tag:theconversation.com,2011:/uk/topics/paywall-3238/articlesPaywall – The Conversation2018-08-20T10:32:27Ztag:theconversation.com,2011:article/1016392018-08-20T10:32:27Z2018-08-20T10:32:27ZAdvertising is obsolete – here’s why it’s time to end it<p>Since it first became clear that Russian agents <a href="https://www.justice.gov/file/1035477/download">spent thousands of dollars a month on political advertising</a> on social media in the runup to the 2016 presidential election, Americans have been asking how the powerful advertising infrastructure run by Google and Facebook <a href="https://www.nytimes.com/2017/09/06/technology/facebook-russian-political-ads.html">could have been thrown open to foreign agents</a>.</p>
<p>But <a href="https://newrepublic.com/article/147887/ban-targeted-advertising-facebook-google">fewer have stopped to ask</a> whether there is a good reason for this infrastructure to exist at all. Why, exactly, is it a good thing for Facebook and Google to be selling advertising to anyone, let alone Russian agents? </p>
<p>The obvious answer seems to be so that legitimate advertisers, meaning the likes of Coca-Cola and General Motors, can inform consumers about the products they offer.</p>
<p>But herein lies the paradox of all advertising in the information age, online or otherwise. If there is one thing that the internet has made it easy for consumers to access without the help of advertising, it is information – and especially information about products. </p>
<p>As I argue <a href="https://www.yalelawjournal.org/article/the-obsolescence-of-advertising-in-the-information-age">in a recent article in the Yale Law Journal</a>, if the only justification for advertising is that it informs, then advertising is now seriously obsolete. Not only that, it could even count as anti-competitive conduct in violation of the antitrust laws – as the Federal Trade Commission once believed. </p>
<h2>Advertising as information</h2>
<p>Imagine a world wiped clean of advertising of all kinds – from the sponsored links at the top of the Google search results page and the banner ads on your favorite websites or mobile apps to the sponsored posts in your Facebook feed and the TV commercials and billboards in the offline world. </p>
<p>Would you still be able to find all the information you could ever want about products in this alternative world?</p>
<p>Of course you would. Your friends, family and the host of complete strangers you follow on Facebook, Instagram, Pinterest and half a dozen other sites would continue to bombard you with information about their lives, including all the products they are using. And if you want to go out and learn more about a particular product, or find something new, a thousand little blue links optimized to meet your search criteria are just a Google search away.</p>
<p>In other words, we live in a world so immersed in easily accessible information that advertising is no longer needed to inform us about products. Advertising is obsolete. </p>
<h2>Advertising as manipulation</h2>
<p>But if advertising is out of date, then why is it everywhere? </p>
<p>The answer, I argue in <a href="https://www.yalelawjournal.org/article/the-obsolescence-of-advertising-in-the-information-age">my article</a>, is that advertising has always done more than just inform. And that other function is if anything more powerful today – and more valuable to advertisers – than ever before. It is what scholars of advertising euphemistically call advertising’s power to persuade, and what the rest of us call its power to manipulate. </p>
<p><a href="https://scholar.google.com/scholar?cluster=3100475456722357198">As sociologist Emily Fogg Mead once put it</a> during <a href="https://books.google.com/books?id=hqafM0xZjqIC">the dawn of mass advertising a century ago</a>, ads are a “subtle, persistent, unavoidable presence that creeps into the reader’s inner consciousness. A mechanical association is formed and may frequently result in an involuntary purchase.”</p>
<p>That – and not the ability to inform consumers about products they might not otherwise hear about – is the value of advertising for which <a href="https://www.statista.com/statistics/272314/advertising-spending-in-the-us/">advertisers paid US$200 billion in total in the United States last year</a>. Advertising remains so common today not because it informs but because it persuades.</p>
<p>That power to sway, which has always been a part of advertising, has been magnified by Google and Facebook, which have invested billions in turning the internet into <a href="https://books.google.com/books?id=mNkxDwAAQBAJ">a vast infrastructure of persuasion</a> that includes the data collection tools running behind all of our favorite free services, the algorithms that decide based on that data how best to target advertising to make us succumb to its blandishments and the screen real estate where ads are displayed.</p>
<p>Google and Facebook put all this in place to help corporate America, not Russian agents, reach us. If it <a href="https://www.wired.com/story/did-russia-affect-the-2016-election-its-now-undeniable/">seems credible</a> that Russian agents could have used this infrastructure to alter the outcome of a U.S. presidential election, it is equally credible that the largest American advertisers can use it every day to their own ends, inducing consumers to buy products that they don’t want.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/232489/original/file-20180817-165961-2qzl06.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Coca-Cola has long used Santa to sell its products.</span>
<span class="attribution"><span class="source">Amankris/Shutterstock.com</span></span>
</figcaption>
</figure>
<h2>The antitrust case against advertising</h2>
<p>And just as Russia’s political advertising <a href="https://fivethirtyeight.com/features/how-much-did-russian-interference-affect-the-2016-election/">may have put one candidate in the election at a disadvantage</a>, commercial advertising can put companies selling products that consumers might actually prefer, but are less well advertised, at a competitive disadvantage. </p>
<p>That gives the Federal Trade Commission, which is charged with enforcing the nation’s antitrust laws, a legal basis for going beyond current limits on <a href="https://www.ftc.gov/news-events/media-resources/truth-advertising">advertising that is false</a> <a href="https://www.ftc.gov/sites/default/files/documents/public_statements/advertising-kids-and-ftc-regulatory-retrospective-advises-present/040802adstokids.pdf">or aimed at children</a>, to sue to put an end to all advertising.</p>
<p>The courts have long held that Section 2 of the Sherman Act <a href="https://scholar.google.com/scholar_case?case=17987618389090921096">prohibits conduct that harms both competition and consumers</a>, which is just what persuasive advertising does when it cajoles a consumer into buying the advertised product, rather than the substitute the consumer would have purchased without advertising. </p>
<p>That substitute is presumably preferred by the consumer, <a href="https://scholar.google.com/scholar?cluster=17694205539407134191">precisely because the consumer would have purchased it without corporate persuasion</a>. It follows that competition is harmed, because the company that made the product that the consumer actually prefers cannot make the sale. And the consumer is harmed by buying a product that the consumer does not really prefer. </p>
<p>Of course, the maker of the substitute can advertise back, but there is no reason to think that the company that wins the advertising battle with the catchiest slogan or the most famous celebrity endorsements will be the one that sells the better product. Coke’s advertising is so good that <a href="https://scholar.google.com/scholar?cluster=13818392844416880527">consumer brain scans light up at the mention of Coke, but not Pepsi</a>, which may explain why <a href="https://money.cnn.com/2018/02/20/news/companies/cola-wars-coke-pepsi/index.html">Coke’s market share is double Pepsi’s</a>, <a href="https://scholar.google.com/scholar?cluster=13818392844416880527">even though consumers cannot distinguish the two colas in blind testing</a>. </p>
<p>The FTC and the courts understood all this in the 1950s, when advertising was taking another new medium – television – by storm. The FTC <a href="https://scholar.google.com/scholar?cluster=7534880275645364220&hl=en&as_sdt=0,18">launched a series of lawsuits</a> against some of the nation’s largest television advertisers, including Procter & Gamble and General Foods. In the FTC’s greatest success of the era, the commission managed <a href="https://scholar.google.com/scholar_case?case=17605714045622526127">to convince the Supreme Court</a> that the advertising of Clorox bleach illegally put rivals at a disadvantage. According to the court, the profusion of Clorox advertising “imprint[s] the value of its bleach in the mind of the consumer,” allowing Clorox to charge a premium over store brands, even though all bleach is chemically identical.</p>
<p>The reason advertising never went away, and Clorox still advertises, is that in the early 1980s the FTC <a href="https://www.ftc.gov/sites/default/files/documents/commission_decision_volumes/volume-103/ftc_volume_decision_103_january_-_june_1984pages_204-373.pdf">embraced the view of advertising as usefully informative</a> and ended its lawsuits.</p>
<p>But now that the information function of advertising is obsolete, as I’ve shown, the FTC should pick up where it left off and once again challenge the business of advertising.</p>
<h2>Freedom and consequences</h2>
<p>A renewed FTC campaign would force the reorganization of some important industries. </p>
<p>Google and Facebook would of course have to find new ways to generate revenue, such as by <a href="https://techcrunch.com/2018/04/15/would-it-make-us-love-or-hate-ads/">charging users</a> for their services, and newspapers would probably have to embrace a public funding model to survive without the advertising that <a href="https://scholar.google.com/scholar?cluster=4183405717638226047">has long been their lifeblood</a>. </p>
<p>But, arguably, since consumers already pay for Google and Facebook with their personal data, it may not be too much to ask that they pay with their money instead. And given journalism’s <a href="https://www.theguardian.com/tv-and-radio/2016/aug/08/john-oliver-journalism-hbo-last-week-tonight-newspapers">well-documented woes</a>, <a href="https://www.nytimes.com/2018/07/30/nyregion/nj-legislature-community-journalism.html">public funding</a> is probably its future anyway. </p>
<p>The only things to fear from a renewed FTC campaign against advertising are freedom and peace of mind; the freedom to decide what to buy on your own, and the peace of mind that would come from the demise of an advertising infrastructure that foreign agents <a href="https://www.vox.com/2018/7/31/17635592/facebook-elections-russia-2018-midterms">are already trying to exploit again</a>.</p><img src="https://counter.theconversation.com/content/101639/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ramsi Woodcock does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the information age, advertising is no longer needed to inform consumers.That means its primary role is to manipulate.Ramsi Woodcock, Assistant Professor of Law, University of KentuckyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/595772016-05-25T20:11:40Z2016-05-25T20:11:40ZWhy some newspaper paywalls are simply unsustainable<p>Despite the shift to digital newsrooms, it is fair to say that Australian newspapers are still reliant on print for their advertising revenue. </p>
<p>The largest newspaper groups, representing 90% of the Australian market, made 80% of their advertising revenue from print in 2015, according to <a href="http://www.newsmediaworks.com.au/news-media-sector-reveals-2-4-billion-in-advertising-revenue/">industry data</a>. The data <a href="http://www.itwire.com/business-it-news/print-solutions/72953-print-still-pays-most-bills-at-major-australian-newspapers.html">shows</a> the combined advertising revenue of News Corp Australia, Fairfax Media, West Australian Newspapers and APN News & Media in 2015 was A$2.4 billion, of which print brought in A$1.9 billion. </p>
<p>As newspapers manage declines in print circulation and advertising revenue, many have turned to paywalls. These range from hard paywalls which The Australian has, to “freemium” models, such as that offered by the Australian Financial Review and the National Business Review. Freemium paywalls allows readers to access some content, but the papers charge for “premium content”.</p>
<p>My study recently published in the journal <a href="http://www.tandfonline.com/doi/full/10.1080/21670811.2016.1178074#.VzvC7L653S8">Digital Journalism</a> confirms the Australian Financial Review (AFR) has, actually, a very hard paywall. A content analysis conducted of AFR’s homepage alongside the National Business Review (NBR) in New Zealand, reveals the AFR locks 86% of its homepage content. The number of its paywalled articles is twice as high as NBR’s.</p>
