Newspaper Paywalls: How does News make money online?

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.

8 COMMENTS

  1. And Victoria, I agree completely. The paywall has actually increased the New York Times PRINT business thanks to their metered system. The Washington Post, LA Times, and a host of US papers are heading this way. The same is happening in the UK; The SUN is looking at exclusive rights to show Premier League football highlights etc.

    Keeping the subscription fee at such a low £1.99 is good. Can’t really argue with that. I give more to WaterAid each month.

    Here’s a good link on the future of newspapers/online etc.

    With some astute business sense like that of the New York Times we have a bright future for the industry ahead.

    http://www.nytimes.com/2013/04/01/business/media/more-newspapers-are-making-web-readers-pay.html?smid=tw-NYTimesAd&seid=auto&_r=1&

    http://www.journalism.co.uk/news/two-years-of-the-new-york-times-paywall/s2/a552534/

  2. Anyone can get news and comment from blogs and social media, but there will always be a market for quality writing. Newspaper columnists seem to be much closer to the political class than bloggers are. My family pay for both The Times and The Telegraph precisely because we want to read incisive articles from commentators such as Boris Johnson, Jeff Randall, Peter Oborne, Charles Moore, Matthew d’Ancona, Benedict Brogan, Matthew Parris, Daniel Finkelstein and Rachel Sylvester. We certainly won’t find them outside the wall!

  3. I might not want to pay £1.99, but then I probably wouldn’t be fussed if I was charged that!
    It’s the whole having to register and pay business that is more off putting than the price – and not just for reading, but if you wanted to aggregate or search content it’s not as easy if it’s not accessible to spiders etc.

    Many musicians have got around the piracy by diversifying and using it to their advantage…ie. making more money from gigs, festivals and merch etc.; the copying of their works helps promote these things.

    So I guess it’s down to the newspapers to find their equivalent of gigs (big conferences? training courses? … coffee shops?!) or be the pop music equivalent that people will pay for and accept the lower distribution that this method receives nowadays.

  4. I think you guys are pretty wrong on this, I’m afraid. Within the decade, a number of newspapers will no longer be in physical, hard-copy publishing mode. The drive for digital is beginning now, because between now and then, newspapers like the Guardian, the Telegraph, the Times etc. have to get ready, essentially, to go out of print. At the same time, the internet is taking off – that’s where the new market is.

    Now, the introduction of the paywall early does several things: firstly, the Telegraph is undoubtedly going to see it’s numbers of readers drop, and as people decide to pay for the online monthly membership, they’re going to be less likely to buy the physical newspaper – taking the newspaper out of publish quicker than it would have without a paywall. But it also gives them a significant amount of time to judge market demand, to see what consumers want. It will push quality up for us, as they work harder to convince us to pay membership.

    The Times have lost a lot of readers – but they always knew they would. That was the trade-off they were willing to make, to create a smaller readership, but with focus on what matters. The Times are charging 4.5x what the Telegraph are charging, and they don’t give you any free articles to get a taste of what lies behind the Great Wall. Given as in a number of years there won’t be a newspaper anyway, what are you expecting them to do? To lose all their revenue beyond advertising, be forced to lay off some of their best writers in order to keep costs in check, and essentially become a small-scale, two-bit operation? That’s not a feasible option.

    Paywalls are the future because media is in decline. When newspapers like the Telegraph, which many right-wing liberals get pretty much all of their news from, are forced to modernise, it’s natural for them to charge for online viewing. If anything, they’ve missed a trick – I think many of us would have been willing to pay more for some of the great writing the Telegraph has. You’ve given no alternative options for how newspapers can stay in vogue when their newspapers are lost – I think you need to, because saying this won’t work without suggesting what would (as though everything will be fine if there’s no paywall) is clearly not true.

    We pay for the Times/Telegraph (and we would pay for the Guardian) because these big operations bring us huge amounts of information, in quality writing, daily. We adore their comment sections, particularly their bloggers with their amazing insight. The Spectator and the Economist both offer digital subscriptions which are successful, and have been doing so for years. There’s a lot to gain from paywalls – I’m glad the Telegraph are making the change.

    • Our solution was for Newspapers to streamline by cutting down in size. They need to beef up their best sections and cut off the ones they do less well; focus on attracting a specific audience, with interests A,B, and C – not just people in general.

      This was the point about Guido and why it is so relevant. It is run by two or three blokes and it regularly beats the Newspapers to stories, and is viewed by many as more influential. That is the future of web journalism for me. Specific, tailored content on an individual topic with great insight and depth.

      • But to do less would undermine the point of newspapers. The point of the Telegraph is to bring to its audience a wide-range of information all across the spectrum and interpreting it in its own right-wing way. That’s why, at the end of the day, or the beginning of one, people sit down, go onto the website and check out everything that’s been happening in the UK/world. The USP for the Telegraph, Guardian etc, is not that they break news first, it’s that people can go to their websites and get EVERYTHING they need to have a decent understanding of what happened today. Cut in size, and cut focus and you lose that – and you lose sight of the reason why these newspapers exist in the first place. People will not go to 15 different sites to get news on 15 different things – people will just stop reading news.

        • But that is the point isn’t it, people do not actually read all of the Telegraph; they read the bits which are important to them. When I go on to their site, I check out politics…and sometimes business; but very rarely anything else. That is because I am not interested in the celebrity gossip or whatever else they run, I base my time on tailoring it to my interest; selfish as I am.

          What we are saying is that people will not have to go to 15 different sites, because people do not actually care enough read in depth about 15 different topics on the same site! I don’t think it is a USP to cover everything but not in great detail, when there are those who do many less topics but with real intensity.

          Yep, it would mean a change in the definition of a newspaper, and how news is fed; but then again, they probably said that about the car when it roared past the horse & cart. :p

          We can agree to disagree though, Victoria – your opinion is most welcome.

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