Beyond the Paywall: Future Valuation of News

By: Gretchen A. Peck

News pay models seem to be caught in a publishing purgatory. Newspaper publishers have the need to make content accessible, shareable, viral even. And yet, much of it is nestled behind paywalls, some of which have been erected with greater success than others. This quagmire—coupled with the decline of mass-appeal advertising in favor of highly targeted campaigns—presents a bleak future for newspapers if these unsustainable models aren’t overhauled. But determining how to valuate content is only half the challenge. First, news enterprises have to figure out how best to prove that value to potential new subscribers.            

“What’s a failure, and what’s not? In my mind, if we’re continuing to intelligently engage our traditional core readers, as well as engaging new readers in those traditional content formats that we’ve always been strong at, to me, that’s all positive,” said John Rockwell, director of subscription sales and retention at the San Francisco Chronicle.            

The paywall isn’t the enemy, according to Rockwell. In fact, he said, the paywall allows newspaper publishers to become more adept at fulfilling their needs. The marketing data acquired from a paywall is valuable and enables the publisher to have a more intimate relationship with passing readers, as well as subscribers. “Paywall models allow me to honor the way the subscriber wants to interact with our content and use our content,” Rockwell said.            

However, he acknowledged that younger readers prove more difficult to engage than older generations of news readers.

“The traditional magazine and newspaper subscriber is older,” he said. “Most people under the age of 30 have never bought a paid subscription to anything. But having said that, am I willing to cede that potential, huge audience of news junkies in our Bay Area? When I started here, I knew it was going to be a hard road, but I want every 26-year-old fedora-wearing, bearded, tech hipster to have a newspaper under his arm!”            

Kevin D. Rogers, a St. Bonaventure University journalism graduate this year, isn’t a fan of paywalls or metered content. He believes the “value” of the Internet is that it’s accessible and often freely so.            

In Rogers’ estimation, paywalls are yet another barrier for younger consumers of news, who aren’t necessarily cynical about journalism in particular; rather, they’re plagued by apathy. “That’s why a paywall system is problematic, because if you say to a kid who is apathetic, who finally has a revelation and says, ‘I’m going to read The New York Times,' you can access up to five stories a day, but after that, there’s a paywall, he’ll say, ‘Okay, I don’t want to do it.’ ”  

The Apathy Wall

Apathy is a formidable obstacle for news organizations, concurred Christine Rushton, a graduate student in the S.I. Newhouse School of Public Communications at Syracuse University. Part of that apathy stems from the perception among younger readers that the news isn’t properly focused, or that it’s centered entirely on the sensational and negative. So there’s disconnect between what the next generation of news consumers wants, and what’s being delivered—for a price.            

“A lot of people my age, especially in the college setting, avoid national news altogether,” Rushton said. “You’d be hard-pressed to find a lot of them who know what’s going on in other countries, let alone our own country. … I wouldn’t attribute that to an undervaluing of news, in general, but they do have a hard time seeing the value of how news impacts what’s going on around them, within their own culture, their own community. They don’t see how it helps them learn about their own lives, as well as the lives of their neighbors, and the issues they’re voting—these things that shape how their community runs.”            

Rushton said that news publishers should follow suit of the New York Times and other agencies that have invested in redesigns of their digital content. “Make it user friendly and pretty to look at,” she said. “That draws people in, not just because it’s easy to get their news, but they also enjoy reading it while they’re there. They enjoy the experience.”            

On June 4, the New York Times introduced a new subscription concept—NYT Opinion, a standalone iOS digital app. The $6-per-month subscription allows readers to access The Times’ daily opinion columns, as well as “Op-Talk,” curated web commentary. The app also enables users to save “My Reads”—Times articles they’d like to read later—to share content via email and social media posts, and to publish their own comments.            

Though there is some skepticism among many in the news industry that pay-per-article or pay-per-section models aren’t attractive to readers—nor sustainable and lucrative for publishers—digital apps like this may be good proving ground to test those uncharted waters.             

Magazines provide design inspiration and insight into what younger readers are looking for, Rushton continued. “People like to look through them because they’re colorful and have lots of photos, lots of fun entry points on the page—meaning, instead of just a bunch of text on the page, there’s lots of graphics, photos, how-tos, and things that draw their attention to multiple areas, rather than just text broken up by advertisements.”  

A Numbers Game

Subscriptions sales are a numbers game. No matter print or digital, the average news consumer only has so much time in a day, a measured inclination to read, and a finite amount of dollars to dedicate to the activity. Just like readers who canceled their print subscriptions because the papers would pile up and go unread, the same phenomenon occurs with digital media, making it increasingly important that publishers not only leverage all, but create particularly compelling content across them.

Aggregators and social media sites can also be beneficial in drawing attention to that content. Though they may not be direct sources of revenue, these ventures allow publishers to extend their brand reach beyond the audiences they’re targeting. A reader who regularly finds good sources of credible journalism through an app like Flipboard, for example, may be more inclined to opt-in to the source of compelling information. The same may be said for cooperative portals—single entry points to a pool of newspapers. For example, Rogers pointed to Michigan, where eight newspapers may be accessed—and subscribed to—by way of one portal: MLive.com. “If it’s going to keep the papers alive, I think it’s probably a good model,” Rogers said. “But how independent will those papers be?”            

