers would read far more content.
But a Globe & Mail writer argues that the price of static online ads, which appear on most news sites, has been falling for years. This makes it difficult for them to fund journalistic content.
While advertising rates vary wildly from site to site, a presentation last May by Mary Meeker of the investment firm, Kleiner Perkins Caufield Byers, noted that CPMs – the cost of getting an ad in front of 1,000 readers – was $3.50 (£2.20) for a desktop web ad while the CPM for mobile ads is about 75 cents (50p).
If so, it means that even a popular article that is viewed 100,000 times might pull in only $350 on a website, and just $75 if viewed on a mobile device. Hence the decision to build paywalls.
Some specialist titles, such as the Financial Times and the Wall Street Journal, have been developing proprietary information and business tools. But that approach hasn’t worked for most general interest papers.
As the Washington Post’s chief executive, Donald Graham, pointed out last month most of the paper’s print readers are based in the District of Columbia, while most online readers access the Post from elsewhere.
He said: “The reason we haven’t adopted [a paywall] yet is that we haven’t found one that actually adds to profits. But we are going to continue to study every model of paywall and think about that, as well as think about keeping it free.”
Most are simply hoping for the best, says there Globe writer, because they don’t believe there is much of an alternative.
He quotes Postmedia’s CEO, Paul Godfrey, as saying: “Newspapers are realising you can’t spend millions on content and give it away for free. I think we’re at the point where pay metered systems will be put in all over the world.”