Digital Marketing
Leave a Comment

What Lies Beyond the Pay Wall

In the digital age, new issues arise almost as fast as technology develops. The advent of the Internet has irrevocably altered the way in which people consume media and the news. The newspaper industry in particular has been severely affected, with newspaper companies struggling to find a revenue model that is sustainable and profitable in the long run.

In response to the shifting media landscape, a popular digital tactic employed by news companies is the pay wall strategy. I believe that pay walls, especially “soft pay walls” which allows free access to select content whilst keeping premium content behind a pay wall (as opposed to no access to content without subscription) are effective strategies for the following reasons:


  • Effective way to monetize content: While an online display ad only produces 10-20% of the revenue of its print counterpart, a pay wall can be set at a desired value, delivering short-term revenues.
  • Offers possibility to vary the degree of impenetrability: The pay wall is a great way to hook users on basic information and charge for their unique premium offerings.
  • Helps maintain integrity and standard: Pay walls can ensure a site maintains its integrity by reducing intrusive display adverts, keeping premium content premium. I believe that most people are willing to pay a small price for quality content. In a March 2013 guest post for VentureBeat, Malcolm CasSelle of MediaPass stated his belief that monetization would become “something of a self-fulfilling prophecy: people will pay for content, and that money goes back into making the overall content even better.”

However, despite the advantages of the pay wall system, there is no denying that the pay wall issue is highly complex; there are several issues to consider and tackle with this digital strategy.


Image Source

Issues to consider

  • People want free access to information: The ethos of the Internet is that information should be free. The pay wall scheme goes against this Internet philosophy.
  • People are only willing to pay for news that offer unique value: If we expect consumers to pay for a product online, we have to offer something the consumer perceives as valuable (as opposed to what we think is valuable) and something that the consumer cannot obtain elsewhere. According to Poynter media expert Bill Mitchell, in order for a pay wall to generate sustainable revenue, newspapers must create “new value”, either through higher quality or innovative in their online content that rewards payment which previously free content did not.
  • The consumer can obtain their news elsewhere: This point relates to the previous one. Publishers often claim that the best way to establish value is to place a price on the information, according to publishers, the price they impose on the product online becomes the value of that product. However, in a supply-and-demand economy, the seller does not establish value – the buyer does. In this day and age, if people have to pay for a particular news story, there are plenty of free alternatives out there; online sites, blogs and social networks.
  • Advertisers think twice: Advertisers fear that a pay wall will severely limit their user base, reducing the number of eyes viewing their ads.

The Times’s model

The New York Times’ latest pay wall scheme has been the subject of hot debate in recent years – earning its fair share of supporters and critics. Despite the criticism it received 2 years ago, its recent financial results have been in favor of their revenue model and many news conglomerates are following its lead. According to media analyst Ken Doctor, today, 41% of the nation’s dailies are doing so or are planning to.


Image Source

The Times’s pay wall model is flexible; accommodating users who come in from traffic generators like social networks and search engines. For example, readers who came in through Google were subject to a 5 article per day limit in addition to the 20 monthly allotted ones, whereas those who visited from social media sites faced no limits, as long as articles were linked directly from those sources. This way, The Times is able to generate additional revenue while promoting the social buzz generated by its article.

Since charging online viewers of its content in March 2011, it now makes more money from readers than advertisers. Digital subscriptions brought in $37.7 million in the 3rd quarter, while digital ads brought just $32.9 million. In other words, it gets 53¢ from readers for every 47¢ it gets from marketers. That ratio used to be closer to 80-20 in favor of advertising. Moreover, The Times’ pay wall hit 727,000 subscribers in the quarter, up from 28,000 in 3 months. However, whilst I think the Times’ model is profitable and viable in the short term, this model is not sustainable in the long run.

Jeff Bezos and the future of the news industry


In the wake of a floundering industry, Jeff Bezos bought the Washington Post in August 2013 and left the world stunned. I believe Bezos bought the Washington Post because as the innovator he is, he plans to revolutionize the way people consume news and alter the way in which news companies make money in the digital space. Bezos’ reputation for innovation with Amazon has been a revolutionary game changer in the publishing and retail business, he wants to be the catalyst for change in the news industry. Bezos was quoted “we will need to invent, which means we will need to experiment.” He will encourage experimentation without regard for short-term profits and losses. In an interview last year with German newspaper Berliner Zeitung, he said he thinks that print newspapers will cease to exist within 2 decades. His overarching goal will be to create a thriving new media species on the digital frontier and find a revenue model that is sustainable for news companies in the digital space.

Beyond the news industry

In addition to the news industry, magazines have also begun to experiment, adopting variations of pay walls. For example, In July, Esquire put a $1.99 paywall around a nearly 10,000-word investigative story, “The Prophet” by Luke Dittrich. David Granger, Esquire’s editor in chief, explained that the story took months to produce — journalism doesn’t come cheap. Sports Illustrated also began testing a variety of pay wall this summer, but one that didn’t ask readers to pay directly. Instead, it granted online readers access to certain print stories — ones typically not available to non-subscribers until an issue is off the newsstand, like cover stories — in exchange for watching a video ad of their choice.

The future of revenue models in the digital space

The rise of the Internet has brought on new opportunities and challenges for the newspaper industry. Pay walls are rapidly changing journalism, with an impact on its practice and business model, and on freedom of information on the Internet. Although the pay wall strategy is profitable in the short term, the digital landscape will continue to change and the pay wall strategy is by no means the one and only solution to the revenue model conundrum in the digital space. Moving forward, the pay wall strategy alone is not enough to save “old media” models. The issue still persists; media owners need to be paid for their premium content while users want access to quality content for free. As such, the industry needs to come up with a more effective solution beyond pay walls. Although the exact solution to this revenue model conundrum is unclear, something tells me that Jeff Bezos will be the vanguard of this change, revolutionizing the way in which news companies generate profit in the digital age.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s