Surprise: Newspaper paywalls are working
Site traffic returns to pre-paywall levels within a year they go up
April 12, 2013
In 2011, The New York Times became the first major U.S. newspaper in years to erect an online paywall, and there were a lot of questions about its viability.
Those questions were resolved almost immediately. Traffic to the site actually rose, and internet advertising now contributes a quarter of the paper’s total revenue.
Still, that was The New York Times, one of the world’s greatest media outlets.
When smaller newspapers began adopting the same metered paywall approach last year, mimicking the Times, there were even more doubts about whether the new strategy could succeed.
The answer: It can and it is.
The evidence is in a new study from Borrell Associates, the local advertising tracking firm in Williamsburg, Va., which notes that online traffic to sites with paywalls is quite strong and the sites aren’t suffering any ill effects to online advertising.
“A survey in the late 1960s asked people if they were willing to pay for TV, and they said, oh hell no,” says Gordon Borrell, chief executive officer of Borrell Associations.
“Within 25 years, almost everyone was paying for it [with cable]. It’s sort of the same concept — there’s a lot more information and utility with these online newspapers.”
By the end of 2012, 350 newspapers had paywalls, up from 50 at this time last year. Borrell forecasts that number will hit 500 by year’s end.
Papers usually give print subscribers a free online subscription as well. But there are a good number who pay a monthly fee to access the content.
Most paywalls have a meter that allows readers to read anywhere from five to 25 articles for free before the paywall pops up. The homepage, classified ads and contest listings also usually remain free.
Initially most papers instituting a paywall see traffic decline. But within 12 to 15 months, Borrell notes, traffic has returned to pre-paywall levels.
“I think for the small group of people who are buying access (the vast majority of subscribers are print; online is typically a small fraction), the convenience is worth $3 to $6 per month,” Borrell says.
“You get access to a lot of stuff online in a searchable and interactive format. It’s a different and sometimes better experience for these people than the printed newspaper.”
The initial traffic declines can be blamed largely on web readers angry that the site has gone paid. Most of them eventually return.
“The traffic that ‘comes back’ after a paywall is instituted is typically from the samplers, not the subscribers,” Borrell says.
“From what we’ve seen, the initial drop in traffic is from disgruntled people who probably weren’t hugged enough as children. They wish to punish the evil newspaper by never returning. In a few months, they do anyway.”
Advertisers like the paywall, too, for one simple reason. They are more interested in quality than quantity.
They’d rather reach a small group of people who are likely to buy their product than a large group of people who probably won’t buy it.
In total, Borrell says, newspapers will make a few hundred million dollars off of paywalls this year, or about 2 percent of the industry’s total circulation fees.
That’s not a huge amount, but it’s one of the few growth areas for papers. Within the next three years, it’ll be hard to find a paper that’s not behind a paywall.
“It makes perfect sense,” Borrell says. “The content is valuable, and the ad-supported model just doesn’t work online.”
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