It’s no mystery that newspapers are struggling to make money: between 2006 and 2014, the industry lost approximately 30 billion dollars in advertising.
In response, many news publishers have experimented with ways to increase digital advertising revenue through native advertising, or through collaborative models like the recently-announced Facebook Instant. Still, many newspapers continue to tinker with paywalls—which require readers to pay to access online content.
But are paywalls viable?
So far the record is mixed. For some publications like The New Yorker they seem to be working, while other newspapers like the Toronto Star are getting rid of them.
It’s difficult to discern the exact trajectory of this moving target—especially since reliable data on their revenues are often unavailable—but there are noticeable trends. As the paywall model continues to evolve, other revenue models are emerging, including another tactic used by news publishers: micropayments.
A Brief History of Paywalls
A paywall basically acts as a barrier between an internet user and a news organization’s online content. To access the content, users must purchase a digital subscription.
While most newspapers only began experimenting with this model in the past few years, a longer history traces back to The Wall Street Journal, which launched the first paywall in 1997. Despite its success, general news outlets feared that launching a paywall would reduce online readership and digital advertising revenue—a tension that continues today.
In 2009, with newspaper revenue plummeting, a lively debate erupted over the paywall model. Publications like The Guardian, The New York Times, Time Magazine and The Atlantic published op-eds debating the paywall model’s viability.
Even Mark Cuban weighed in. The renowned entrepreneur and owner of the Dallas Mavericks argued that newspapers should put their most valuable content behind a paywall and partner with cable companies to offer customers a heavily discounted digital subscription rate (such as five cents per month).
While only a handful of publications in the US had a paywall in 2009, by 2014—largely as a response to declining revenue—over 500 daily newspapers were using one. Since then, the debate has shifted from whether paywalls could work to asking whether they are working.
The Empirical Record
After several years of trial and error, there have been noteworthy successes, along with failures.
In 2011 The New York Times launched their “metered” paywall, a model similar to the Financial Times’.
Metered paywalls block a reader from accessing articles once they reach a certain threshold. The New York Times initially allowed readers to access 20 articles (now it’s 10) for free each month. This model has been increasingly emulated because it is believed that only core readers, who are the most likely to purchase a digital subscription for unlimited access, will eventually be blocked from viewing more articles.
