Newspaper Paywalls: How does News make money online?

Backbencher April 3, 2013 8

Alex MacDonald and Tristan Kitchin,

 

The Daily Telegraph has added a paywall to its digital content. Readers will be given 20 free articles a month, after that, a fee of £1.99 a month will be charged. For many media companies, including news providers, music companies, and others the Internet is still a rather tricky puzzle to figure out. Just how do you make a profit in a consumer’s paradise, where competition is so fierce?

You probably wouldn’t think twice about handing over a couple of quid to a barista at an up market coffee shop: that’s £5 blown on a creamy warm beverage and a surprisingly small sandwich; you might even do it twice a week, if that is your sort of thing. This is much the same for those who find it easy to spend 20 quid in the cinema; sure we all moan at the price of popcorn and snacks, but we pay for them anyway – right? So why is paying £1.99 a month to read the digital content of a newspaper deemed so steep and ridiculous?

£1.99 a month. You could buy… well not a whole lot really with that. But £1.99 will give you access to what many believe to be the digital content of one the best British newspapers; so what’s the fuss?

Frankly put, this has been a nightmare for news providers. The reason being is that there are thousands of sources for Joe Bloggs to read about what is going on in the world. As we all know, news junkies can visit a plethora of websites to get their fix, without spending a penny, without even being asked to click on an advert to compensate the publisher for their work. This is why we found it strange to hear that The Daily Telegraph would be putting up a paywall on its online content. Sure, it is a super site; one of the best; but is that enough to make a paywall work in a market where demand is never satisfied and pockets are always tight? The Barclay Brothers must have been looking the other way when the world found out that The Times, and the FT have suffered tremendously due to their paywall features; both now have smaller readerships than the Evening Standard, Independent, and Guardian. Abroad, The New York Times is having incredible difficulty in stopping “cheapskates” from bypassing its paywall and accessing its content for free.

So what is The Telegraph thinking?

Well actually, this time around it could work out well because The FT, The Times, and now The Telegraph have all implemented a paywall structure, so if you are a moderate centre-right politico; and you don’t fancy reading The Mail or other such newspapers; then you are going to have to fork out a couple of quid to keep up to date. The vast majority of the British centre-right broadsheet newspapers now ask for a fee to read their content, and as such, consumers are being pushed into a corner.

But of course, not everyone thinks in such a fashion, and not everyone will happily oblige to the new framework at Telegraph HQ. But that is to be expected, because when it comes to the Internet in general, people hate paying for things.

 

 

Yes, people hate paying for things, and the Internet has become notorious for its wealth of easily accessible free content. If one looks hard enough online, any form of media can be found freely available (although in many cases illegally).

But no supplier wants their products made available for free – why should they? – as Brogan (Deputy Editor of The Daily Telegraph) points out. But that desire is quite clearly not enough, and the same story is being seen, or rather listened to in other industries: record labels have spent over a decade fighting off piracy using the courts as a deterrent, whilst meanwhile racking up significant costs. No matter how draconian and ridiculous the sums people were sued for downloading protected content, Internet piracy has remained rampant. If consumers are willing to take on that risk, even at the possibility of imprisonment and fines, then what hope does The Telegraph’s new scheme really have?

For the music industry, access to paid material online through services such as iTunes gave the record labels their first taste of Internet profit. Its introduction of 99p singles boosted music sales; but why pay for something when you can get it for free, even if through illegal means? A commentator boasted to us today of how “all of my music is illegally downloaded, and I don’t plan on paying for music ever again.” iTunes may have given the record labels their first taste of online profit, but the Internet remains a largely untapped source of income, much to the dismay of many artists and producers – but to the joy of many consumers.

Spotify allows for the free online streaming of music, a new service which has proved profitable for record companies.

Enter Spotify, a profitable online streaming service which gives people what they want: free content. Much like on the radio, advertisements break up music playback, with a premium service made available for £9.99 a month for those who can spare it – now 6 million people pay for its service. This is a quite an optimistic sign for internet businesses, but whether or not that good news will transfer to other sector, like newspapers, remains to be seen.

In regards to the digital newsroom, the Internet provides new revenue streams for media companies, but it also needs to be approached differently. Sure, paying 99p for a track of music is not much to ask at all, neither is £1.99 a month to visit a news website, but why pay for something which you can get for free? This is the problem with the Internet as a business platform: it is too open. But free content does not necessarily mean no profit: news providers still can generate money from adverts on their site; but for big newsrooms with as many Journalists on the HR books as that of The Telegraph, you can understand why they have decided to try a paywall; even if previous models have not worked out brilliantly.

The updates of the newsroom are now most accessible on a digital platform, and the market is moving towards more demand and quick turn-around content – whilst not necessarily scrapping the quality of journalism. Essentially, we as consumers have gotten pretty greedy. So what is the answer for the pocket conscious Barclay Brothers, Murdoch, and the reader? Streamlining. As consumers we have preferences, such as politics, celebrity gossip, the Royal Baby, sports, movie reviews; you name it. A newspaper cannot hope to entice its readers with every single story, meaning that there are articles, or sections in newspapers which are just never read by some people.

This is what is so attractive about the web, and good examples of streamlined material are in abundance: Guido Fawkes, City AM, Football 365 – amongst others illustrate the successes of following this tactic. These sites have high interaction levels with their readers because they are definitive: the content focuses on the reader’s primary interest; we don’t skip past entire chunks of content because everything is noteworthy material for us. Newspapers would be better off in the long-run if they focused on less and covered these sections in far greater detail.

Good luck to The Telegraph, the paywall could pay off, but we don’t think that it is a long term solution for the industry.

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