In the age of corporate-owned media, independent journalism is appealing to many young people, Rogers said.            

“I’ve just finished a class on media and democracy, and one of the final things we talked about was how to reinvent the media, and what would be the best way to do it,” Rogers said. “One thing we discussed was if advertising doesn’t pick back up again, whether an investor-driven system might work. … One concept that I’ve come across is with start-up news sites creating a blind trust, whereby a person or investor puts money into the system, but does so anonymously to keep the system and content independent.”            

This model is not unlike the NPRs and PBSs of the world, which largely depends on the generosity of its followers to keep them funded—not always an easy endeavor, judging from the frequency of pledge drives and the dangling of incentive “gifts.”  

Netflix for News

Perhaps the most intriguing pay model du jour is single-subscription content portals. For films and TV, Netflix and Hulu Plus are examples of how it works, and works well, with consumers paying a modest monthly fee that allows them to access an unlimited number of programs and movies. Pandora One and Spotify Premium are similar services for music and podcasts. And for e-books, there’s Oyster (oysterbooks.com). When that site launched last year, it charged just $9.95 a month for unlimited access to its modest catalog of e-books. The Oyster library has since expanded to include more than 500 publishers’ offerings, for a total of more than 500,000 titles as of May. Those titles are currently only available for viewing on iOS technologies—the iPad and iPhone—but Oyster reports that it’s developing an Android app, as well.            

Lanie Lee Cook studied journalism in college, and now works as the multimedia producer for Townsquare Media. She appreciates the potential of a single-source, monthly subscription model for all sorts of publications, including newspapers. “Look at Netflix and Hulu. They’re doing great,” Cook said.            

But beyond aggregators, portals, and pay models, newspapers are going to need to get clever about how to market to new audiences, according to Cook. Here’s where publishing may take a cue from broadcast journalism, she said.            

“I work at the news station at our broadcasting company, and we host a lot of live events. Community engagement, I think, is going to be a non-traditional revenue source in the future,” Cook said.            

In the business of news, it’s increasingly difficult to distinguish a publication’s content, especially in the digital space, where there’s a glut of information.            

"With the Internet, the content keeps coming, and the quality keeps depreciating,” Cook said. “The more that’s out there, the more it becomes clear that there’s quality lacking. I imagine that newspapers are going to have to hold themselves to a higher standard, but at the same time try new things, like live events. They should try to engage with the audience in new ways, rather than just saying, ‘You pay this much money, and get what we write.’ That’s what I’ve been witnessing in broadcasting. … I recently read about The Guardian in the UK opening a coffee shop! So readers can go in and buy coffee, but they can also interact with journalists. I think that’s a really innovative idea.”            

Though newspaper publishers have hoped that “10 free articles” would be enough to tempt readers into subscriptions, it doesn’t appear to be compelling younger consumers of news.            

“I’d read the 10 free articles in a month, but then I’d go find the rest of my news elsewhere,” Rushton said. But, she added, the subscription model is intriguing: “I have a Pandora One subscription because I got tired of the advertisements, and I use Pandora every single day. If I had the ability to do that with a news media service, I’d go for The New York Times, The Washington Post, and then maybe some other niche newspapers and magazines.”            

But beyond accessibility, it’s still quality that is the most compelling argument for news consumption, according to Rushton. “Audiences are incredibly demanding,” she said. “They not only want it for free, but they want really high quality for free. When you’ve got people out there blogging and willing to publish free information, newspapers are going up against that and asking for money on top of it, which is hard to do. … But a lot of this is about quality. People pay for The Washington Post and The New York Times for that reason.”  

The Value Proposition

Ross Dawson is a media futurist and the founding chairman of Future Exploration Network, a futures think tank. Predicting how media content will be monetized in the future requires some past perspective, he said.            

“I used to describe the paywalls as a grand experiment, but we’ve already learned quite a bit from those experiments,” Dawson said. “My recollection is that there have been a couple of phases. Around 2003 to 2004, there was a wave of paywall attempts, almost all of which failed. Many tried things that they moved back from. So we went into an extended period of almost all free online content, and during the last few years, we’ve seen a concerted effort and very diverse endeavors around paywalls.”

Much of that diversification is a reflection of content and community, “depending on the type of content, depending on the audience, geography, and many other things. There are some models that are better suited, so we are starting to see more exploration and diversification,” he said.            

“One of the key variables is how porous the paywall is. I believe that you need to have some porosity. You need to allow people to access some content. Otherwise, it’s very difficult to promote socially, which is a very important part of visibility. … You also need to have a very well-established proposition from the start. [The newspaper] has to be recognized by a broad audience before it can be feasible to establish a closed paywall.”  

What’s on the Horizon            

Don’t tear down the paywall just yet, Rockwell cautioned. “I don’t think it’s going to be a matter of paying for all content, or all content being free. I don’t think it has to be that simple a picture,” he said.            

