Are There Serious Problems Ahead for Paywalls?

The world of print journalism has changed dramatically in the last decade. Since the 1990s, various media outlets have folded, have migrated to an entirely online business model, or have paved the way for hybrid online-print approaches. Many hailed the development of the paywall, a model that required readers to pay to access online content, as a much needed revenue stream in today’s world where advertising is less expensive (and thus generating less revenue) than ever before. But many news organizations, including the New York Times, are experiencing declines that suggest the paywall may be on its way out.

SEE ALSO: 5 Reasons Paywalls Fail

Paywalls as Revenue Streams

The New York Times, one of the nation’s top publications, has been leading the charge with newspaper paywalls. Prior to launching their paywall initiative, the company engaged consulting firm McKinsey & Co to determine how an online subscription model would resonate with readers. The company predicted modest interest, with approximately one million subscriptions before growth leveled off. According to recent reports, these numbers are accurate. While the revenue generated by the paywall is significant, it may not be enough to sustain the publication as it moves forward.

Competition is Tight for Reader Attention

Estimates suggest that one third of US newspapers now charge readers for online access. Yet competition is fierce for reader attention. Publications must offer timely topics, unique angles, and in-depth meaningful coverage to compete. The number of publications that offer coverage on the same subjects is immense, with competition arising at the local, regional, national, and niche publication levels. While companies like the New York Times have significant brand assets and reader loyalty to help attract subscribers, many other publications struggle to articulate a unique positioning that consumers deem is worthy of paying for.

The Future is Free

Many experts suggest that the future of journalism is free content. Growth in advertising may support this idea. Innovations are happening at a startling speed to make online advertising more effective. Because it’s simply filling up pixels, many publications are maximizing advertising revenue with strategic redesigns that allocate more space to ads and less to content. At the same time, technologies like retargeting are incorporating data from web searches and previous online browsing when targeting advertising. These technologies increase clickthroughs and sales, driving up the revenue that publications can theoretically earn as a result of hosting ads.

While online advertising may not completely fund a newspaper or magazine’s entire operation, many are reconfiguring to ensure their success long-term. From acquisitions and mergers to plans to reorganize the way that publications are staffed and written, today’s online publications are lean and mean. As a result, costs are low and publications are constantly evaluating which models will help them attract the most readers and subsequently the highest revenue numbers.

While only time will tell if paywalls have the potential to sustain a publication long-term, one thing is for certain. In today’s environment of stiff competition for reader attention and advertising dollars, the most agile publications that put reader value first stand the best chance of staying relevant.

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