As newspapers have gone belly up, one model that is always tossed around is the pay-to-read model. Essentially, the plan would be for a newspaper to eliminate distribution via print and delivery and instead move all of the content to the Web.
A Paywall would go up online in an effort to force users to have to pay for the news as they have through the traditional newspaper model. The cost savings of this model would be enormous, but would users be willing to pay a monthly or annual subscription to get news online from their favourite paper?
Four months ago, The Times UK, which is owned by News Corp, went with the Paywall model. The Times UK did have a large online readership which had enjoyed free content before the Paywall went up. MediaPost recently reported that only 1 out of 200 of The Times UK readers had upgraded to pay for the Premium Content option. Even worse, only half of these people who agreed to pay actually subscribed;
with the other half choosing a pay per day plan.
These results are pretty bad, and it isn’t a good sign for those who support the pay-to-read model for newspapers. It is also interesting to look at how steep the traffic declined at the thetimes.co.uk since June. An article on TechCrunch reported that according to ComScore, online traffic declined by 4 million monthly unique visitors to 2.4 million. That represented a 62 per cent drop in traffic. The page view loss was even more steep, going from 41 million in May 2010 all the way down to 4 million in September 2010.
This data is a clear indication of the attrition rate that can be expected when an online news site goes from a free model to a pay model. And the Web continues to head in a direction that doesn’t support a pay-to-read model. Here’s why:
1) Search Engines. Google and Bing aren’t going to index pages behind a Paywall. And as services like Google news have continued to get better, Web Search continues to be an enormous referrer to news sites. This is the model behind many blogs, which rely on search traffic to bring in readers. Online
news sites, without much effort, get new readers to their site due to high quality articles being indexed and ranked well in search engines. With a Paywall model, all of these users that come through search engines will evaporate overnight.
2) Social Media. It was recently reported that Facebook is beginning to refer as much traffic to websites as Google. This referral traffic exploded when Webmasters began to implement “Like” buttons across the Web. Now, when users visit a website or an article that they enjoy, they can easily share it
with their Facebook friends via clicking the “Like” button under a given article. With a Paywall, this can’t happen — users aren’t going to take the time to like an article considering that many if not all of their Facebook friends won’t be able to read the article because they aren’t Premium members of the respective news site. The same goes for Twitter — as news stories are among the most popular links promoted on Twitter. Users are not going to Tweet links from a story on Thetimes.co.uk or any other site hid behind a Paywall. So, as the Web continues to become more social, and users share more and more content, the
Paywall sites will get left behind.
3) Online Ad spending. One of the reasons a website would move to a Pay model is due to a difficulty making money through advertisements. Online advertising, however, continues to climb. In fact, according to the Interactive Advertising Bureau, online advertisers spent $12.1 billion online during
the first 6 months of 2010. That represents an 11.3 per cent climb from the same time period in 2009. So, with more dollars being spent online, it’s in Web publishers interest to grow page views — not decrease them by 90 per cent, which Thetimes.co.uk has done.
4) Competition. There is more competition than ever for online news. Legitimate Bloggers and Blog Networks have been established all over the Web. When you combine that with new technologies such as Posterous, which makes it ridiculously simple to post content on the Web, online news has to be easy for the user to access because there is so much of it. A Paywall is anything but that, so this contributes to the decline in traffic that will result from the Paywall.
5) The Beauty Of The Web. Users are accustomed to getting content for free on the Web. That’s the way it has always been, and it’s in grained in our minds. One of the great beauties of the Web is the vast economies of scale for publishers. As a result, users can benefit greatly from the Webs’ simplicity in that they have access to endless amounts of information right at their fingertips. For little or no cost, anyone can launch a website that has the chance and capability to service hundreds of thousands of visitors. It is crucial for online news sites to embrace the Webs’ beauty, and not try and reinvent the wheel with paid models. When they are done the right way, it is clear that free models work best for everyone.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.