<p>The most locked content on afr.com and nbr.co.nz includes hard news and opinion pieces. However, both mastheads give readers a greater access to technology news, and free articles are obviously used to pull in visitors as they try to turn them into digital subscribers. Interestingly, NBR also allows people to read routine market news – such as stock and currency market reports – for free. Similarly, The Wall Street Journal lets its readers access such content without a subscription. Meanwhile, the AFR paywalls all market news.</p>
<p>Digital media experts <a href="http://towcenter.org/research/post-industrial-journalism-adapting-to-the-present-2/">Chris Anderson, Emily Bell and Clay Shirky argue</a> that in order to survive, news publishers have to commodify production of ordinary news to “free up resources for more complex work elsewhere”. It seems that NBR has followed this advice as it has outsourced production of content which is also freely available elsewhere. A majority of the paper’s routine market news comes from the local business newswire BusinessDesk.</p>
<h2>Print dependency behind the hard paywall</h2>
<p>The different paywall strategies of AFR and NBR are linked to their publishing models. NBR is mainly published online as its print version is only published once a week. In contrast, the AFR is published in print six days a week (although its weekend print edition <a href="http://www.theaustralian.com.au/business/media/greg-hywood-flags-print-closures-at-smh-and-the-age/news-story/699b808f6dead3647e0082b21edcb69f">may soon disappear</a>). </p>
<p>NBR’s income is more dependent on digital subscriptions and advertising than the AFR’s, and its hard paywall is most likely linked to print reliance in terms of revenue. In contrast to NBR, AFR’s digital subscriptions are mostly linked to its print newspapers as they are sold as a bundle. In her research paper, <a href="https://www.academia.edu/22322548/Behind_the_newspaper_paywall_lessons_in_charging_for_online_content_a_comparative_analysis_of_why_Australian_newspapers_are_stuck_in_the_purgatorial_space_between_digital_and_print">Andrea Carson</a> estimates that digital subscriptions make up 33% of the the AFR’s total circulation.</p>
<p>However, the AFR’s readership has clearly moved to digital platforms. This suggests the paper may be wiser to have a less strict paywall. Its paywall is currently among the most expensive in the world. The latest <a href="http://www.roymorgan.com/findings/6806-cross-platform-newspaper-readership-australia-march-2016-201605120654">Roy Morgan</a> figures show that in March 2016 the AFR had 417,000 print readers and 938,000 digital readers.</p>
<p>Commenting on the figures, Roy Morgan Research chief executive officer Michele Levine said that “in balancing the pros and cons of reaching print and digital audiences, publishers and advertisers clearly need to have a thorough understanding of who reads only one platform or the other, who reads both, and what the proportions means”. </p>
<p>Yes indeed. </p>
<h2>But do they make money?</h2>
<p>Fairfax doesn’t publish digital-only subscription figures for the AFR even though it does so for The Age and The Sydney Morning Herald. Perhaps this itself is telling. It is impossible to know if the AFR is profitable or not, and how much its digital-only subscriptions contribute to its revenue. What we do know is that Fairfax is cutting 100 jobs from its Sydney and Melbourne newsrooms, and these cuts include staff from the AFR. </p>
<p>Fairfax chief executive Greg Hywood recently said that for the Fairfax mastheads, 65% of advertising revenue is generated on the weekend, except for the AFR which was “profitable on weekdays only”.</p>
<p>Paywalls are not a saviour of newspapers, and even the Financial Times, which has been hailed as an example of successful paywall structure, is struggling. The paper is now facing cost cuts in its newsrooms and production despite the fact that it has 566,000 digital subscribers and growing digital revenues. </p>
<p>As a <a href="http://fortune.com/2016/04/22/financial-times-cuts/">Fortune</a> article points out, “the reality is that, despite its digital growth, the Financial Times is facing the same challenge as thousands of newspapers, magazines, and other traditional print publications around the world. Namely, the fact that print advertising, which still generates far more revenue than digital, continues to shrink”. </p>
<h2>Regional newspapers next</h2>
<p>Paywalls continue to emerging, disappear and evolve. Last year, News Corp’s British tabloid The Sun abolished its hard paywall, and its traffic grew 26% as a consequence. Its experiment with the paywall was doomed.</p>
<p>APN’s Australian regional newspapers started to charge for digital news content last year. In New Zealand, a handful of regional newspapers have also introduced fees for their digital content.</p>
<p>Most recently, The Otago Daily Times (in Dunedin) introduced a metered paywall. The paper’s <a href="http://www.radionz.co.nz/national/programmes/mediawatch/audio/201793324/an-old-school-paper-makes-a-bold-new-move">editor Barry Stewart </a>commented that “we cannot win the clickbait war. We are investing in what we do best. We want to protect our journalism and this paywall is the logical way to do that”. </p>
<p>Perhaps the model will work better for regional papers?</p><img src="https://counter.theconversation.com/content/59577/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The AFR has one of the hardest paywalls in the business, but the evidence shows this strategy could prove difficult to maintain.Merja Myllylahti, Project manager and author for Journalism, Media and Democracy (JMAD) Research Center, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/535852016-02-22T10:15:54Z2016-02-22T10:15:54ZAre paywalls saving journalism?<figure><img src="https://images.theconversation.com/files/111808/original/image-20160217-19256-1xd0is.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/honestreporting/14231913293">"CC BY-SA HonestReporting.com, flickr/tristanf</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p><em>Journalism is in an existential crisis: revenue to news organisations has fallen off a cliff over the past two decades and no clear business model is emerging to sustain news in the digital era.</em></p>
<p><em>Some of the big news organisations are imposing paywalls on their websites, while others believe in free access to their content. In the latest in our series on <a href="https://theconversation.com/uk/topics/media-business-models">business models for the news media</a>, Tom Fell weighs up the pros and cons of paywalls.</em></p>
<p>There was a time, not so long ago, when newspaper presses may as well have been printing money. A combination of hefty advertising revenues and circulation growth saw huge profits flow into the coffers of owners and shareholders. But those days are long gone. The announcement that the UK’s Independent titles <a href="https://theconversation.com/the-independent-newspaper-dies-as-it-was-born-in-the-white-heat-of-technology-54690">are to cease printing in March</a> came as a surprise, but many with an eye on the newspaper industry had mused that it was not a question of if, but when, the Independent would go. Circulation had dropped to around 56,000 copies daily and print advertising rates remained in long-term decline.</p>
<p>The problem for newspapers – and their owners – is not that news has suddenly become unfashionable, it’s that making money out of news is proving increasingly difficult. The reasons for the collapse in profits are simple: for more than 100 years newspapers controlled the news and advertising markets, but digital technology has changed everything. Staples such as classified advertising, property and cars went quickly online. Newspapers were too slow to react to classified sites such as CraigsList and Gumtree – and lost the market.</p>
<p>At the same time titles have haemorrhaged circulation as news, once a prized commodity, is now freely available on a diversity of sites. Legacy news organisations initially gave everything away for free online, naively assuming their brands were invincible and that digital advertising would simply replace print loses. However digital revenues have proved elusive, and while online revenues are growing, the growth is nowhere near enough to offset the decline in print advertising and circulation.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=618&fit=crop&dpr=1 600w, https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=618&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=618&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=777&fit=crop&dpr=1 754w, https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=777&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/111635/original/image-20160216-19218-4hfc10.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=777&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">ABC national circulation figures.</span>
<span class="attribution"><span class="source">ABC</span></span>
</figcaption>
</figure>
<p>Since the mid 2000s US and UK newspapers have lost close to <a href="http://www.niemanlab.org/2015/03/newsonomics-the-collapse-of-single-copy-sales/">50% in circulation</a> with few exceptions. Specialist titles, Sunday papers and broadsheets have fared slightly less badly than tabloids, but there is no good news for anyone in newsprint. While there are some examples, such as in Germany and Holland, where print circulation has held <a href="http://www.niemanlab.org/2013/10/the-newsonomics-of-2014-for-the-german-press/">up relatively well</a>, most titles are at best managing decline.</p>
<h2>Paying for quality</h2>
<p>Paywalls, introduced by a number of news companies in recent years in an effort to both put a value on the exclusive content they produced and to try to replace lost newspaper circulation, have worked to varying degrees.</p>
<p>In the US, big brands such as The New York Times and The Washington Post have both <a href="http://www.usatoday.com/story/money/columnist/wolff/2016/02/14/wolff-prints-dead-but-so-digital/80284046/">struggled with how to monetise editorial content online</a>, however both have now implemented somewhat successful paywall models. The Washington Post introduced its somewhat porous <a href="http://www.poynter.org/2013/washington-post-paywall-will-launch-june-12/215323/">paywall in 2013</a> after struggling digitally for a number of years.</p>
<p>A similar approach is in operation at The New York Times, though it has <a href="http://www.niemanlab.org/2015/08/newsonomics-10-numbers-on-the-new-york-times-1-million-digital-subscriber-milestone/">had more successes digitally</a> in attracting paying subscribers and in converting print readers to sign up to seven-day delivery and online subscriptions. It now has more than a million digital subscribers.</p>
<p>News UK introduced a paywall for its news brands, including The Times and The Sunday Times in 2010, with The Sun following in 2013. While the strategy <a href="http://www.inma.org/blogs/conference/post.cfm/hard-paywall-takes-the-times-from-loss-to-profit">has been successful</a> with 170,000 Times subscribers, the company abandoned The Sun’s paywall late in 2015, <a href="http://www.theguardian.com/media/2015/oct/30/sun-website-to-scrap-paywall">and announced plans</a> to aggressively grow its digital platform in 2016.</p>
<p>Of all media organisations with paywall or metered models, the <a href="http://www.newyorker.com/news/john-cassidy/the-financial-times-and-the-future-of-journalism">Financial Times remains one of the most successful</a>. Of a paid circulation of 720,000 in 2014, more than 500,000 were digital, up 20% on 2013. <a href="http://www.pressgazette.co.uk/ft-digital-subscribers-14-cent-520k-now-make-70-cent-fts-paid-circulation">Half year figures for 2015</a> showed a year-on-year rise to 737,000 total circulation, with 520,000 digital subscribers.</p>
<p>The German media giant, Axel Springer, announced it was <a href="http://www.bloomberg.com/news/articles/2015-12-09/axel-springer-considers-paywall-for-business-insider-upday-app">considering introducing paywalls</a> at its Upday app and newly acquired Business Insider last December. It has already introduced a metered paywall at popular Berlin daily Bild and banned readers with adblockers installed on their PCs from accessing its content.</p>
<p>Australian media giant <a href="http://www.newscorpaustralia.com/">News Corp Australia</a> – which owns The Australian, the Sydney based Daily Telegraph and most of the main regional titles – put its content behind a paywall in 2013. Fairfax, which owns the Sydney Morning Herald and The Age, also introduced paywalls in 2013 – and <a href="http://thenewdaily.com.au/money/2016/02/17/fairfax-step-closer-ending-print/">subscriber numbers are steady while print circulation is falling off</a>.</p>
<h2>Dead giveaways</h2>
<p>But while media companies are still making significant revenues from print, any revenue from digital, while impressive in growth terms, remains tiny.
