On Monday the great paywall experiment comes to Australia, with News Corp’s flagship broadsheet, The Australian, launching its digital subscription packages.
Actually it’s not the first of the paywalls, given that the Australian Financial Review has been operating behind a very thick wall throughout most of its history online. That has, however, been a strategy designed to limit cannibalisation of the physical product rather than grow an audience online. The AFR paywall is now under review and will almost certainly be lowered to some extent.
The Australian , however, will be the first of the major general newspapers to charge for online content and its version of a paywall is one of the new and more sophisticated versions being pioneered by mastheads like the Wall Street Journal, the Financial Times and the New York Times offshore.
In fact, The Australian’s version appears to borrow heavily from the model used by its News Corp sibling, the Wall Street Journal, which has a simpler and clearer delineation of free and paid-for content than the more complex metered and tiered and highly porous New York Times’ version of the ‘’freemium’’ model.
The Journal, the FT and the New York Times are, of course, iconic and unique mastheads and the first two are specialist business products with audiences that may be largely indifferent to paying. It is unclear, even if their models prove successful – and there are some encouraging signs – whether that has any relevance for lesser mastheads. The Australian’s experiment may help provide some insights.
Its launch will be relatively soft, with a three-month free trial, free digital subscriptions for existing six-day-a-week print subscribers and some access to premium material via some search engines and social networking sites. Digital-only subscriptions start at a modest $2.95 a week.
The freemium model is designed to facilitate a balancing act – to slow the migration of paying print subscribers to free online products, which undermines already declining advertising revenue streams, while minimising the damage the introduction of pricing might do to existing online audiences and digital revenues.
Both the Wall Street Journal and the New York Times claim their versions of the model are working to generate new revenues without adversely affecting either of their audiences, indeed the New York Times, while conceding it is too early to come to any definitive conclusions (it launched its paywall in March) claims to have actually increased its online audience despite introducing pricing of access to content.
The Australian was the obvious candidate to be the first of News Ltd’s papers to erect a paywall. It is a broadsheet with significant slabs of content its editors would regard as ‘’premium’’ and its economics have always been marginal, at best, so there is little to lose and any additional revenue would be a bonus. If the paywall has a materially adverse effect on its online audience and revenue base, the tabloids within the News portfolio might re-think their plans to erect their own walls.
News would also be reasonably confident that Fairfax will follow its lead, although it is more likely to adopt a New York Times-style model and prioritise audience over revenue, given Greg Hywood’s strategy of monetising the group’s digital audiences by marketing its digital transaction businesses to them.
Whether it is the New York Times or The Australian, these early experiments with paywalls are at this point just experiments.
The revenue generated by the subscriptions wouldn’t, even in the more optimistic scenarios, fund the very expensive journalism they have traditionally produced and their ability to raise prices in the medium term will be constrained by both the impact on the size of their digital audiences and by the presence of an increasing number and quality of free online sources of news and commentary, including the expanding presences of public broadcasters (and, of course, sites like this one).
If the paywalls generate some revenue and slow the migration of audiences online, however, that would provide some near term benefits for the publishers and raise at least the prospect that subscription revenues could become meaningful over time as readers became more used to paying for what they could previously access free.
The surge in paywall construction around the globe might also eventually have implications for advertisers, who are increasingly moving online. Yields online are a fraction of what the traditional media has traditionally enjoyed – largely because there is so much inventory on the mainstream media sites and elsewhere, but also because the major media groups have seen digital revenue as incremental.
Smaller, but more dedicated and more easily defined online audiences – and almost by definition a paying subscriber is likely to be more engaged than the one-off browser who arrives at a site via a search engine – ought to be more valuable to advertisers. Longer term the impact of paywalls on the prospective size and quality of the audiences attracted by the major mastheads ought to be a positive for yields.
Whether readers and advertisers will ever be prepared to pay enough to sustain the kind of investment in journalism the major mastheads have produced in the past is, of course, another question and an impossible one to answer at this point, although it looks improbable.
This article first appeared on Business Spectator.
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