Publishers are pinning their hopes on paywalls as the primary means of supporting the journalism they produce. Last week the UK’s current affairs title The New Statesman was the latest publisher to announce its own metered paywall model, a move that prompted the editor of The Spectator Fraser Nelson to say “Paywalls are the only future for journalism: if the quality of writing is good enough (and the New Statesman’s certainly is) then people will pay”.
It’s the latest point in a trend map that shows just how seriously publishers are considering throwing up paywalls en masse. Digital ad-funded models of journalism are looking increasingly shaky as the duopoly urges publishers to adopt subscription-based models, and simultaneously tighten their grip over digital ad revenue. The high-profile success of subscription models at larger news organisations like the New York Times and Washington Post has only thrown more fuel on the fire – smaller publications like Italy’s Corriere della Sera have explicitly cited the NYT model as the inspiration for its own paywall.
Subscriptions and paywalls have been the domain of B2B publishers for the past few years, as those audiences have long recognised the expertise and technical know-how of those titles are worth paying for. Now that B2C generalist news publishers are following suit, what are the benefits of paywalls for small-to-medium publishers and, conversely, what are the problems for publishers looking to emulate organisations like the New Statesman?
The most obvious benefit of a paywall is something that has been central to publisher business models since before digital revenue was conceived of: Subscriptions based around regular access to a product provide a regular and recurring source of income. At a time when publishers are over-dependent on less secure means of monetisation, it’s no wonder that news organisations might look to replicate their old success in print-based subscriptions digitally. Throwing up a paywall – hard, metered or otherwise – in order to encourage people to subscribe is one way to do just that.
But digital subscriptions offer tangible benefits beyond a regular flow of cash. Accurate first-party user data, much of which can be gleaned from sign-up and logged-in user behaviour, is increasingly considered table stakes for any digital organisation. That data effectively allows a subscription-based audience to be monetised again through more targeted and specific advertising: many of the big advertising alliances are based around doing just that for an audience that their members can prove are ‘premium’, in part through log-in details.
Though it’s easy to be cynical about the term ‘audience-first’ (weren’t B2C publishers always audience-first?), the re-emergence of paywalls as a viable model for publishers has forced the term to take on a much more specific definition. When publishers are no longer chasing scale for scale’s sake and are instead reliant on a smaller but more loyal pool of subscribers, they can double down on the topics and mediums that matter to their audience. At a time where generalist news publishers are finding it difficult to launch paywalls due to easy replicability of their core product, audience-led specificity of purpose is an advantage that can’t be overstated.
That more involved relationship between publisher and audience is paying dividends at some primarily digital news outlets. The Atlantic has effectively launched a tiered paywall model, with The Masthead acting as a higher value membership tier that allows The Atlantic to hone its focus on its audiences’ priorities, while the actual paywall comes into play when users choose to block its ads.
But launching a paywall isn’t a guaranteed source of revenue, particularly for small- and medium-sized publishers that have historically had the bulk of their digital content online for free.
For starters, while much of the heavy lifting around developing paywall sign-up processes and audience funnels has been done by the early paywall pioneers, implementing a paywall still requires a significant amount of resources to be allocated to its development.
It is also not a one-and-done event. Paywalls require constant iteration and tinkering in order to appeal to an audience that is constantly buffeted by other publishers’ decisions. The Norwegian newspaper Aftenposten first introduced a metered paywall in 2012, for instance, but has since moved to a hybrid metered model, with more content locked behind the paywall than at launch.
It is also tacit acknowledgment that the publisher’s audience will diminish in size (though hopefully the value of those that subscribe will be greater). That will inevitably have an impact on the publisher’s relationship with advertisers, particularly where those brands have mass-market, low margin products that need to be sold at scale.
Additionally, while there is a growing body of evidence that audiences are becoming habituated to paying for digital content, it doesn’t necessarily follow that the type of content for which they’ll pay is news. The Reuters Institute for the Study of Journalism found that willingness to pay for online news is still in the low single figures across much of Europe.
That’s particularly true for general news publishers, whose content is easily replicable, which limits the viability of any effort to charge for content and whose demographics don’t favour advertisers with big-ticket, high margin items to sell.
And while a paywall aggregator, a ‘Spotify for news’, is more likely now than ever before, publishers shouldn’t rely on it to bolster their own paywall strategy. Publishers don’t necessarily want to pile into a grouping that could negatively affect the perception of their own value and, as analyst Frederic Filloux points out, that model is as vulnerable to disruption from platforms as digital advertising was:
“Well, the same forces apply: platforms are calling the shots. They control a large chunk of news distribution, capture all the advertising growth, are technologically way ahead, and can up-sell across all their product lines, and withstand any loss necessary.”
Ultimately, the ability of small- and medium-sized publishers to monetise through paywalls is dictated by their niche and audience demographic. For those that can weather the transition to a different publishing strategy, however, the benefits of recurring payments and a more intimate relationship with an audience are a huge advantage at a time when digital ad revenue cannot be relied upon.
- More publishers – large and small – will inevitably move to a paywall-based subscription model as the extent to which digital advertising has been co-opted by platforms becomes clearer.
- The majority will use metered or hybrid models, though newspapers and magazines with a particularly strong brand, or B2B publications, will likely favour hard paywalls.
- As the market leans towards paywalls, there will likely be increased competition among publishers for the limited amount of discretionary spending that audiences are willing to drop on a news subscription.
- Attempts to launch aggregation models will continue apace, although the realities of corralling publishers with vastly disparate editorial stances and perceptions of value mean that it is unlikely any ‘Spotify for news’ will offer a truly comprehensive selection of publisher content.
Laptop header image thanks to Dooder at Freepik.com