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Posted by H.G. Watson on January 17, 2017
The development of the Internet in the mid-1990s presented media organizations with a challenge. How to take advantage of a new online platform, and survive the possible decline of print advertising revenue? Image courtesy Jessica Hirtle.

The development of the Internet in the mid-1990s presented media organizations with a challenge. How to take advantage of a new online platform, and survive the possible decline of print advertising revenue? Image courtesy Jessica Hirtle.

By Jessica Hirtle for The Signal

John Winn Miller was faced with a dilemma: raise more revenue or cut expenses. Publisher of the New Hampshire newspaper the Concord Monitor from 2010 to 2013, the long-time journalist needed to find a solution to declining circulation and cash.

Following in the footsteps of other news organizations including the New York Times and the Wall Street Journal, Miller decided to implement an online paywall.

“You never know what’s going to happen,” says Miller. “I felt that we really had no choice and we had to try something different.” He calls his 2011 decision “a leap of faith.”

Why a paywall?

The development of the Internet in the mid-1990s presented media organizations with a challenge. How to take advantage of a new online platform, and survive the possible decline of print advertising revenue?

In the beginning a majority of news organizations – the Wall Street Journal and the Illinois News Gazette were two exceptions – offered free online content, believing their print and advertisement income would continue to grow. They were wrong. Between 2003 and 2010, revenues for print advertising in the U.S. dropped more than 50 per cent, from $45 to $22 billion.

By 2015, 77 of 98 American newspapers with a circulation of more than 50,000 had implemented a paywall, requiring readers to buy a subscription to access online news. Some offered soft paywalls, which offer some free content to readers; others offered hard paywalls, which provide no access without a subscription.

After the Concord Monitor implemented its paywall, Miller says readership and revenue went up 10 per cent – a “big jump” for the publication. In 2015, the Concord Monitor had a print circulation of 17,500 and 1.5 million monthly website views.

Miller attributes the success of the paywall to being “completely upfront and honest” with readers. “We got very little pushback,” he says. “We made the argument that we couldn’t keep giving it away for free and survive as a publication.”

Following a similar upfront approach, online publication allNovaScotia provides a targeted audience – mostly businesspeople – with content five days a week, for a price.

“It’s free – to anybody who wants to buy it,” jokes Kevin Cox, former managing editor at allNovaScotia. Cox is a passionate defender of paywalls.

He says allNovaScotia set out to do things nobody else was doing – like publishing a daily list of civil court cases – to attract and entice readers. “This is an exclusive group,” Cox says of readers. Subscribing to allNovaScotia promises they will receive “something nobody else gets.”

Under a strict paywall with no free access to content, subscribers pay $30 per month (up to three readers can share a subscription). Since 2001, allNovaScotia has successfully grown to more than 9,000 paid subscribers. With each subscription costing $30, this means allNovaScotia makes close to $3 million in annual subscription revenue. In 2015, the company launched an additional website, allNewfoundlandLabrador.

A Globe and Mail correspondent for 23 years before joining allNovaScotia, Cox says that paywalls are doing nothing new. Referring to an earlier price of printed newspapers, he says, “If you haven’t got a quarter for the paper, you haven’t got a right to it.

“You always had to pay.”

Large media organizations including the Wall Street Journal, the Globe and Mail and the Financial Times continue to thrive in the era of subscription-based journalism. Alex T. Williams, a doctoral candidate at the Annenberg School for Communication at the University of Pennsylvania, points out the New York Times’ success in generating new revenue with an online paywall.

In 2005 the Times implemented its first paid service, TimesSelect, which charged $7.95 U.S. per month for premium online content. The subscription only attracted 300,000 subscribers and was eliminated in 2007.

Williams attributes the failure of TimesSelect to news organizations’ inexperience with paywalls. Between 2005 and 2007, only three American newspapers had a paywall.