Digital revenues at The Sydney Morning Herald in 2014 were A$15m, compared with A$242m from print circulation and print advertising. Figures for 2015 from the Times Co (The New York Times parent company) show that <a href="http://www.nytimes.com/2015/10/30/business/media/new-york-times-co-reports-9-million-profit-in-3rd-quarter.html">digital subscriptions</a> were responsible for just under US$49m of US$365m in revenue during the third quarter of 2015.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/111815/original/image-20160217-30543-cah9lc.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Print versus online revenue for US newspapers.</span>
<span class="attribution"><span class="source">Pew Research Center</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>And not everyone has made a success of paywalls. Mid-market popular newspapers and tabloids, where a heady mix of “gotcha” journalism, crime stories, and celebrity and entertainment news have proved a recipe for huge popular success in the UK, have in most part steered away from paywalls – favouring instead high-volume mass market free content, with a heavy emphasis on content that plays well on social media. </p>
<p>The Daily Mail’s MailOnline site remains free, and is one of the <a href="http://www.journalism.org/media-indicators/digital-top-50-online-news-entities-2015/">largest news sites in the world</a>, with a <a href="http://www.theguardian.com/media/2015/feb/20/mail-online-gains-17m-unique-browsers-as-newspaper-sites-bounce-back">global reach or more than 200m unique users</a> each month.</p>
<p>Other sites, including the UK’s Guardian, have remained free, relying instead on revenue from digital advertising. However the rise of adblockers has severely damaged the ability of such news sites to make money from advertising. The Guardian <a href="http://www.theguardian.com/media/2016/jan/25/guardian-news-media-to-cut-running-costs">reported losses of £53m in 2015</a> and announced it would cut costs by 20%, blaming a sharp decline in print advertising and slower than expected growth in digital revenues.</p>
<p>For smaller players, the market remains challenging. Regional and local newspapers have little or no prospect of introducing successful paywall models. Economies of scale mean their potential audiences are too small to monetise via digital advertising. For now, most are clinging to their print editions (<a href="http://www.theguardian.com/media/greenslade/2013/aug/14/mediabusiness-local-newspapers">which remain profitable</a>) and using websites to build brands and market share.</p>
<p>ABC1 readership newspapers – in other words, those appealing to the middle classes – and niche brands such as business titles, where content is exclusive and in demand, seem to be making paywalls work. For everyone else the future looks bleak.</p><img src="https://counter.theconversation.com/content/53585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Felle does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Comment may be free, but newspapers have got to make money somehow.Tom Felle, Lecturer in News and Digital Journalism, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/550132016-02-19T04:19:05Z2016-02-19T04:19:05ZMore staff cuts likely as Fairfax eyes digital only<p>There seems to be no end to Fairfax’s restructuring saga. On Friday, the company’s management signalled they would continue to cut costs no matter what. <a href="http://www.fairfaxmedia.com.au/ArticleDocuments/193/2016-02-19_FY16%20Half-Year%20Results%20-%20ASX%20Statement.pdf.aspx?Embed=Y">CEO Greg Hywood</a> said: </p>
<blockquote>
<p>“We have made clear many times that we are managing a structural shift in publishing from print to digital. We continue to adapt business model to this reality, which involves an intense focus on cost reduction.” </p>
</blockquote>
<p>This week Fairfax also said it <a href="http://www.skynews.com.au/business/business/market/2016/02/16/fairfax-media-planning-to-axe-70-nz-jobs.html">would shed 70 jobs</a> in New Zealand as it moves sub-editing work back to Pagemasters. </p>
<p>Figures published in <a href="http://www.fairfaxmedia.com.au/Investors/annual-reports">Fairfax’s 2015 Annual Report</a> show that between 2011 and 2015 the company cut 30% of its full-time employees. Today’s 2016 half-year results show that during the last four years Fairfax has cut its cost base by 34%, clearly on the back of staff reductions.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=371&fit=crop&dpr=1 600w, https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=371&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=371&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=467&fit=crop&dpr=1 754w, https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=467&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/112077/original/image-20160219-1261-131z5k1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=467&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Fairfax Annual Report 2015</span></span>
</figcaption>
</figure>
<p>An internal restructure this week saw the departure of The Age’s editor-in-chief, Andrew Holden, and the abolition of AM and PM news directors. <a href="http://www.crikey.com.au/2016/02/18/clickbait-on-the-front-page-fairfax-backs-away-from-print/">Commentators say</a> the new structure will increase clickbait content on the Fairfax papers. Under the new structure, says Crikey media writer Myriam Robin, “editors of the papers will no longer work closely with journalists and commission stories; instead, the print editors will scrape together material already put on Fairfax’s websites to fill their papers”. </p>
<h2>Cost cutting: ‘short-term cost, long-term benefits’</h2>
<p>However, Fairfax is not the only news publisher focusing on cost cutting, or reinventing its newsroom strategies. <a href="http://www.nytimes.com/2016/02/05/business/media/new-york-times-q4-earnings-newsroom-strategy.html?_r=0">The New York Times Company </a> announced earlier in February that despite strong growth in digital revenue in the fourth quarter, it continued to “feel the impact of declines in parts of our print business”. Dean Baquet, the newspaper’s executive, said “the company must continue to carefully manage its costs”, and that “everything we do now has got to include a certain amount of thinking about costs”. He didn’t rule out layoffs.</p>
<p>Similarly, Rupert Murdoch’s News Corp is planning to further cut costs in its Australian and British mastheads after poor results in the 2016 second quarter. While commenting on News Corp results, chief executive <a href="http://www.theguardian.com/media/2016/feb/05/news-corp-announces-cost-cutting-at-australian-and-british-newspapers">Robert Thomson</a> said that “for our Australian mastheads, it was clearly a difficult quarter in advertising and to that extent we’ve clearly embarked on a cost-cutting program”. He added that “cost cutting has a short-term cost and a long-term benefit”.</p>
<h2>Following The Independent’s example?</h2>
<p>We know that in 2013 Fairfax asked Bain & Co to undertake a “detailed analysis” of the benefits of going entirely digital, shrinking its editorial team from 503 to 205. </p>
<p>Now, a similar move actually underway at The Independent in the UK will see the loss of approximately 100 editorial jobs.</p>
<p>Is Fairfax ready for such a move? </p>
<p>Fairfax’s numbers show it still has a long way to go to be truly digital-led.</p>
<p>The company’s digital subscription revenue rose 14.3% on the back of “around 162,000 digital subscribers across the SMH and The Age”. In 2015, the two papers had 158,000 digital subscribers. The real driver in its digital earnings was Domain, which saw digital advertising revenue growth of 37%.</p>
<p>To see if the digital-only model would work, let’s do some simple math.</p>
<p>In the first half of 2016, the combined digital advertising and subscription revenue of Fairfax’s metropolitan media was A$149 million, whereas revenue from its print advertising and circulation was A$252 million - a gap of A$103 million in favour of print. </p>
<p>The digital advertising income of metropolitan media rose A$24.3 million to A$131 million from the same time last year, and the digital subscription revenue A$2.2 million to A$18 million over the same period. </p>
<p>To simplify, in the first half of 2016, the digital revenue of Fairfax’s metropolitan media made 15.5% of the company’s total revenue of A$958 million. In comparison, print papers of metropolitan media made 26.3% of the total revenue.</p>
<p>Clearly Fairfax still needs the print for the revenue, but if it continues its heavy cost cutting, the digital-only model could be closer to reality.</p><img src="https://counter.theconversation.com/content/55013/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The transition from print to digital will not be painless at Fairfax, or its global peers.Merja Myllylahti, Lecturer, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/532872016-01-27T04:04:40Z2016-01-27T04:04:40ZAd blockers are here to stay, micropayments less so<figure><img src="https://images.theconversation.com/files/109308/original/image-20160127-19660-1h7n9ve.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will the plethora of conflicting market signals be too much for news consumers to bear?</span> <span class="attribution"><span class="source">Image sourced from shutterstock.com</span></span></figcaption></figure><p><em>The global media sector continues to adapt slowly to digital disruption. Paywalls are yet to make up for the loss of print advertising revenue, and experiments continue with sponsored content and micropayments. In this <a href="https://theconversation.com/au/topics/media-business-models">media business models</a> series we explore the green shoots in media models – what’s working, and what’s yet to be proven.</em></p>
<hr>
<p>Another year, another crisis in traditional media. Most recently, it has been The Guardian announcing it needs to <a href="http://uk.reuters.com/article/uk-media-guardian-idUKKCN0V31Q8">cut costs by 20%</a>, as the revenues from online advertising cannot compensate for the losses of revenue from its print editions. </p>
<p>The situation with online advertising is worsening, not only because the rates advertisers are prepared to pay continue to fall – they are quite simply spoilt for choice in terms of online outlets – but because more and more people use ad blocking software. It is now estimated that <a href="http://www.campaignlive.com/article/ad-blockers-gain-ground-consumers-say-enough/1326412">almost half of online users aged 18 to 29 use ad-blocking software</a>, for reasons that range from concerns about third-party access to their search data, performance issues, and a hostility to advertising being a part of their online experience.</p>
<p>An option to advertising challenges that is generating considerable discussion is the use of micropayments to fund journalism and other media activities. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=899&fit=crop&dpr=1 600w, https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=899&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=899&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1130&fit=crop&dpr=1 754w, https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1130&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/109303/original/image-20160127-19680-eg39i0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1130&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Steven Depolo/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p><a href="https://medium.com/on-blendle/blendle-a-radical-experiment-with-micropayments-in-journalism-365-days-later-f3b799022edc#.q9galajen">Blendle</a> in The Netherlands has now operated for more than a year on a micropayments model, where users register once only, only pay for the news stories they access, and can request a refund if they were dissatisfied with the story they accessed e.g. if they thought it was “clickbait”. <a href="http://www.niemanlab.org/2015/09/the-micropayment-platform-blendle-is-expanding-to-germany/">German publishers</a> are now working with Blendle on developing this model. </p>
