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Are Paywalls Working For Digital Publishers?

No one has yet found the most effective way to monetize digital news

1Sep

Before the explosion of digital content, publishers were in a powerful position. Circulation of print media was high and advertising revenue reflected that, with comparably little competition against the digital age's excess. We published a piece last year that explored whether 2016 would be the ‘year of the paywall’, with some publications (the New York Times, the Times, for example) performing well with a subscription model. Other papers argued that the use of a paywall would limit traffic and therefore relevance, while others argued that pricing people out of quality news content online is unethical in of itself.

Even so, there are certain types of publications for which paywalls make sense. Those with niche audiences and a specialty focus (like the Financial Times, for example) can charge because they are the authority in their area. Common tabloids would have a more difficult time convincing their readerships to part with cash. Essentially, for the likes of the NY Times, the WSJ and the FT, it’s the unique content that sells. For most publishers, audiences will look for similar content elsewhere when presented with a paywall; if they can find it, they’ll make the switch. This is reflected in News UK’s abandonment of The Sun’s paywall in late 2015.

In an attempt to help publishers, Google is reportedly developing new tools designed to boost subscriptions for publishers online by putting paywalled pages in front of its users. The first - and most important - of Google innovations is a revamp to its ‘First Click Free’ feature. Publishers signed up to First Click Free can allow visitors access to one ordinarily paywalled article without a subscription, so long as the visitor reaches the site through search. Some will offer visitors a number of ‘free’ articles per day before putting up a paywall and nudging the visitor toward subscription.

It’s not a wholly altruistic project from Google, given that the company relies on both consumers and publishers populating its search results - the key part of its booming ad business. Google believe First Click Free ‘can benefit both our users and our publisher partners. It allows Googlebot to fully index your content, which can improve the likelihood of users visiting your site; and it allows users to view the article of interest while also encouraging them to subscribe.’ The willingness to offer free content to get in front of new audiences suggests that people aren’t flocking to subscribe.

Even the more ‘successful’ paywall proponents, the WSJ, made it easier for nonpaying visitors to engage with its content in August last year. The 24-hour guest pass allows the publisher to get information from and subsequently market to its more casual visitor, and expanded social sharing allows journalists to share full stories for free on their social channels. Google is also reportedly planning to relax its policy of having publishers offer at least three articles a day for free. Mark Thompson, president and CEO of The New York Times, said: ‘Early results are that there is some flexibility here,’ and it seems that Google are keen to work with publishers to find a system that works best for both parties.

Interestingly, the Wall Street Journal pulled out of First Click Free earlier this year after finding it to be an ultimately ineffective solution for driving subscriptions. ’We are constantly experimenting with different ways to enhance the digital experience for members,’ Dow Jones (owners of WSJ) wrote. ‘As a continuation of this, the Journal has broadened its test by removing content available through Google’s First Click Free. The test began last month when the Journal removed four sections, resulting in subscription growth driven directly from content.’ Google has reportedly refused to comment on whether or not WSJ’s decision will impact its all-important rankings, but the implication is that the search giant may view subscription sites unfavorably.

Ultimately, paywalls are working for some major publishers but are utterly unworkable for others. Those with a niche and dedicated audience have managed to make the switch with relative success, though the failure of The Sun and other less specialist publications to encourage visitors to subscribe suggests that, for most, a paywall isn’t a viable option. What this means for the future of journalism is unclear. Some are thriving, selling ad space on quality content and retaining strong visitor numbers. Others are struggling to adapt to the hyper-competitive digital news market. It doesn’t look like the paywall is going to become the go-to monetization strategy any time soon, though. 

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