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Raising the walls

Are news subscription services here to stay?

James Francis
By James Francis, Ghost Writer, Copywriter, Media Hack & Illustrator
Johannesburg, 27 Sep 2013

Although Rupert Murdoch is hardly known for cracking a smile - or even an errant smirk - only a fraction of his scowl results from News Corp's phone-hacking problems. Most of that grimace surely reflects the state of news publishing, which finds itself caught in the same wave that struck the music industry: a massive drop in revenue and an unprecedented dilution of the audience. But music must have felt like an oil tycoon watching a ruptured pipeline spew away its profits. Media gave it away for free - and came up short.

Cash for content

News Corp decided to take action, and in 2010, put the Times of London (The Times) Web site behind a subscription service. It wasn't the first to implement a so-called 'paywall'. The Wall Street Journal has had limited content for non-subscribers since 1997, followed a year later with the first of many New York Times (NYT) paywall experiments. The Times' decision drew a lot of ire, mainly because it chose a 'hard' wall - nobody on the outside gets a sniff, other than spying the headlines. NYT's latest implementation favours the 'metered' model: visitors get x-number of free article views a month, then they have to cough up. Hoping to entice potential new subscribers, some sites don't penalise links from social media sources.

Paywalls have been controversial: a knee-jerk reaction that flies in the values of a free Internet. But a different argument holds that giving news away makes no sense.

"I don't see any feasible business to be built around quality journalistic content that's free and solely advertising-based," says Jeff Israely. "So it was never a question of 'if', but, as a start-up, we had to decide 'when' and 'how'." Accordingly, the site Israely founded, Worldcrunch, has recently limited monthly article views for non-paying readers. It's hitching onto a stampede of bandwagons: major newspapers have been setting up walls, especially since neither the NYT nor The Times' experiments have proven disastrous.

Naspers has recently put some of its newspapers behind paywalls.

Naspers' Sebastian Stent agrees that NYT was "an enormous inspiration for our team - with a lot of great lessons learnt from their fantastic execution". But he adds that the group also learned from Le Monde and The Australian and "many, many more in-between" before implementing a paywall approach at several of its newspapers. Ads, according to Stent, don't work: "Web advertising has never provided the returns that it looked to promise, especially for smaller publishers with limited audiences." He highlights how the strategy instead resulted in a glut of marketing pasted around each news page, much to the distaste of readers.

There are other forces at work. News aggregation sites like Google News and Huffington Post collate news material, amassing huge audiences that no single publication could match. And forget competing against the likes of Facebook. The closest is the Web presence of the UK's Daily Mail, served with a good deal of lasciviousness. Paywalls outpace ads: although The Times experienced a four million reader drop after the wall went up, it's making more from subscriptions than Web advertising ever brought in.

This wasn't always the case. Earlier paywall attempts such as NYT Select (2005-2007) have failed. What changed? David Restropo from TinyPass believes people were keen to pay - and have been doing so: "We saw emerging pockets where people paid for content and felt there are countless niche sites with niche audiences and they'd be willing to pay for it if it was easy enough." Tinypass forms part of a new paywall solution industry banking on this willingness, citing iTunes as a broad example: people will subscribe if it's simple and fair.

Originality is important: The Economist and WSJ's digital subscriptions are enormously successful, thanks to their unique content. But general news sites cannot quite match this, and although paywalls are a tourniquet, revenues are down sharply and probably will be permanently. The Times and NYT enjoy rising subscriber numbers, yet they still make a lot less than before. Media has to become leaner and, according to Stent: "The key to a successful publishing company in the 21st century is a diverse variety of revenue sources, and a strong and sincere focus on quality, value and respect for the reader." Other revenue streams include premium ads and syndication, while the most successful paywall systems usually tip their spear with top-end paid mobile applications.

There's mixed consensus that paywalls are good, and alternative solutions are in play. For example, The Guardian is experimenting with its Open Platform to make access to content easier and thus gain more ad views. But despite predictions of doom, paywalls are proving successful enough. And in a sea of glum earnings, any lifeline will do.

First published in the September 2013 issue of Brainstorm.

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