<p>The <a href="http://www.theguardian.com/media/greenslade/2015/sep/14/canadian-newspaper-uses-micropayments-system-to-charge-online-readers">Winnipeg Free Press</a> in Canada has adopted a micropayments system, and the concept is attracting growing attention in the <a href="http://thenextweb.com/media/2016/01/25/future-media-monetization-cryptocurrencies-micropayments/#gref">tech community</a>, particularly as virtual currency systems such as Blockchain are being adopted and as Facebook Connect is developed for games platforms. </p>
<p>Micropayments are a logical extension of both the unbundling of media content, particularly in news, and an increasingly user-driven online experience. But they have also long had their critics. Social media theorist Clay Shirky has been a <a href="http://shirky.com/writings/fame_vs_fortune.html">long-time critic of micropayments</a>, arguing they risk enveloping users is an endless decision-making loop, and that the “mental transaction costs” of deciding whether or not to pay for particular items of content would ultimately prove too burdensome to users. </p>
<h2>Endless choice</h2>
<p>Most debates about micropayments have focused on the consumer side. Is it a desirable option to have, or are we being spoilt by too much choice? Once we start pricing individual pieces of journalism, will the plethora of conflicting market signals be too much to bear? Should we be paying for the story, or paying the journalist, and so on. If a news outlet is one whose journalism you are particularly keen to support, it arguably makes more sense to make a one-off donation to it than make large numbers of small transactions on individual stories, particularly if that donation is tax deductible. Critics such as Shirky rightly point to a fallacy of assuming people do not notice small payments as compared to large ones: once there are a lot of them, they certainly do. </p>
<p>The bigger problems, I would argue, reside on the supply side. The founders of Blendle readily acknowledge that their 250,000-plus users will not pay for news, but will pay for quality commentary. As they put it, <a href="https://medium.com/on-blendle/blendle-a-radical-experiment-with-micropayments-in-journalism-365-days-later-f3b799022edc#.q9galajen">“people don’t want to spend money on the ‘what’, they want to spend money on the ‘why’”</a>. But the providers of quality content typically require a stable source of income – the “gig economy” model is less likely to work for detailed analysis of a subject than it is for quick, real time reporting on particular events. A story like the famous account in <a href="https://www.vice.com/tag/isis">VICE</a> of what was going on inside ISIS, which established VICE as a significant news outlet and which is the sort of content for which people will pay, requires people who are prepared to embed themselves within a location for a period of time. </p>
<p>And for that kind of work, they require either cash up front, or the security of other forms of full-time employment (a news organisation, a university etc.). The personal risks of doing such stories in the subsequent hope that people will pay for them are simply too great. This is one of the reasons why the situation for public service media is better, not worse, than it was two decades ago. We have seen how vulnerable the business models of commercial media have turned out to be, in terms of generating content, attracting paying consumers, and being able to recruit and retain talent. </p>
<p>So I would be expecting a certain amount of activity in 2016 around news micropayments. It is the topic of the moment, and news organisations are prepared to try anything, particularly as the online advertising market becomes more and more fragmented. But it is at best a supplement to other revenue generating strategies, more akin to the online dating sites and weekend creative writing classes that have generated alternative revenue streams in recent times. The core of the news business will not be funded by micropayments.</p><img src="https://counter.theconversation.com/content/53287/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Terry Flew receives funding from the Australian Research Council. He is part of an ARC-Discovery Project researching politics, the media and the future of democracy in Australia. </span></em></p>Media consumers are spoilt for choice, making new revenue models difficult for publishers.Terry Flew, Professor of Media and Communications, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/465572015-08-28T04:07:14Z2015-08-28T04:07:14ZOpen access is not free. Someone is doing the work. Someone is paying<figure><img src="https://images.theconversation.com/files/93062/original/image-20150826-15397-p0axbc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pay wall or no pay wall? Students study at the Humboldt University Library in Berlin, one of the most advanced scientific libraries in Germany. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>There is no such thing as a free lunch – or free <a href="https://www.plos.org/open-access/">open access</a>. </p>
<p>Silicon Valley futurist, <a href="http://longnow.org/people/board/sb1/">Steward Brand</a>, states that all information should be made available for free. But his <a href="http://fortune.com/2009/07/20/information-wants-to-be-free-and-expensive/">corollary</a> is that: </p>
<blockquote>
<p>… information wants to be expensive because it is so valuable… </p>
</blockquote>
<p>There is always a value chain, and costs are incurred, on a continuing basis, whatever the platform that houses it. Someone somewhere is paying for open access publishing.</p>
<p>Open access, which stands for <a href="https://www.plos.org/open-access/">unrestricted access</a> and unrestricted reuse of published materials, took off in 2012 and is driven by the promise of wider exposure of articles that can be freely read by anyone connected to the Internet.</p>
<p>Open access publishers offer different author-pays models: </p>
<ul>
<li><p>In gold open access, the author, their funder or institution pays while readers browse at no charge. Universities pay the Internet data charges. </p></li>
<li><p>‘Green’ open access, following peer review, enables authors to upload their post-print versions on their own institutional repositories. These are managed by the universities in which authors work. </p></li>
<li><p>‘Read-only’ versions, whereby browsers can access documents but they can’t be downloaded or copied, are an increasing phenomenon to enable access. </p></li>
<li><p>Independent open access journals that do not impose an author-pays model - including article processing or submission fees- are largely housed and maintained on institutional websites. They are managed and edited by volunteers. Such journals tend to disappear when the original editors move on, or when a web site crashes, or when funds become tight or a university policy changes. Their content is thus not always secure.</p></li>
</ul>
<p>Hundreds of open access journals are available on platforms like <a href="http://www.scielo.org.za/">Scientific Electronic Library Online</a>, a platform supported by the South African government. But many titles are simply one-off sites located on individual university webs.</p>
<p>Many foundations, donors and universities do pay for open access exposure. A one-time payment buys this status - provided that the host remains in business. But the costs can be very steep. This is one of the advantages of <a href="http://www.scielo.org.za">Scientific Electronic Library Online</a>. But it lacks the full-house of services offered by the commercial publishers. At the end of the day, it’s a question of what business models work for which journals. </p>
<h2>What the commercial model offers</h2>
<p>Commercial publishers’ paywalls are usually, though this differs between publishers, complemented with 50 free electronic offprints and permission to upload pre-typeset versions on personal and institutional websites. Scholars can approach individual authors and request copies of their papers via the publisher, email, or via an array of professional networking sites like <a href="https://www.google.co.za/webhp?sourceid=chrome-instant&rlz=1C1CHWA_enZA634ZA634&ion=1&espv=2&ie=UTF-8#q=ResearchGate">ResearchGate</a>, <a href="https://www.google.co.za/webhp?sourceid=chrome-instant&rlz=1C1CHWA_enZA634ZA634&ion=1&espv=2&ie=UTF-8#q=Linked-in">Linked-in</a>, <a href="https://www.growkudos.com/about/researchers">Kudos</a> and <a href="https://www.academia.edu/">Academic.edu</a>. Some publishers allocate one number annually as open access. </p>
<p>Commercial publishers provide the following services charged to the journal but not to authors: </p>
<ul>
<li>proofreading, </li>
<li>design and layout, </li>
<li>typesetting and production, </li>
<li>legal services and copyright protection, </li>
<li>computerised management and tracking of submissions, and</li>
<li>archiving of peer review reports.<br></li>
</ul>
<p>These administrative services are complemented by global marketing; distribution to thousands of subscribing libraries, and conference sponsorship. They offer regular writing, editing and training workshops, seminars on copyright law, indexing, publishing and marketing. Many publishers offer affordable pricing options to developing countries. </p>
<p>Journals licensed to a publisher can retain copyright and many permit their authors to make free copies of their own articles for class use. The corporates offer critical marketing mass; their websites dynamically cross-index similar topics within their respective stables. </p>
<p><a href="http://www.taylorandfrancis.com/">Taylor & Francis</a> in particular, via a development strategy with selected South African journals, initially facilitated by the <a href="http://www.nrf.ac.za/">National Research Foundation</a> and <a href="http://www.unisa.ac.za/default.asp?Cmd=ViewContent&ContentID=930">Unisa Press</a>, helped to position many of these titles as global, rather than only local. In so doing, they catapulted South African authors into global research networks.</p>
<p>Permission charges enable journals, publishers and authors to earn their livings. Denying them income and making their intellectual labour ‘free’ is not an option for any of them. Not all authors are fully employed; few academics earn market-related salaries, and many authors earn a living via their writing. </p>
<p>South African authors earn a state subsidy for their institutions on publications in <a href="https://theconversation.com/financial-reward-for-research-output-under-the-spotlight-in-south-africa-45567">approved lists</a>. Universities invariably use this to cover the costs of research support and development. Some authors concede a portion as taxable salary. </p>
<p>In an academic world ever more infiltrated by fraudsters, con artists and pirates, one can still trust the content and academic integrity of scientific society journals and long-standing corporate publishers. They protect against article and journal cloning, identity theft, bogus journals, forgery, author substitution, fake metrics, and prevent outright intellectual property theft. </p>
