The great paywall debate

06/28/2010

By Liam Plowman – In simple terms, the background to paywalls is this: newspaper readers never had to pay full price for the stories they read (classified and display advertising subsidized that) and on the internet, many people have expected content to be completely free. In the light of insufficient advertising revenue, some publishers have decided they can't give away content for nothing and remain profitable, and so have been grappling with the nettlesome task of trying to establish the value of their online content with consumers.

Making matters worse, the sheer volume of advertising space on the internet makes it difficult for even the most prestigious publishers to charge the rates they’d like for advertising on their sites. The rise of demand-side platforms and real-time bidding may only complicate financial matters by making it easier for advertisers to reach on other websites the exact same readers who frequent, say, nytimes.com, and pay less for those eyeballs than they would on nytimes.com.

For publishers, trying to figure all this out as the internet morphs with each passing week is akin to changing a tire on a car that’s going 60 miles per hour. The success of paywalls hinges on what consumers see as unique content. In theory, this favors local newspapers, whose news isn’t readily available elsewhere. By contrast, coverage of politics is everywhere on the internet, if one includes both traditional web publishers and bloggers. 

In the U.K., Rupert Murdoch unveiled his paywalls for The Times and The Sunday Times in June. Each charges one pound a day to access content, or two pounds for a weekly subscription. This follows Mr. Murdoch’s public dustup earlier in the year with Guardian editor Alan Rusbridger over whether online news needs to be free. By the reckoning of News International (publisher of The Times and The Sunday Times), the organization could lose up to 90% of its online audience. It  hopes to maximize the remaining pool of readers by offering them access to special content and shopping offers, and by convincing advertisers that these committed readers are the most valuable to pay to reach anyway.

The Guardian has chosen to offer its online content gratis, hence the public disagreement between its editor and Mr. Murdoch. In his now famous lecture last January in memory of the late journalist Hugh Cudlipp, Rusbridger praised Murdoch as “a brave, radical proprietor,” but warned that charging for online content – thereby cutting the cord between some publishers and their readers – could result in “sleepwalking into oblivion.”

Among smaller U.K. publishers, the regional Johnston Press apparently has encountered enough resistance to paywalls at some half-dozen of its publications that it’s retrenching. According to HoldtheFrontPage, Johnston Press was hoping that paywalls could be extended throughout its organization in search of a sustainable business model. Its pullback appears to strain the concept that local content can be seen as unique in a way that national or global content isn’t.

In the U.S. the Wall Street Journal has long had a successful paywall, put in place even before Murdoch acquired it. The New York Times announced last January that it will erect a metered paywall (mirroring the U.K.'s Financial Times) starting in 2011. As yet, there’s no word on pricing. Unlike some publishers, News International’s U.K. paper, The Times, is encouraging bloggers and search engine visitors to link to thetimes.co.uk, where those readers view a small number of stories free before having to pay. Subscribers to the print edition of the paper get free online access. This is the company’s second attempt at a paywall. Recall that in 2005 it put some of its columnists within a pay-to-read section called Times Select. That effort was scrapped in 2007.

So paywalls are an evolving species and it’s too early in their evolution to predict their survival or otherwise. However, if recent reports in the Italian newspaper, La Repubblica are to be believed, the publisher paywall is about to get the support of an unlikely ally. It reports that Google has been engaging publishers on a new centralized paywall model called Newspass. If this is the case, it could be a game-changing development. Watch this space.

Liam Plowman is media business director for DDS UK & Ireland. He can be reached at uknewbusiness@dds.co.uk