Was 2014 The Year of the Paywall? Yes and No

In late 2013, there was plenty of speculation regarding the future of revenue in publishing. Would 2014 be the year of the paywall? Well, 2014 is drawing to a close and it’s time for some very important reflection on the matter.

The 2013 Prediction: Correcting the mistakes of the past in which publishers distributed their content online for free, more publishers will turn to paywalls after exhausting other options.

The Analysis:

Paywalls are often seen as the “last resort” option for publishers. Reprints won’t come to the rescue. No one clicks on banner ads. Some publishers are queasy about native ads thanks to plenty of mess-ups. So, it’s up to paywalls.

Newspapers using paywalls use ones that are metered, which allows users to click on a certain amount of articles for free each month. One type of “wall” between consumers and content is surveys, in which consumers must answer the questions to access content. But most newspapers allow between 6-10 free articles a month before they ask for a subscription fee.

It’s not a terrible question to ask since they have provided a service, but it is potentially troubling that it’s stepping backwards. Instead of pushing forward, publishers are relying on old media revenue structures to get themselves out of a pinch.

More often than not, they look too closely at publications out of their reach. Publishers cite the  The New York Times, which conquers $150 million in new digital revenue annually, as a lead international news brand. And even for the The New York Times, there is no precedent for sustaining that growth.

The takeaway for most publishers should be that not everyone can be The New York Times. A paywall is beneficial if you are a very big name brand—like The Wall Street Journal or The Economist—or possibly if you offer very, very niche and technical information, that people expect (or are willing) to pay for. Paywalls are also unseen in new media publications as they have other ways to raise money. Besides, they can just aggregate the traditional publishers content to their site and take traffic.

The 2014 Results:

Publishers did turn to paywalls this year as a part of the saving grace of publishing. According to The Guardian, paywalls in 2014 exist on 70 percent of daily newspapers’ websites, increasing by about 33 percent in 2012. Of the paywall newspapers, 60% use a “soft” or metered paywall. It appears to be working, with higher retention rates for the metered paywall versus the more rigid ones.

Notably, The New Yorker took a break from their paywall plan for three months, allowing users to binge on content even from the archives, but resurfaced the paywall again, this time after a 6-article limit. The paywall has even led to a rise in subscriptions. (Disclosure: I am actually one of these people).

But publishers also pushed harder to work with brands for sponsored content and native ads, even running print native ads in The Washington Post and The New York Times. The paywall is not the last resort for many publishers, and while it has been proven effective, it is not the “end all be all.”

The 2015 Prediction: Paywalls will save newspapers, but people will turn to new media.

5 Questions You Have About Paywalls, Answered

By Emily E. Steck

Everything you wanted to know about paywalls.

  • How Much Money Is Being Made?

    By Emily E. Steck

    The NY Times makes about $150 million a year. However, not every publication can be the NY Times. Gannett has said it has seen "strong revenue from its paywalls."

  • What's the Problem?

    By Emily E. Steck

    Newspapers can no longer revert to classifieds or ads thanks to online innovation, but they can put up paywalls—where users must pay after accessing a limited number of free articles. 

  • Who's Adopting Paywalls?

    By Emily E. Steck

    Everyone, it seems. The NY Times, in 2011. Gannett (the largest newspaper publisher in the country) has 59 of their 80 newspapers use paywalls. The L.A. Times. The Wall Street Journal. And so forth.

  • Why The Sudden Surge?

    By Emily E. Steck

    Thank the NY Times. "After the NY Times rolled out its paywall, 41 American papers adopted paywalls in the third quarter of 2011."

  • Are There Any Other Issues?

    By Emily E. Steck

    Besides failure? Paywalls are short term solutions and provide little sustainable growth. The content that is also blocked by paywalls can be swooped up by aggregator sites to claim traffic.

Image Credit: Ron Mader

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