<h2>What open access lacks</h2>
<p>Open access journals, unless connected to a reputable publishing house, lack all of the above services, protections and brand value. </p>
<p>Of concern is that electronic subscription costs have by far <a href="http://lj.libraryjournal.com/2013/04/publishing/the-winds-of-change-periodicals-price-survey-2013/">outstripped inflation</a>. There is a reason for this. Academic enterprise demands that all lecturers and even graduate students produce multiple peer reviewed articles annually. </p>
<p>Universities everywhere are driving (over-)supply of product, in an environment where consumer demand is not keeping pace. In normal economics, an oversupply would see a drop in price. But in academia, the market is kept afloat artificially by the imposition of publishing targets set by individual universities irrespective of intellectual impact or significance. </p>
<p>Publishers have responded by providing the production capacity that is needed by university research and human resources departments. </p>
<p>Open access is not simply a matter of access to free articles. Readers need the infrastructural means for accessing online content. In the <a href="http://ssc.undp.org/content/dam/ssc/documents/exhibition_triangular/SSCExPoster1.pdf">Global South</a> access is impeded by exorbitant costs of bandwidth. And authors should not be written out of the analysis. Without authors there is no information.</p>
<p><em>We failed to provide a full disclosure of this author’s relationship with a publishing house for which we apologise. He provided full disclosure at the bottom of his original article. This was removed in the editing process. These details were not included in the disclosure statement as they should have been. This has now been remedied.</em></p><img src="https://counter.theconversation.com/content/46557/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Keyan Tomaselli serves on the board of the Academic and Non-Fiction Authors Association of South Africa (ANFASA) and is editor of Critical Arts, a journal licensed to UNISA Press and Taylor & Francis, and co-editor of Journal of African Cinemas published by Intellect Books.</span></em></p>Much of what’s being said in support of open access publishing misses one key point: that is there is always a value chain and costs are incurred. Someone somewhere is paying for open access.Keyan Tomaselli, Distinguished Professor, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/407262015-05-21T09:57:55Z2015-05-21T09:57:55ZNewspapers’ ongoing search for subscription revenue: from paywalls to micropayments<figure><img src="https://images.theconversation.com/files/82423/original/image-20150520-11413-1rdvlf8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Over 500 daily newspapers now use paywalls. Are they working?</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/cat.mhtml?lang=en&language=en&ref_site=photo&search_source=search_form&version=llv1&anyorall=all&safesearch=1&use_local_boost=1&search_tracking_id=oVGmnreWa5Hg88EIafRfKQ&searchterm=newspaper%20online&show_color_wheel=1&orient=&commercial_ok=&media_type=images&search_cat=&searchtermx=&photographer_name=&people_gender=&people_age=&people_ethnicity=&people_number=&color=&page=1&inline=198603977">'laptop' via www.shutterstock.com</a></span></figcaption></figure><p>It’s no mystery that newspapers are struggling to make money: between 2006 and 2014, the industry lost approximately <a href="http://www.journalism.org/2015/04/29/newspapers-fact-sheet/">30 billion dollars</a> in advertising.</p>
<p>In response, many news publishers have experimented with ways to increase digital advertising revenue through native advertising, or through collaborative models like the recently-announced <a href="http://www.nytimes.com/2015/05/13/technology/facebook-media-venture-to-include-nbc-buzzfeed-and-new-york-times.html?_r=0">Facebook Instant</a>. Still, many newspapers continue to tinker with paywalls – which require readers to pay to access online content.</p>
<p>But are paywalls viable?</p>
<p>So far the record is mixed. For some publications like The New Yorker they seem to be <a href="http://www.niemanlab.org/2015/03/after-the-archive-came-down-the-new-yorkers-revamped-paywall-is-driving-new-readers-and-subscribers/">working</a>, while other newspapers like the Toronto Star are <a href="http://www.thestar.com/news/gta/2015/03/07/note-to-readers-star-to-end-paid-digital-subscriptions-on-april-1.html">getting rid of them</a>. </p>
<p>It’s difficult to discern the exact trajectory of this moving target – especially since reliable data on their revenues are often unavailable – but there are noticeable trends. As the paywall model continues to evolve, other revenue models are emerging, including another tactic used by news publishers: micropayments.</p>
<h2>A brief history of paywalls</h2>
<p>A paywall basically acts as a barrier between an internet user and a news organization’s online content. To access the content, users must purchase a digital subscription. </p>
<p>While most newspapers only began experimenting with this model in the past few years, a longer history traces back to The Wall Street Journal, which launched the first paywall in 1997. Despite its success, general news outlets feared that launching a paywall would reduce online readership and digital advertising revenue – a tension that continues today. </p>
<p>In 2009, with newspaper revenue plummeting, a lively debate erupted over the paywall model. Publications like <a href="http://www.theguardian.com/commentisfree/2009/may/11/newspapers-web-media-pay-wall">The Guardian</a>, <a href="http://www.nytimes.com/2009/04/08/business/media/08pay.html?pagewa">The New York Times</a>, <a href="http://time.com/3270666/how-to-save-your-newspaper/">Time Magazine</a> and <a href="http://www.theatlantic.com/entertainment/archive/2009/05/shhhh-newspaper-publishers-are-quietly-holding-a-very-very-important-conclave-today-will-you-soon-be-paying-for-online-content/18409/">The Atlantic</a> published op-eds debating the paywall model’s viability. </p>
<p>Even Mark Cuban <a href="http://blogmaverick.com/2009/02/22/how-cable-satellite-can-save-the-newspaper-business/">weighed in</a>. The renowned entrepreneur and owner of the Dallas Mavericks argued that newspapers should put their most valuable content behind a paywall and partner with cable companies to offer customers a heavily discounted digital subscription rate (such as five cents per month).</p>
<p>While only a handful of publications in the US had a paywall in 2009, by 2014 – largely as a response to declining revenue – over <a href="http://www.poynter.org/news/mediawire/247555/newspaper-industry-narrowed-revenue-loss-in-2013-as-paywall-plans-increased/">500</a> daily newspapers were using one. Since then, the debate has shifted from whether paywalls <em>could</em> work to asking whether they <em>are</em> working. </p>
<h2>The empirical record</h2>
<p>After several years of trial and error, there have been noteworthy successes, along with failures. </p>
<p>In 2011 The New York Times <a href="http://www.npr.org/2011/03/17/134621239/new-york-times-unveils-metered-online-paywall">launched</a> their “metered” paywall, a model similar to the Financial Times’. </p>
<p>Metered paywalls block a reader from accessing articles once they reach a certain threshold. The New York Times initially allowed readers to access 20 articles (now it’s 10) for free each month. This model has been increasingly <a href="https://www.americanpressinstitute.org/publications/research-review/paywall-decisions/">emulated</a> because it is believed that only core readers, who are the most likely to purchase a digital subscription for unlimited access, will eventually be blocked from viewing more articles.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=392&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=392&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=392&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=493&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=493&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82424/original/image-20150520-11413-1yuvpwj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=493&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A metered paywall notice for the South China Times informs readers how many free articles they have remaining before they’ll have to pay a fee.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/clankennedy/9028948796/">Ian Kennedy/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Meanwhile, casual readers – and the publication’s advertising dollars – are not affected. These “<a href="http://www.poynter.org/news/mediawire/326073/ken-doctor-newspaper-companies-should-focus-on-news-apps/">fly-bys</a>” account for 93% of news websites’ unique visitors, so their retention is highly valued. </p>
<p>Newspapers have also succeeded in asking print subscribers to pay <a href="http://www.poynter.org/news/mediawire/141628/9-reasons-newspapers-are-suddenly-asking-print-subscribers-to-pay-for-full-web-access/">slightly more</a> for a digital subscription, while <a href="http://www.cjr.org/the_audit/gannetts_paywall_plan_flounder.php">reducing</a> its price if new customers will accept a Sunday paper. They’ll also allow readers to access articles found through search or social media even if they’ve exceeded their <a href="http://www.themediabriefing.com/article/paywall-approaches-gated-access">monthly limit</a>. </p>
<p>The Gannett Company, whose newspapers include USA Today and The Arizona Republic, implemented metered paywalls at <a href="http://www.americanpressinstitute.org/publications/reports/white-papers/10-secrets-successful-meters-paywalls-reader-revenue-strategies/">78</a> of its newspapers. In 2013, digital subscriptions added more than <a href="http://www.capitalnewyork.com/article/media/2014/08/8550225/post-spin-gannett-publishing-will-seek-acquisitions-ceo-says">$100 million</a> in operating income. </p>
<p>And in 2014, digital subscriptions at the New York Times Company earned <a href="http://www.mondaynote.com/2015/02/15/the-nytimes-could-be-worth-19bn-instead-of-2bn/">$169 million</a>. While these substantial gains are cause for optimism, they’re tempered by the fear that paywalls may only generate a temporary boost, as subscription revenue has notably stalled at the <a href="http://www.niemanlab.org/2015/01/newsonomics-how-deep-is-the-newspaper-industrys-money-hole/">Tribune Publishing Company and Gannett</a>.</p>
<p>On the other hand, some newspapers have decided to take down their paywall altogether. In 2013, The Dallas Morning News removed a “hard” paywall, which rarely allowed readers to access articles without a digital subscription. The Columbia Journalism Review subsequently declared that hard paywalls made sense for only “<a href="http://www.cjr.org/the_audit/the_dallas_morning_news_drops.php">the most essential news providers</a>” – places where readers cannot find the same information elsewhere, like The Wall Street Journal’s coverage of finance.</p>
<p>After a similar misstep – which was exacerbated by publishing some of their news content on a free website – the San Francisco Chronicle took down its hard paywall <a href="http://www.poynter.org/news/mediawire/221127/san-francisco-chronicle-drops-its-paywall/">five months</a> after its launch. </p>
<p>The Toronto Star hadn’t made such errors, but nonetheless jettisoned its paywall after growth had “<a href="http://mumbrella.com.au/toronto-star-scrapped-digital-paywall-as-it-was-expensive-and-had-a-high-churn-rate-292661">plateaued</a>” to focus on <a href="http://www.theglobeandmail.com/report-on-business/torstar-swings-to-profit-on-boost-from-harlequin-sale/article21452577/">increasing digital ad revenue and readers</a> with an improved tablet edition. </p>