Introduced in 2011, the Times’ metered paywall allowed online visitors to read 20 free articles a month – cut to 10 articles in 2012 – before signing up for a subscription. A charge of $20 U.S. per month grants unlimited access to the website, smartphone and tablet apps.

Williams says the Times’ paywall “was considered very innovative. At the time, there were a lot of sceptics that thought paywalls couldn’t work.”

In 2015 the Times’ digital subscriptions rose to one million. An additional one million subscribers have both a print and digital subscription. In the same year the Times generated $1.58 billion U.S. in revenue.

Paywall predicaments

Bob Hepburn, the director of community relations and communications at the Toronto Star, says each news organization is faced with a tough decision: make readers pay for content or give it away for free.

Established in 2013, the Toronto Star paywall lasted until April 1, 2015. While Hepburn says the number of digital subscribers grew to 60,000, the overall visits to the website declined. Instead of continuing with the paywall the Star went in a different direction. It introduced Star Touch, a free news tablet app, and offered all other online platforms for free.

“We felt we no longer could have a paywall only for our website,” says Hepburn. “We didn’t feel we could charge for one and not for the others.” Hepburn says the Star is not ruling out the possibility of implementing a paywall in the future, but having the “digital properties available free is where the current thinking is.”

While the Toronto Star has totally dropped its online subscription, brief suspensions of paywalls are common. Between 1999 and 2015, 41 paywalls were temporarily suspended in the U.S.

Half of these suspensions were in reaction to crisis situations. The New York Times briefly lifted its subscription model for emergencies such as Hurricane Sandy in 2012, the Washington Navy Yard shooting and the Boston Marathon bombings in 2013. In crisis, doctoral candidate Williams says, news organizations “don’t want to be cutting people off from information because they’re not willing to pay for it.”

News organizations will also often drop paywalls for significant events. In November, the New YorkTimes and USA Today offered free coverage of the U.S. election. The Wall Street Journal did not.

Getting around the wall

Rather than buy a subscription, some readers will go to great lengths to avoid paywalls. They find articles through social media, deleting cookies, switching web browsers and downloading ad blockers.

A 2016 study by the Pew Research Center concluded that 62 per cent of U.S. adults get their news from social media websites such as Facebook, Twitter and Reddit. “A lot of the same stories get reported everywhere,” says John V. Pavlik, a professor in the department of journalism and media studies at Rutgers. “They’ll take it free rather than pay for it.”

While Pavlik believes paywalls will be part of the solution to surviving in the era of digital media, he says there is still “plenty of room for people to continue to innovate.”

He mentions developments such as Google Glass and the 360-degree video.

More than 600 million adults worldwide read a newspaper online in 2012. Pavlik hopes that more readers will come to recognize that paying for good journalism – like any other commodity or service – is worthwhile. “It’s just a price for the product,” says Pavlik. “Everything has a price.

“If people start to see that there is real value in quality, and that it’s worth paying for, things might change.”

Describing journalism as the “lynchpin” of a democratic society, Pavlik says news organizations should focus on quality news content, effective use of technologies and low-priced paywalls.

“There are so many changes happening and at such a rapid pace that journalism has to adapt. It can’t just stand still.”

During John Winn Miller’s time as publisher of the Concord Monitor, the initial wave of subscription-based online journalism swept through the U.S. and Canada. From 2010 to 2013, the number of American newspapers using a paywall rose from six to 74. In Canada, the number of paywall newspapers grew from one to 33.

Even though Miller and the Monitor staff were nervous, he says that the news organization couldn’t be “afraid to fail” in an ever-changing industry.

“It’s not going to scare away readers. It’s not going to upset advertisers,” says Miller. “It will bring in new revenue for the paper – if done right.”

Jessica Hirtle is a fourth year journalism and international development student at the University of King's College in Halifax, Nova Scotia. She hopes to one day make documentary films about social justice issues. In her spare time, you can find her eating a veggie burger, sipping green tea and watching Parks & Recreation. This story was originally published on University of King's College The Signal, and is republished here with the author's permission.
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