The online ad jungle, a wild place in which a website could forage and survive not so many years ago, is now being clear-cut by the gaping maws of those two 8,000-ton brontosaurs, Facebook and Google. But don’t take my word for it:
(Source: eMarketer, MediaPost, via Statista)
That’s over half the online digital ad market swallowed up by Facebook and Google. And that’s amazingly bad news for the general interest new sites that compete for the same ad dollars.
So bleak is the situation that three-quarters of newspaper websites are now sporting metered gates, because if advertisers are not paying the bills, then readers will have to do the job. But will readers be willing to pay for the cow when the milk is free in lots of other places? News sites are banking on paywalls and valuable unique content to shift turn their financial fortunes around.
Of course, as paywalls rise, tears fall. Plenty of pundits are willing to stand up and rail against paywalls — they are doomed to fail, they cost too much, they don’t work. Unfortunately, naysayers have very few constructive alternatives to suggest. Here are a few complaints.
At TechCrunch, Danny Crichton is frustrated that he has to pay for content.
- I’m frustrated with this hell. I’m frustrated that the web’s promise of instant and free access to the world’s information appears to be dying. I’m frustrated that subscription usually means just putting formerly free content behind a paywall. I’m frustrated that the price for subscriptions seems wildly high compared to the ad dollars that the fees substitute for. And I’m frustrated that subscription pricing rarely seems to account for other subscriptions I have, even when content libraries are similar.
Writing at Medium, Rob Howard thinks that metered paywalls send bad messages, and that publishers should simply erect all-or-nothing walls and live or die by them:
- Publications that hope to survive online are left with a challenge: Can we subsist on advertising, and all the perverse incentives that come with it? Or can we actually produce something that’s valuable, meaningful and different? That’s the only way to build a responsible wall, asking readers to pay in advance instead of soliciting them when they’ve clicked too much.
John Heltman at Washington Monthly basically agrees. General interest and newspaper paywalls will fail. He thinks that the notable and successful creators of valuable, meaningful, and different content are special interest publishers and the trade press. Unfortunately, that means those willing to pay are getting the news, but the general public is not.
- Gathering news costs money, and that money has to come from somewhere. If there is sufficient demand for information, someone will gather it, as the rise of the trade press has demonstrated. The problem is that despite the struggle and innovation that has been taking place in the news media since the internet disrupted its business model, no one has come up with a profitable way to provide information about government to average Americans in ways they care about.
Om Malik, founder of Gigaom, likes paywalls that guard truly valuable content. That’s not what most news sites offer, he says:
- I think the paywall craze which is sweeping the media herd will be a big reality check for the news and magazine publishers. So many of them are drinking their own spiked kool-aid. They will soon realize the size of their “real audience” and will soon realize that they don’t pass the “value for money” threshold. There are very few publications that have a feeling of must-reads and must-haves.
The Washington Post’s Megan McArdle sees paywalls as both regrettable and inevitable, despite some interesting alternatives.
- Either we will find someone else to pay for the news and opinion and cartoons you consume, or we will go out of business. That someone doesn’t have to be the reader. Some journalism can function as a sort of a loss leader for a conference business, or another associated product, like books or package tours. Some opinion writing can be produced by people who use it as a personal loss leader for their brand as a “thought leader” or “public intellectual” – or simply use it as a hobby to blow off steam. Outside of the “loss leader model,” there are a few other options: Some reporting can be financed by donors as a philanthropic project; some consumer product journalism can support itself through affiliate programs that provide rewards for selling merchandise; and some writing can be supported by “native advertising” sprinkled among the journalism so that it’s hard to tell them apart. All of those business models can produce good journalism. … But if you don’t like those options, then you, dear reader, are going to have to step up to the plate. Unfortunately, many of you have gotten used to the idea that news ought to be free, and resent being asked to pay for it.
Over at Vulture, even humor writer Brian Agler gets in on it. I can’t quote his not-quite-safe-for-work piece, but go over for a chuckle. It’s not too often that the subscription biz gets played for laughs.
Okay, so in the light of all this media criticism pointing to the coming failure of paywalls, metered or otherwise, for general interest news organizations such as newspapers, well, what does the data say?