“When I was in magazines 20 years ago … we anal-retentively analyzed what groups, what prospects—former subscribers and current subscribers—would do what, in what context. And then we marketed to them until their ears bled. Now, because we’ve got all these great new tools and metrics as a result of the paywalls, we know how to engage customers at different points in time. We can test them granularly, and we can see all the implicit touchpoints of a potential customer and an existing customer. This is a lead-generation model.            

“I attended a presentation at the NAA [conference], and learned how The New York Times has 5 million leads in its system. Those are registered, non-subscribers in their system. And they’re getting really smart about targeting those people—online and offline—to engage them or re-engage them. The paywall model is part of that; it’s one of the reasons why they’ve amassed those 5 million leads.”            

The term “paywall” implies an obstacle that’s unforgiving and difficult to scale, but it doesn’t have to be that way in practice. Rockwell said that he’s seen promise in paywall models that incentivize readers. “There may be a point system, and if the readers look at a few ads, they are rewarded with points,” he said. “And maybe those points put them in a VIP category that allows them to access more content for free before they hit the paywall and are asked to subscribe. I think those kinds of models are going to be way more interesting than the pure, hard paywall.”            

The value proposition to newspaper subscribers should be simple to communicate—and about more than just price.            

“You should be able to present the tangible benefits of being a premium subscriber within a two-floor elevator ride,” Rockwell said. “I’ve been to a lot of newspaper conferences lately, and there’s lots of focus—especially from a circulation standpoint—on rate, term, and offer. These are retail subscription tactics, and that’s great. But I didn’t hear [publishers] presenting a simple, broad message that everybody in their community knows about their papers.            

"I used to work in B2B magazines, and when I started at a weekly, the editorial team repeatedly told me that we were the best in the industry. But the subscription sales strategy was what I would call ‘an apology strategy.’ We’d tell people that the magazine wasn’t really that good, that the website blows by giving it away for free for a year. And maybe we’d ask subscribers to pay later, what we used to charge years before. And I stopped that. For some customers that meant that we raised the price by 400 percent. If they wanted the magazine, it was $249 a year. Guess what happened? Our renewal rate went up. Our conversion rate from first year to second year went up by 40 percent. The page views on our website went up by 400 percent. But we had a simple message. Granted, it was a narrow B2B case for which the news was critical for these readers, but we saw results. We called it, ‘getting out of the way of the content.’ … We’re not just selling discounts. We’re selling the content. You cannot ‘efficient’ your way to success. I cannot, as a subscription marketer, just make my offer super cheap and expect success.”

Blendle Shakes Up the Paywall Concept

By Gretchen A. Peck  

Blendle is the iTunes of The Netherlands’ publishing industry. Through this single site, readers may access all of Holland’s top newspapers and magazines, according to Blendle’s co-founder Alexander Klöpping, and pay only for the content they consume. And there’s a money-back safeguard if they don’t find value in it. E&P reached out to Klöpping to learn how Blendle works, how it’s been performing, and whether it could be a compelling model for news in the U.S.  

E&P: Fundamentally, why do you predict that consumers of content—news and otherwise—are interested in a service that allows them to pay just for the content they consume? Is this based on news publications in The Netherlands that have tried and failed with own content distribution and content monetization, like a paywall?

Alexander Klöpping: We don’t predict. It’s already working. We [have been] live for a month, and 60,000 people have signed up to pay for articles from all of Holland’s top newspapers and magazines that are available for sale per article. Publishers in Holland don’t have metered paywalls and only offer complete issues or subscriptions. We’re adding pay-per-article for young consumers who don’t want subscriptions. Currently, more than half of our users [are] under 40 which is a target audience that publishers currently don’t reach.  

E&P: From the consumers experience perspective, how does Blendle work? What do they pay, and to what do they have access?

Klöpping: All major newspapers and magazines joined. When you register—two clicks, with your email address or Facebook—you get the first €2.50 for free. That money you can spend on all paid content in Holland. If you’re out of money, you can top up your account. Paying for an article is as easy as clicking it, and you can always ask for your money back if you didn’t like the article.  

E&P: How have you been able to inspire publishers to partner with you? And how do they benefit from distribution through Blendle?

Klöpping: They earn 70-percent of what we earn, and we reach a young audience they have trouble getting.  

E&P: Publishers will be able to monitor what trends through Blendle, yes? Does this mean that they will tailor what is available, in terms of content, based on what types of content is trending—stories, topics, videos, etc.? And if so, is there a concern that what trends on Blendle will somehow misdirect publishers to creating only content that is popular, and neglect topics and types of journalism that may be more narrow and specialized in scope of audience?

Klöpping: The stupid stuff is available for free on the rest of the Internet. What sells on Blendle is the hard-hitting reporting, longer analysis, background pieces and interviews. So, if anything, it makes the journalism better.  

E&P: Is there something special about The Netherlands’ publishing space and culture that makes Blendle particularly suitable for the audiences? Or do you think your model could apply and appeal to publishers and audiences U.S, as well?

Klöpping: We don’t think Blendle works very well in an environment where metered paywalls are the default, like in the United States. I don’t think people consider the metered paywall the future of monetization of journalism. I truly believe that if you make it easy enough to pay for journalism, people will pay. We’re showing that it can work in Holland.