<p>These cases notwithstanding, it’s difficult to predict whether a paywall will help or hurt a publication’s bottom line. Newspapers have generally been unwilling to publicly discuss how much revenue their paywall is generating, and how it’s impacting their audience size and advertising revenue. </p>
<p>Simply put: newspapers are experimenting, but they aren’t sharing the results. We only know for certain that paywalls are being implemented, that the metered model is preferred, and that the increases in subscription revenue – while substantial for some – haven’t matched losses in advertising revenue.</p>
<h2>The future of paywalls</h2>
<p>Paywalls may work as a partial solution for finding new revenue streams but the search for a better subscription model continues. In March, two new models involving “micropayments” – in which readers pay a small fee (roughly 25 cents) to read a single article – made headlines.</p>
<p>First, The New York Times, The Washington Post and The Wall Street Journal signed up to the news aggregator <a href="http://www.businessinsider.com/the-new-york-times-wall-street-journal-the-washington-post-sign-up-to-blendle-2015-3">Blendle</a>. Following the so-called <a href="http://www.poynter.org/news/mediawire/326571/new-york-times-washington-post-wall-street-journal-sign-with-dutch-itunes-for-news/">iTunes model</a>, this Dutch startup allows readers in the Netherlands to make micropayments to access individual newspaper and magazine articles from a variety of publications. </p>
<p>By hosting a variety of news publishers, both individual publishers and Blendle are hoping that individuals will be more likely to use micropayments. Think of iTunes: while an individual might not sign up to use iTunes if it were just for one record company, the fact that the largest companies are using iTunes makes listeners more likely to use the service and for companies to profit from it. </p>
<p>On the other hand, a newspaper could try to “cut out the middle man” and use micropayments on their own website. Indeed, Winnipeg Free Press, a Canadian newspaper, <a href="http://www.winnipegfreepress.com/opinion/columnists/Free-Press-to-roll-out-affordable-user-driven-access-to-news-297814851.html">recently announced plans</a> to use micropayments on their own website, making it the first North American newspaper to do so. Free Press editor Paul Samyn explained the novel decision by <a href="http://www.niemanlab.org/2015/04/the-winnipeg-free-press-is-launching-a-paywall-that-lets-readers-pay-by-the-article/">noting</a> that while newspapers have had some success with paywalls, “their ability to grow paid digital subscriptions appears to have either stalled or only grown marginally.”</p>
<p>The micropayment model has <a href="http://www.mondaynote.com/2014/11/02/the-new-york-times-and-springer-are-wrong-about-blendle/">critics</a> – as do <a href="https://medium.com/geeks-bearing-gifts/paywalls-e401eb73b348">paywalls in general</a>. </p>
<p>Unfortunately, whether any subscription model can convince consumers to pay enough to sustain the journalism that a healthy democracy requires remains an open question. </p>
<p>Since the future of commercially viable journalism hangs in the balance, the stakes are considerable. More research is needed (and more data needs to be made publicly available). And conversations should continue about what the future of digital journalism – including noncommercial models – should look like in a democratic society.</p><img src="https://counter.theconversation.com/content/40726/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The stakes are high for news outlets to raise revenue. Do paywalls have a future?Alex T. Williams, PhD Student in Communications, University of PennsylvaniaVictor Pickard, Assistant Professor of Communication, University of PennsylvaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/378402015-02-24T19:31:28Z2015-02-24T19:31:28ZFairfax has a plan, but it’s not the paywall<p>When Gina Rinehart’s Hancock Prospecting recently sold all its shares in Australian media company Fairfax, chief development officer John Klepec took the <a href="http://www.smh.com.au/business/media-and-marketing/gina-rineharts-hancock-prospecting-takes-farewell-swipe-at-fairfax-media-20150206-138czi.html">parting shot</a> that Fairfax management had “no workable plan” to turn the company around. In reality, the ship is turning, although incredibly slowly. </p>
<p>In the first half of the 2015 financial year <a href="http://www.fairfaxmedia.com.au/pressroom/au---nz-press-room/au---nz-press-room/2015-half-year-results-announcement">Fairfax’s</a> profit dropped 86% from the previous year. But there are some positive signs when scrutinising Fairfax’s figures more closely. For example, the number of digital subscribers for Fairfax’s metropolitan newspapers, including The Age, The Sydney Morning Herald and The Australian Financial Review, grew 8.2% from 146,000 to 158,000. The company’s revenue from digital subscriptions rose 61% from A$9.7 million to A$15.8 million. More positively, its digital advertising revenue rose to 14.8% to A$106 million. </p>
<p>The bad news is digital subscriptions represented only 1.7% of the company’s total revenue, and Fairfax is still strongly reliant on its print revenues. In the first half of 2015 financial year, print circulation and print advertising brought in A$242 million in revenue, almost 50% more than its combined revenue from digital operations.</p>
<p>To compare, in the 2014 fiscal year, The New York Times had 910,000 paid digital subscribers, a 20% increase from the previous year. The revenue from its digital-only subscriptions rose 13.6% from previous year, and the total revenue of digital-only subscriptions was US$169 million. This represents 10.6% of its total revenue. Clearly, Fairfax has still some way to go even though The New York Times might not be the fairest comparison point.</p>
<h2>Native advertising and classifieds the right remedy?</h2>
<p>When looking at the data more closely, interesting trends start to appear. It seems that paywalls have gone to the back burner as newspaper publishers are increasingly betting on native advertising, listing services and online classified advertising. Companies such as BuzzFeed have been dominating the native advertising market, and news publishers are now following suit.</p>
<p><a href="http://investors.nytco.com/press/press-releases/press-release-details/2015/The-New-York-Times-Company-Reports-2014-Fourth-Quarter-and-Full-Year-Results/default.aspx">The New York Times Company’s</a> 2014 results were boosted by digital advertising, and especially <a href="https://theconversation.com/au/topics/native-advertising">native advertising</a> (sponsored content). In the fourth quarter of 2014, the company saw a 19% increase in digital advertising revenue thanks to its “paid posts” native advertising platform. Mark Thompson, chief executive of the company, commented that “we delivered digital ad growth for all four quarters, highlighted by double-digit strength in the second half of the year, including a 19% gain in the fourth quarter.” APN, owner of The Australian Radio Network, is also gambling with content marketing and native advertising. APN is taking a majority stake in the new company, Emotive, which specialises in native ads (editorial-style content).</p>
<p>American news publisher <a href="http://investors.nytco.com/press/press-releases/press-release-details/2015/The-New-York-Times-Company-Reports-2014-Fourth-Quarter-and-Full-Year-Results/default.aspx">Gannett</a> has also started to expand in online classified advertising and listing services. Last year the company took a controlling stake in US-based Classified Ventures, which runs the car sales site Cars.com. Thanks to Cars.com and its online job-site CareerBuilder, the company’s digital revenue rose 22.8% in 2014 from the previous year. In February this year, global publishing giant Axel Springer also formed a new joint venture in real estate advertising called Immowelt, in order to gain new advertising dollars. </p>
<p>Last year Rupert Murdoch’s News Corporation and its Australian real estate website REA Group bought American real estate listing site Move.com. The acquisition has clearly boosted News Corporation’s profits, as in the second quarter of 2015 the revenues of its digital real estate services rose 50% from the previous year. </p>
<h2>Too little, too late?</h2>
<p>So they are all doing it. But what about Fairfax? Fairfax lost online classified advertising markets in Australia to Seek, REA and Carsales as the company’s management failed to understand the internet, and to purchase any of these companies. From its results, it’s obvious Fairfax has put its eggs in one basket: its real estate advertising site Domain to compete with realestate.com.au. In January Fairfax increased its ownership in Metro Media Publishing Holdings (MMPH) from 50 to 100% in order to expand its digital property businesses. MMPH has an extensive portfolio related to real estate markets, and it also includes reviewproperty.com.au. </p>
<p>Commenting on the 2015 half-year results, Fairfax’s chief executive officer Greg Hywood stated that “Domain continues to power ahead in expanding its national footprint”. In the first half of 2015, Domain’s digital revenue rose 37.8% from the previous year.</p>
<p>Fairfax is expanding its classified advertising and listings portfolio in order to build new digital revenue streams it desperately needs. But it could still prove to be too little too late. As the latest figures from <a href="http://www.crikey.com.au/2015/02/13/print-circulation-circling-the-drain-is-it-time-for-drastic-measures/">Audited Media Association of Australia (AMAA)</a> show, the weekday print circulation of the SMH fell 13% in the last quarter of 2014, and The Age’s 18% from the same time last year. In comparison, The Australian’s weekday total print sales declined 6.7% during the same period.</p><img src="https://counter.theconversation.com/content/37840/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With digital subscriptions barely registering on the revenue front, media companies are staking their hopes on alternative revenue sources.Merja Myllylahti, Lecturer, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/194862013-11-07T19:41:31Z2013-11-07T19:41:31ZMaking sense of Fairfax’s paywall figures<figure><img src="https://images.theconversation.com/files/34666/original/ghwxzmyk-1383805936.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The New York Times launched its paywall in 2011 and in the most recent quarter claimed US$37.7 million in digital subscription revenue.</span> <span class="attribution"><span class="source">Andre-Pierre/Flickr</span></span></figcaption></figure><p>Media companies are failing to deliver transparency about their digital subscriptions, as <a href="http://www.tandfonline.com/doi/abs/10.1080/21670811.2013.813214#.UnsciCdHKpC">my recent study</a> about paywalls found. </p>
<p>The research of paywalls in eight countries found paid online content presents roughly 10% of news companies’ total publishing or circulation revenue. This is not enough to make paywalls a viable business model in the short term.</p>
<p>In fact, trying to make sense of how many people are paying for access to online news content is much harder than you might think. Newspaper companies are disclosing very ambiguous figures about their online subscriptions, and are reluctant to reveal how much paywalls ultimately contribute to their bottom line.</p>
