As we creep into 2012, a proliferation of publishers will attempt to monetize their content by erecting paywalls. Most recently, the Los Angeles Times and Gannett have announced plans to begin charging readers for online news, and even Groupon is getting into the paywall game, with a “VIP” program that could by all standards be considered a paywall for premium content.
Paywalls have been around for quite awhile. The Wall Street Journal was one of the first major newspapers to implement a hard paywall, essentially not allowing any digital access unless you’re a subscriber, back in 1997. More recent paywall successes have come in the form of soft paywalls, or metered paywalls—often porous by design—allowing a reader to view a number of stories before hitting the paywall. The New York Times implemented this type of paywall, allowing 20 articles per month for free, with some perceived success in March of 2011. Since then, a number of large dailies have followed suit or announced plans for a similar paywall, including the Minneapolis Star Tribune.
When a visitor is allowed to browse a number of stories before hitting the metered paywall the casual reader is not typically affected. The thought behind the metered paywall is that the regular user, who hits the paywall on a regular basis, will eventually feel obligated to pay for the content, and won’t be turned off by a poor user experience. There’s also the thought that the porous nature of the soft paywall will potentially “guilt” regular users who bypass the paywall into paying.
There are also a few counter strategies to paywalls, including Google’s “First Click Free” option and the tactic of bringing “breaking” news out from behind the paywall. First Click Free allows a user coming from a Google web search to view the full text of the document without registering or subscribing to the source’s site. According to Google, this allows a “discovery opportunity” for a casual browser and promotion for the publisher, while also allowing the search engine an opportunity to crawl the page.
The other counter strategy involves providing breaking news, or news publishers believe is best suited for everyone, free to all readers. This adds a dangerous ethical element into the paywall equation, since it grays the line between revenue generation and editorial, and subsequent questions arise. How does the publisher determine what content should be free and available to all? What content should be behind the wall? How does this affect the quality of the reader’s experience? Are we dividing content between two groups of readers, those that can afford to pay and those that can’t?
From a publisher’s perspective, it’s hard to argue against paywalls. They’re still generating quality content for their readers at a significant cost; yet the revenue gained from online ad sales isn’t coming close to the amount of revenue lost from declining subscriptions.
From a reader’s perspective, online news has almost always been free, so why should they start paying now? If a reader can just move on to a free site and get the same or similar content, why would they consider pulling out their wallet now?
It’s also interesting to consider the effect publishers pulling their content behind paywalls will have on content aggregators. As a publisher with a paywall, how open are you going to be to giving your valuable content to aggregators like Pulse, Flipboard, and Taptu for free? I think not. Even publishers that have their content out there for free aren’t too happy about aggregators scraping their content for the aggregator’s own use.
Just ask Barry Collins of PC Pro what he thinks of Zite, the news app, presenting his publication’s content in their own application Barry’s argument is that PC Pro provides the content on their site for free in exchange for the opportunity to expose their readers to advertising. Zite eliminates the advertising, thereby eliminating that content for advertising exchange, along with the revenue that accompanies it. Even the Wall Street Journal stopped playing in the sandbox with the mighty Google by limiting the articles that are available via the First Click Free program.
Are there too many paywalls? Probably not yet, but where is the saturation point? As more and more news and information sites move to paywalls, could there be a point when all news sites have some sort of paywall? The answer is: not likely.
Hypothetically, if all news sites moved to paywalls simultaneously, there would be a significant market opportunity for a single site to take advantage of the situation and be the one free news source. Assuming publishers with paywalls are only able to convert 30 to 50 percent of their audience to subscribers, which based on released figures would be on the extreme high end, there would literally be millions of unique users searching for a free news source. Think of the value of that audience and those banner ads … move over Facebook IPO.