Released this month by the Reynolds Journalism Institute, a new survey of 333 general interest news websites has a story to tell. Take a look at the business models used by online newspapers and other news sites:
(Source: Reynolds Journalism Institute)
That metered gate is the primary tool used by newspapers looking for online subscribers. And the industry is coming to a consensus on how many articles to give away before closing the gate: 10 or less:
(Source: Reynolds Journalism Institute)
Commenting on the research, RJI’s Brian Steffens suggests that news sites are becoming savvier about what they need to do to survive — for example, using pricing bundles with other media services.
- The Seattle Times is getting smarter about attracting readers to those bundles. The programmers there are experimenting with algorithms that help 1) widen the funnel of prospective readers, 2) determine which of those readers are most likely to respond positively to an invitation to subscribe or join and 3) at what point(s) in that journey down the funnel would they be most likely to accept such an invitation. This is the kind of data collection and analysis that many industries and companies use, but it’s relatively groundbreaking for the news industry.
That’s very similar to what the Wall Street Journal is doing, The company is not using the same metered gate for all users. Rather, the company algorithmically assigns each non-subscribing browser “a propensity score based on more than 60 signals, such as whether the reader is visiting for the first time, the operating system they’re using, the device they’re reading on, what they chose to click on, and their location.” That’s according to Shan Wang at Nieman Lab. What’s more, the WSJ uses this score to determine how to meter the gate and pitch subscription services:
- Using machine learning to inform a more flexible paywall takes away guesswork around how many stories, or what kinds of stories, to let readers read for free, and whether readers will respond to hitting paywall by paying for access or simply leaving.
This process has allowed the Journal to do some testing and determine their most likely prospects.
- these non-subscribed visitors fall into groups that can be roughly defined as hot, warm, or cold … Those with high scores above a certain threshold – indicating a high likelihood of subscribing – will hit a hard paywall. Those who score lower might get to browse stories for free in one session – and then hit the paywall. Or they may be offered guest passes to the site, in various time increments, in exchange for providing an email address (thus giving the Journal more signals to analyze). The passes are also offered based on a visitor’s score, aimed at people whose scores indicate they could be nudged into subscribing if tantalized with just a little bit more Journal content.
The Financial Times has long depended on its paywall, and is doing very fine, thank you, per a report in Fast Company. “Currently print advertising represents only 17% of the company financial publishing division’s revenue-and that division’s 2016 profit margin exceeded 45%.”
Another paywall success story is that of the New York Times. The Grey Lady has had a paywall for a long time, but recently tightened it, allowing visitors to read fewer articles before locking them out. At the recode website, Edmund Lee and Rani Molla took a deep look at the data. The trends in print vs digital are revealing:
(Source: NYTimes and Recode)
The success of the Times’ strategy can be seen in the way the company has shifted its revenue streams from advertising to subscription:
(Source: NYTimes and Recode)
There are also a number of stories about general interest news organizations adopting or tinkering with paywalls.
Vanity Fair’s paywall, launched in April, only allows readers to see four articles before requiring a subscription.
Hearst recently followed the WSJ model, according to Digiday: “Hearst Newspapers has replaced its one-size-fits-all paywall with a customizable one. The newspaper group, with 24 daily and 64 weekly papers, including the Houston Chronicle and the San Francisco Chronicle, has been tinkering with a paywall whose permeability changes depending on who’s visiting and what they’re reading.”
Bloomberg just launched a paywall with a 10 article gate. The subscription price is high, inspiring much teeth gnashing among the pundit class.
The Chicago Sun-Times announced its new paywall with print drama: a blank white front cover.
The Denver Post recently put up a metered gate a few years after taking it down.
And of course, there are going to be experiments that go poorly. The New York Daily News put up a paywall on Feb. 1, 2018, and promptly saw page views decline 45% and unique users drop 12%.
Meanwhile, the American Press Institute is touting the value of site visitors who convert after hitting the gate. Check out this data-rich API video the organization has produced:
- Improve the user experience at the subscription sign-up page.
- Try dynamic paywalls so that the meter count is customized based on an individual or segment.
- Target those who read multiple stories by the same reporter within a specified time window.
- Offer users of ad blockers a message about the value (and cost) of journalism.
Insider Take
Opinion makers and media critics can complain about paywalls, but few have any concrete workable alternatives. In the real world, publishers are finding that metered paywalls, ones that close after only a handful of articles are read, are the best choice left. And the more tech-savvy sites are moving from a one-size-gate-fits-all approach to one that looks to the individual user and tailors the subscription pitch.