<p>The same can be said of Fairfax, which this week released new figures concerning its digital subscriptions. Chief executive officer Greg Hywood told investors that the company’s paywall “success has exceeded expectations”. </p>
<p>Fairfax launched paywalls for its mastheads The Age and The Sydney Morning Herald in July 2013. The readers of the papers can access 30 articles per month for free before the paywall kicks in.</p>
<p>According to Hywood, The Age and The Sydney Morning Herald now have 86,000+ paid digital subscribers, and 102,000+ existing print subscribers who have signed up for digital access, or bundled subscriptions.</p>
<p>Fairfax doesn’t disclose how its print subscribers pay on top of their print newspaper, or if they pay anything at all. The idea of bundling is that if you offer a digital subscription relatively cheaply on top of the print subscription, people are more likely to take both.</p>
<p>For example in Finland, the leading national newspaper Helsingin Sanomat, charges its print customers only US$48 for the digital access on top of their print subscription. The Finnish paper claims around 42% of its readers pay for the digital content.</p>
<p>The parent company of the paper, Sanoma, doesn’t disclose any revenue figures for its paywall, but it seems that its bundling model is working reasonably well. </p>
<p>A quick calculation of Fairfax’s paywall revenue reveals that if the readers of its two mastheads paid for the cheapest digital-only package, A$180 dollars per year, Fairfax would make around A$16 million annually. Assuming an extra 102,000 readers would pay for a bundled package with the price tag of A$528 per year, Fairfax would earn A$54 million from these bundled subscriptions.</p>
<p>Based on these figures and rough calculations The Age and The Sydney Morning Herald would earn A$70 million from their bundled and digital-only subscriptions per year. This presents approximately 3.3% of the media corporation’s annual revenue.</p>
<p>I guess it is fair to say that these two mastheads would not save Fairfax from sinking, but extra revenue is welcome for any news publishing company nowadays.</p>
<h2>New king of content bundling</h2>
<p>In the US, some of the leading media corporations have sold off their newspapers, and a new block of media moguls has emerged. But the same challenge remains there – how to sell digital subscriptions to a public generally uninterested in paying for news.</p>
<p>Earlier this year Amazon’s founder Jeff Bezos bought The Washington Post. Bezos has been hailed in media as a content “bundling king”. </p>
<p>He believes that people don’t buy individual stories, they buy packaged or bundled content. “People will buy a package. They will not pay for a story,” he told staff at the WaPo.</p>
<p>The Washington Post had put up a paywall a few months earlier, in June. It gives its readers 20 free articles per month before they are asked to pay. But Bezos intends to bundle content of his newly acquired newspaper into packages, lucrative to different groups and a different kind of buyer.</p>
<p>Amazon is already experimenting with different packages for its users. They are starting to offer combined print and digital subscriptions for magazines like Vogue, Wired and Vanity Fair.</p>
<p>And Amazon has a major strength compared to traditional news outlets. Its platform has a wide reach and a prominence, which the magazine’s own distribution channels don’t.</p>
<h2>Circulation stabilises, print readership high</h2>
<p>The latest reports from <a href="http://stateofthemedia.org/">PEW</a> and <a href="http://www.pwc.co.nz/global-entertainment-and-media-outlook-2013-2017/">PricewaterouseCoopers</a> suggest the decline in newspaper circulation and revenues has stabilised, although globally news publishing revenues from sales and advertising fell in 2012 to US$164 billion from US$187 billion in 2008.</p>
<p>PwC forecasts flat revenue growth for the newspapers in 2013-2017, and notes that “a long-term decline in newspaper advertising revenues means that circulation will represent an increasingly significant proportion of overall revenues”. </p>
<p>A recent study published by <a href="http://www.city.ac.uk/news/2013/aug/more-than-90-of-newspaper-reading-still-with-print-editions">Dr Neil Thurman</a> provides surprising findings. He observes that in the UK, an average of 96% of the time spent with newspapers was in print, not online. This suggests print newspapers are far from the death’s door, since the readers spent more minutes reading the print version of a newspaper than the online one. </p>
<p>Another study also suggests that print newspapers are surprisingly resilient and have loyal readership, at least in certain countries. The Reuters Institute <a href="https://reutersinstitute.politics.ox.ac.uk/publications/risj-digital-report.html">Digital Report 2013</a> reveals that newspaper purchases are especially high in Japan, Italy and Germany.</p>
<p>The report also found the number of people paying for online news content has increased, although the numbers are still relatively low.</p><img src="https://counter.theconversation.com/content/19486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Merja Myllylahti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Media companies are failing to deliver transparency about their digital subscriptions, as my recent study about paywalls found. The research of paywalls in eight countries found paid online content presents…Merja Myllylahti, Lecturer, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/188222013-10-13T19:27:22Z2013-10-13T19:27:22ZGet out your wallets, paywalls are in<figure><img src="https://images.theconversation.com/files/32879/original/sxgzgdgk-1381467838.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">More newspapers are turning to paywalls, and while the number of readers falls, revenues often grow.</span> <span class="attribution"><span class="source">Anne Petersen</span></span></figcaption></figure><p>The Guardian’s Australian editor-in-chief Katharine Viner did what many media commentators fail to do, last week, and disentangled the crisis facing print newspapers from the state of journalism. Too often the decline of print journalism is conflated with the future of journalism. </p>
<p>Viner, in an <a href="http://www.theguardian.com/commentisfree/2013/oct/09/the-rise-of-the-reader-katharine-viner-an-smith-lecture">inspiring speech</a> showed how the two were separate. But she muddied the waters about the role a paywall can play in funding newspaper journalism.</p>
<p>Studies have shown that falls in newspapers’ advertising revenues and print circulations can increase pressure for “serious newspapers” to include more sensational stories on their digital websites. Some free online newspapers succumb to clickbait stories using sex, crime and celebrities to boost net traffic and lure advertisers. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1058&fit=crop&dpr=1 600w, https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1058&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1058&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1330&fit=crop&dpr=1 754w, https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1330&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/32868/original/wm4ksxjd-1381462643.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1330&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Maybe it was just a slow news day? Paywalls reduce the need to lure readers through clickbait.</span>
<span class="attribution"><span class="source">news.com.au</span></span>
</figcaption>
</figure>
<p>Newspapers that use paywalls can dispense with clickbait and prioritise content to an audience willing to pay for quality. Early adopters of the paywall, such as the Wall Street Journal, have detailed audience data that allows advertisers to better target sales.</p>
<p>Those who read The Guardian will know it provides a counter example to this argument. It is a quality newspaper that has enormous global reach – the third most read English-speaking newspaper website in the world – behind the New York Times and Britain’s Daily Mail. It launched its Australian edition in May this year and, before that in 2011, its US edition. </p>
<p>The newspaper is free to read online with advertising revenues, print circulation and the 1936 Scott Trust supporting its journalism. It has adapted to the digital era and provides innovative journalism that actively involves the audience.</p>
<p>To allow this relationship to flourish, Viner argued the World Wide Web should remain open. It’s a noble concept and difficult to refute – we all benefit from sharing knowledge. </p>
<p>But Viner takes this view one step further and argues that paywalls are “utterly antithetical to the open web”. She said on Wednesday: </p>
<blockquote>
<p>A paywalled website is just print in another form, making collaboration with the people formerly known as the audience much more difficult. You can’t take advantage of the benefits of the open web if you’re hidden away.</p>
</blockquote>
<p>But, speaking at a Future of Journalism conference in Wales last month, I found in a comparative study of newspapers across Britain, the United States and Australia that this does not have to be the case. </p>
<p>A paywall does not necessarily limit audience reach or collaboration, but it can focus a newspapers’ reporting towards quality journalism.</p>
<h2>You’ve got to make money somehow</h2>
<p>The New York Times is a clear example of a large digital audience willing to pay for content. Like Britain’s Financial Times it has a metered paywall; and FT now has more digital subscribers than hard copy. </p>
<p>At the NYT, digital subscriptions have helped circulation revenue surpass advertising revenues. At the start of this year, the NYT’s metered paywall delivered 708,000 digital subscribers, a 45 percent year-over-year increase. </p>
<p>Like The Guardian, the NYT is a custodian of quality journalism with global reach. Unlike the Guardian, it has a paywall.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=295&fit=crop&dpr=1 600w, https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=295&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=295&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=371&fit=crop&dpr=1 754w, https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=371&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/32874/original/q3z8j65p-1381465204.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=371&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The New York Times has a soft paywall, where a number of articles can be read by non-subscribers. But it still costs money to get all the news when you want it.</span>
<span class="attribution"><span class="source">nytimes.com</span></span>
</figcaption>
</figure>
<p>Equally, The Guardian, the Daily Mail, and USA Today have among the largest news audiences in the English-speaking world and their online content is provided without charge – so far.</p>
<p>But, The Guardian itself, although an inspiring example of open journalism, is not without its economic vulnerabilities. The <a href="http://www.newyorker.com/reporting/2013/10/07/131007fa_fact_auletta">New Yorker last week reported that the newspaper has lost money for the past nine years</a> and, if not reversed, the Trust would run out of money this decade.</p>
<p>Meanwhile, The Daily Mail has built its audience using tabloid-styled news and sensationalism including clickbait stories to boost web traffic. It has global reach but like most print newspapers it is losing paid readers and its online revenues alone are not yet enough to sustain its operations. </p>
