Newspapers also increasingly charged readers for online
access, with many adopting the successful “metered” paywall system pioneered in
the UK by the Financial Times and perfected in North America by the New
York Times. Experimentation with online subscription systems went through
several distinct phases in the first two decades of the World Wide Web. Many
newspapers tried to charge for online access to their content from the outset,
but most had discontinued such attempts by the millennium after they failed to bring
in significant revenues. Most newspapers preferred to instead keep access to their
online content free in order to attract as many readers as possible as in their
print model, and to instead rely for profits on selling digital advertising. Rates
for digital advertising dropped significantly due to oversupply, however, and
most ad revenue began flowing to Google and Facebook, so renewed attempts were
made by newspapers in 2010 and 2011 to devise a profitable paywall. These
proved highly successful, encouraging widespread adoption across the industry.
News Limited CEO Rupert Murdoch ordered a “hard” paywall at
the Times and Sunday Times in 2010, allowing no content to be viewed without a
subscription. By 2014 the newspapers had more than 300,000 online subscribers,
each paying £6 a week, and recorded their first
annual profit since 2001. Their £1.7 million in earnings that year compared
to losses of £6 million the year before and more than £70 million in 2011. By
2018 they had a combined 500,000
online subscribers, with digital subscriptions outnumbering print subscriptions
for the first time. Their operating earnings in 2018 were £17 million. Most
newspapers hesitated at such an extreme approach, however, preferring to hedge
their bets by keeping their pageviews as high as possible in order to maximise
online ad sales.
A “metered” paywall, which allowed both revenue streams, was
adopted by the New York Times in early 2011 after considerable development. It allowed
most casual visitors through but charged their most frequent readers after a
certain number of articles, initially 20. This proved even more successful than the hard paywall, encouraging most of the U.S.
newspaper industry to follow its example. Before
2011 was over, such major newspapers as the Baltimore Sun and the Chicago
Tribune had adopted the metered model, and the Gannett chain of 80 newspapers
followed in 2012, with the exception of its national daily USA Today.
Businessweek magazine declared 2013 “the
year of the paywall” and noted that more than 400 publishers in the U.S.
and Canada by then charged online readers, helping to raise U.S. newspaper
circulation revenue by 5 percent the previous year, the first gain since 2003. The
2013 State
of the News Media report published by the Pew Research Center noted that paywalls
had “caught fire” in the year since Gannett followed the Times’ lead. Together
with print price increases, noted the report, Gannett estimated the changes would
generate an additional $100 million in earnings annually. “When Gannett
reported in early 2013 that its digital revenue projections were on track, it
seemed to signal that such initiatives could work at papers of varying sizes”.
It counted 450 of the country’s 1,380 dailies which had by then adopted paywalls,
including 47 from the Lee chain, 30 from McClatchy, and fourteen from the E.W.
Scripps chain. By early 2018, the New York Times had more than 2.6 million
digital subscribers, bringing its reader revenue above $1
billion a year and accounting for 60 per cent of its sales.
In Canada, only 4 percent of newspapers were behind a
paywall in 2011, according to a study by the Canadian Media Concentration
Research Project, but by 2015 that had risen to 58 percent. When the Toronto
Star, Canada’s largest daily, erected a paywall in 2018, that brought the total
to 65 percent when measured by circulation. A 2018 study done
at the University of Missouri which examined 236 U.S. newspapers found 77
percent of them charged for online access. By far the most common pay model found
was the metered paywall, which was used by 72 percent. A study of
twenty small newspapers in
Norway found that in addition to using a paywall to increase online
subscription revenues, they used it in a “brake” strategy to stop losses in
print circulation revenue.
A
2019 study by the Reuters Institute for the Study of Journalism examined 212
news organisations in the U.S., UK, and five European countries and found that 69
percent of newspapers employed a paywall, up from 64.5 percent in 2017. The
proportion of regional newspapers with paywalls was even higher, as only 27
percent offered free access, down from 36 percent in 2017. A majority of the
largest newspapers in Finland, France, Germany, Poland, and the U.S. had adopted
pay models, but not those in Italy or the UK, which are “very competitive
markets where even leading titles may fear losing market share if they implement
pay models”. The U.S. had seen the sharpest rise in paywalls erected by newspapers,
with 76 percent employing a pay model by 2019, up from 60 percent in 2017. The continuation
of this trend prompted the report to declare: “Paywalls are likely here to stay”.
A report
released in August 2019 by the Shorenstein Center and Lenfest Institute went
even farther, finding that nothing less than a “digital subscription
renaissance” had taken place over the previous five years. Declaring the “end of the beginning” of the digital subscription era,
its survey of more than 500 for-profit newsrooms in the U.S. found that digital
publishers were “well on their way to evolving a standard for success in
subscriptions”. Paywalls also encouraged audience engagement, the study of
mostly local, regional, and metro newspapers found, which was lacking elsewhere
on the Internet. This had positive spillover effects on both digital
advertising sales and journalism.
Volume-driven digital advertising engenders a race-to-the-bottom to produce the lowest-cost, highest-volume content. Publishers reliant on digital advertising generally see business goals as increasingly distant from editorial priorities. Conversely, digital subscriptions require growing the number of users who are highly engaged in a publisher’s content. . . . When users pay for access to news content, the business goals of a news organization more closely meet editorial goals.
A 2019
analysis by the Wall Street Journal, however, found that a “stark divide
has emerged between a handful of national players that have managed to
stabilize their businesses and local outlets for which time is running out”.
Its examination of circulation, advertising, financial, and employment data
found that local papers had suffered sharper declines in circulation and
advertising revenue than national newspapers and were also having “a much more
difficult time converting readers into paying digital customers”. It pointed to
data which showed that Google and Facebook took 77 percent of digital
advertising revenue in local markets in 2017, compared with 58 percent nationally.
While the Wall Street Journal was able to convert 4.5 percent of its readers into
digital subscribers and the New York Times 3.6 percent, Gannett’s local newspapers
which had paywalls (not all did) converted only 1.4 percent.
