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People Don't Like Paywalls, But Not Because They Won't Pay

Written by Gabriella Rackoff on October 08, 2013

Brick Wall

The world’s best-known publications have turned to online paywalls to recoup some of the lost revenue from newspaper sales and advertising. But while it’s become the norm for media outlets like the Wall Street Journal and the Globe and Mail, it might not be the best tactic for remaining relevant in a rapidly changing media landscape.

The number one goal for any publication – print or online – is to maintain and grow its reader base. Paywalls might be effective for the time being when it comes to established names like WSJ or the Globe since there are still many people out there, baby boomers in particular, who are used to paying for newspaper subscriptions and will happily continue to do so online. But Gen X and Millennials have different priorities when it comes to media consumption: convenience and variety.

A paywall forces people to make a commitment to a given publication by paying a subscription fee and setting up a password. This is something a lot of people are not prepared to do. It's not parting with a few bucks a month here and there that people don't like; rather paywalls are taking away their ability to surf the web their way by making it cost-prohibitive to get news from an unlimited number of sources. People may want to read the Globe and Mail, but they also want to see how their coverage of a given story compares to competing publications, as well as blogs and alternative news sources. Paywalls prevent people from getting their news in a fluid, organic manner, from as many outlets as they like.

So what’s the alternative? Providing good news coverage and analysis is expensive, and media companies have already turned to layoffs to consolidate the newsroom and cut down on costs. Advertising is the obvious solution, but people hate advertising, right? Not necessarily. From very early on, media has involved a contract with the consumer where they agree to a certain amount of advertising in exchange for the content they want. Having access to such a huge variety of content, wherever and whenever you want it, makes advertising much easier to swallow. It also helps if advertisers try not to make their ads too obnoxious, and we can already see this with the integration of native advertising, which displays ads in-stream rather than as a pop-up or banner ad. But the reason publishers turned to paywalls is that online advertising isn’t as lucrative as print advertising, and while they’re looking to native advertising and other models to increase ad revenue, it’s still not a clear sole revenue model. But presumably this will change as advertisers come to see the importance of reaching consumers online.

Microtransactions are another viable alternative to paywalls. Instead of pledging allegiance to a small number of websites, people can pay a tiny amount amount to read articles all over the web. Naturally, the Wall Street Journal wouldn’t be happy about spreading the wealth, but consumers are demanding that kind of variety and convenience when browsing.

But the most obvious solution for publishers, whether a traditional print-to-digital outfit like the WSJ or a fully online publication like the Huffington Post, is a Netflix-like solution that lets readers have access to any content they want at any time. In the Netflix model, the overarching subscription company would pay publishers a licensing fee for access to the content, which would let them work with any number of media companies. Then in turn the consumer would have access to an unlimited (or at least a diverse) number of outlets, and an unlimited amount of articles and content.

We’ve already seen this work for magazines with Next Issue, which lets consumers pay $9.99 a month for access to the digital versions of 97 magazines including InStyle, Inc. Magazine, and Vogue. While NextIssue is only available in the U.S., Rogers recently announced Next Issue Canada, which launches October 15th and will let Canadians pay $9.99 a month for access to all the titles in the Rogers publishing stable, including Chatelaine and MacLean’s. This isn’t a perfect solution, since it only includes Rogers titles, but it’s a start.

To offer this for newspapers and blogs wouldn’t involve reinventing the wheel. Popular digital newsreaders like Flipboard, which aggregates content from different publications into an iPad magazine, are examples of the way a “Netflix for newspaper/blog content” could look, and Flipboard could easily add a premium subscription service and pull in content from paywalled publications (right now they’re working with paywalled publications like the New York Times to pull in their content, but app users need to be a subscriber to see all content). The key will be having a third-party operate the service, since as in the Rogers Next Issue example letting a media company own it means only their publications will be included.

Whether online publications stick with advertising, move to a microtransaction model, or a system like Next Issue, dropping paywalls will make content more accessible to more people and allow big name publications to reach a new generation of readers.


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