Bridging the Gap: Behind the Paywall

With declining print sales and the pressure to monetize digital, many newspaper websites have considered putting their content behind a paid or metered wall. A common theme is to bridge the gap between the two revenue streams. The potential of additional revenue via a paid subscription also comes with challenges; most notably a decline in advertising dollars. When a publisher places content behind a paywall, they risk losing readership, leading to less page views, and that means less ad space to be sold. Should online publishers take the plunge? For some online publishers, yes, but it might not the best route for everyone.

One of the most popular examples is that of the New York Times.  It launched its paid digital subscription model two years ago and it has been exceptionally successful.  So successful in fact, their paywall now accounts for more revenue than their digital advertising revenue. While this is a sure sign that their paid model is “working,” one might assume that their losses in advertising revenue continues to raise eyebrows. Furthermore, can the Times sustain and grow this paid revenue model?  If not, there’s still a significant challenge: how to grow the advertising revenue behind a paywall.

For some newspaper companies, that is the exact question they are facing. Surprisingly, there are about 400 online U.S. newspapers that now use a paywall; and many more are flirting with the idea of forcing readers to pay for their content. With the success of the Times, why are these companies hesitating?  Gannett, owner of USAToday, has also been able to successfully prove that readers are willing to pay for content – most readers being new subscribers, to boot. Being that not all newspapers are created equal, there is heightened apprehension around losing readership. Not all readers are willing to pay for content, especially with many other media outlets just a click away. Not to mention – the advertiser – do they want to be behind the paywall? If so, will the page views be there?

Big name sites like the Dallas Morning News, The Washington Post, San Francisco Chronicle and the Boston Globe have also implemented paid subscriptions within the past two years. For them, the results haven’t been as successful as the Times. The Post is still facing losses this year. The Globe is facing similar challenges, having only 39,000 subscribers as of June 30, 2013. The Dallas Morning News implemented a hard paywall (all content must be paid for vs. allowing some for free) in January 2011 but removed it altogether in October this year. Similarly, the Chronicle removed theirs after only four months.  Simply put, paywalls did not make up for the losses in print revenue for these outlets.

A paywall might be a good fit for your online subscriptions – depending on your reader loyalty and marketplace position. Other publications have experienced a decline in traffic which leads to less ad space to be sold. For the advertiser, they are now next to a qualified reader – which is incredibly valuable.  But for the publisher, the verdict is still out on whether or not they will be able to sustain the revenue growth from paid subscription models.

At Centro, we believe there are additional revenue streams that some publishers might be missing out on, namely unsold inventory, data protection, as well as our Affiliate program that provides additional lift beyond owned inventory. A paywall might not be the end all be all to bridging the revenue gap. There’s going to be a mix for everyone.