<p>USA Today is also losing circulation and has just doubled its cover price from $1 to $2. Last month its publisher Larry Kramer said they would ‘explore’ paywall options. It is owned by America’s largest newspaper chain, Gannett, which introduced metered paywalls in 2012 to its 80 local mastheads. The US now has more than 400 newspapers with paywalls; eleven of their 20 biggest selling daily mastheads have some form of paywall.</p>
<p>How to fund newspaper journalism in the digital era is clearly a difficult problem to solve. Once, it was classified advertising, but that lucrative bond has broken. </p>
<p>And the rise of the internet has meant any non-media website can compete for advertising dollars. Digital advertising has become cheaper for advertisers in an over-saturated market, meaning smaller revenues for newspapers.</p>
<p>The comparative study found online newspapers’ success in attracting subscribers depended on the type of paywall used, whether it was hard or soft, and what type of content was behind it, whether it was niche or general news.</p>
<p>A hard paywall, where virtually no content is free, can be successful when a newspaper provides specialised content, such as the predominantly business newspaper, WSJ – it has almost 900,000 digital subscribers.</p>
<p>It is true that free online newspapers and national public broadcasters such as the government-funded ABC challenge newspaper paywall models that charge for general news content. This is particularly testing for general newspapers that lock content behind hard paywalls.</p>
<p>But a soft paywall, and there are several types, allows some content for free. The metered model caps the number of free articles before readers are asked to pay: NYT provides 10 articles a month; The Age provides 30. This model enables newspaper websites and conversations to remain open to non-paying readers. By providing some free content this model does not limit traffic as much as a hard paywall, and it tempts readers wanting more, to subscribe.</p>
<h2>Sorry, you’ll need to log in to see this</h2>
<p>A 2012 US Alliance for Audited Media report found that most US mastheads favoured a soft paywall (77%) over a hard (17%) paywall. A recent Reuters Institute study found that hard paywalls can curb website traffic flows significantly (85% to 95%) in the first few months compared to 5 to 15 per cent loss of digital traffic when using a metered paywall.</p>
<p>In fact, the last 12 months could be described as the year of the paywall in these three countries. More paywalls were erected in 2012 than in any other single year. In 2013, there are now more Australian major daily newspapers with a paywall than without, as can be seen in Figure 1.</p>
<p><strong>Comparison of newspapers with paywalls in Australia, the US and the UK.</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=364&fit=crop&dpr=1 600w, https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=364&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=364&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=457&fit=crop&dpr=1 754w, https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=457&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/32877/original/gdkmpn9h-1381465999.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=457&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Alliance for Audited Media 2013; Carson 2013</span></span>
</figcaption>
</figure>
<p>A few months ago two of Britain’s biggest selling daily print newspapers, the Telegraph and The Sun put their content behind paywalls despite earlier hesitations. Website traffic has decreased, but this is expected initially. </p>
<p>The recent paywall uptake sharply conflicts with the view of Arianna Huffington who declared in 2009 that the <a href="http://www.guardian.co.uk/commentisfree/2009/may/11/newspapers-web-media-pay-wall">“paywall is history”</a>. Viner also left her audience wondering when she said: “Economically, it’s too early to rule them [paywalls] out when we’re all trying to survive.”</p>
<p>Instead, newspapers have been experimenting with different types of paywalls and tweaking prices, more often than not settling on the metered model for general news. Paywalls might not be the entire solution for finding a new revenue source for newspapers’ journalism, but the soft paywall can be part of it.</p><img src="https://counter.theconversation.com/content/18822/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrea Carson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Guardian’s Australian editor-in-chief Katharine Viner did what many media commentators fail to do, last week, and disentangled the crisis facing print newspapers from the state of journalism. Too often…Andrea Carson, Honorary Research Fellow Centre for Advancing Journalism , The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/140412013-05-09T01:19:11Z2013-05-09T01:19:11ZThe News Limited paywall dilemma: how to avoid competing against yourself<figure><img src="https://images.theconversation.com/files/23375/original/svp44hrq-1368019654.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">News Limited CEO Kim Williams has been forced to change tack on the online newspaper paywall model for the company's metro mastheads.</span> <span class="attribution"><span class="source">AAP/Joe Castro</span></span></figcaption></figure><p>You could almost feel sorry for newspaper owners. The internet is smashing their hard copy advertising revenue and they have yet to work out how to make money out of their online editions.</p>
<p>It is just over a year since News Limited <a href="http://www.smh.com.au/business/media-and-marketing/herald-sun-to-hoist-online-paywall-in-march-20120223-1tpe3.html">moved its Melbourne Herald Sun tabloid</a> to a “metered” online paywall model. Now News Limited <a href="http://mumbrella.com.au/news-limited-confirms-move-to-metered-paywall-154393">has announced</a> that the Herald Sun, together with Sydney’s Daily Telegraph, will be moving to a different pricing model later this month.</p>
<h2>Interpreting the move</h2>
<p>At first glance, it looks like the “freemium” model - where some articles are free to all readers and other articles are locked and available to subscribers only - has failed. Indeed, as more newspapers around the world <a href="http://www.businessspectator.com.au/article/2013/5/8/media-and-digital/news-and-fairfax-aim-meter-perfect-dive">move to a metered model</a>, it could be argued that the industry is converging on a “winning” pricing strategy for the internet.</p>
<p>Such a conclusion is at best premature and at worst wrong. News Limited is not going to adopt a pure metered model. Instead, it will have a “hybrid” model. As <a href="http://www.theaustralian.com.au/media/news-unveils-metered-paywall-plan-for-daily-telegraph-and-herald-sun/story-e6frg996-1226637384084">noted</a> in The Australian, “some premium sports content will only be available to subscribers”, so there will be a hard paywall for some content and a “try-before-you-buy” model for other content.</p>
<p>News Limited is also allowing itself plenty of wiggle room. It is rolling out the model to the Adelaide Advertiser and Brisbane’s Courier Mail in June. But, News Limited claims “the models will vary across Australia depending on the local market”.</p>
<p>An alternative conclusion is that online newspapers have no idea what to do and are grasping at straws. I think that such a conclusion is reasonable for some publications (and I suspect Fairfax fits into this category). </p>
<p>However - in my opinion - News Limited CEO Kim Williams knows exactly what he is doing. Williams is establishing an internet sports “channel” based on Foxtel’s suite of Fox Sports channels: and he is pretending that it is an online newspaper.</p>
<h2>Evidence</h2>
<p>The announcement is merely the latest step in a strategy News Limited has been following for the past year. This strategy included <a href="http://www.news.com.au/breaking-news/news-limited-cleared-for-194bn-consmedia-takeover/story-e6frfkp9-1226509292987">gaining</a> 50% of Foxtel and 100% of Fox Sports. <a href="https://theconversation.com/news-limited-reveals-its-convergent-future-but-will-its-pay-walls-pay-off-7818">As I noted</a> when the acquisition was announced: </p>
<blockquote>
<p>News Limited is expanding. It is grasping new technology with both hands and bonding traditional and alternative news outlets together.</p>
</blockquote>
<p>The other key element in News Limited’s paywall announcement was not the pricing model but rather the change of focus. The online publications will be under a separate “news +” brand. As Kim Williams stated: </p>
<blockquote>
<p>…subscribers will have access to their local masthead with enhanced local content as well as to our entire national news, lifestyle, business and sport network, delivered across all the devices they love.</p>
</blockquote>
<p>The “local masthead” will simply be a local brand name used to sell a national product. And that new product is likely to have lots of video, sourced predominantly from Fox Sports.</p>
<p>So my conclusion from the paywall shift announcement is simple. News Limited is just continuing on the path it set itself on at least a year ago. That path will replace online editions of its newspapers with on-demand video based around sports content. It will have some video news, some “text articles” and some local content. But it will be a subscriber-based, online video channel.</p>
<p>Will this business model work? Only time will tell. There is a lot of free sports content available on the internet already, and News Limited is going to have to fight against other owners and providers of video sports content such as Telstra. To work, the model will need to have enough unique content to encourage online viewers to pay the $4 per week full digital subscription.</p>
<p>The model has risks for News Limited. To the degree online subscribers can access Fox Sports content through their “newspaper” subscription, they will not need to access it through Foxtel. However, News Limited own 50% of Foxtel, so if its online model works then it will undermine the profitability of its pay TV business.</p>
<p>In this sense, News Limited faces a problem of effectively competing against itself. If news+ is a great alternative to pay TV, News Limited wins through news+ but may lose money overall. So News Limited wants news+ to succeed – but not too well. </p>
<p>Therefore, instead of making news+ a high quality online service, News Limited will be tempted to limit the content on news+ to avoid undermining Foxtel. Of course, if it does this then news+ is less likely to be successful.</p>
<p>So while news+ is a bold move, News Limited is faced by a conflict that may kill it. How does it make a successful new media company that does not compete too hard with its old media?</p>
<p>Finally, what does all this mean for the print newspapers? </p>
<p>This announcement is their epitaph. It suggests that News Limited really sees little future in hard copy newspapers. They will continue until their revenue falls to a point where they are unprofitable. Then they will die. But don’t worry: you can always switch to news+.</p><img src="https://counter.theconversation.com/content/14041/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen King does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>You could almost feel sorry for newspaper owners. The internet is smashing their hard copy advertising revenue and they have yet to work out how to make money out of their online editions. It is just over…Stephen King, Professor, Department of Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.