Digital Promise And Reality

Michael Hedges May 6, 2019 Follow on Twitter

Those who study media economics have made interesting discoveries about paywalls, the seemingly indispensible cookie monsters meant to extract cash. Publishers love paywalls, generally, because their shareholders want more money. Readers are less excited, particularly those desiring access to multiple sources.

The headline from a report on paywalls from German media publication W&V (May 6) shows more publishers are delving into even more clever means to hone revenue extraction. Publishing has gone from simply drilling holes into consumer’s pockets to fracking. “Free online media financed only through advertising revenue is gone,” wrote the authors. “What follows is more and more paywalls.”

The authors examined digital publishing across the globe and compared paywall usage in 2014 with 2018. Of those examined, 62% globally had paywalls enabled in 2018, up from 44% in 2014. Geographically, the tilt is to Europe, where 73% of the titles had paywalls, up from 50%. North American paywall usage is unchanged at 56%. Under half of online editions in Asia and Latin America use paywalls; 47% and 40%, respectively.

The recently announced acquisition of legacy Irish publisher Independent News & Media (INM) by Dutch media house Mediahuis is further evidence that the internet is where old publishing traditions go to die. INM, publisher of the Irish Independent and other titles, shunned the paywall. Mediahuis builds them.

Of the three common paywall models - metered (fixed number access), freemium (some material free access, some not) and hard (pay or nothing) - the metered and freemium paywall models were both used by 27% of the titles surveyed in 2018. The difference lies in the trend, such as it may be: use of the freemium model growing from 15% in 2014, the metered model slightly in retreat. The hard paywall is far less popular, 8% of titles judiciously guarding the gate. But that has risen from 0% in 2014. The no paywall model is quickly losing popularity, according to the W&V report, falling to 38% of the titles surveyed from 56% in four years.

Then there is the “dynamic paywall.” If this sounds vaguely similar to programmatic ad sales, it is. The dynamic paywall uses multiple data points, all collected by cookie bots, to identify people - you, dear reader - and categorize them (us) by likelihood to pay-up. Two publishers identified by the authors - Swiss-German daily Neue Zürcher Zeitung (NZZ) and the Wall Street Journal (WSJ) - classify potential subscribers as hot or not. “The more likely it is that readers will subscribe, the fewer items they will see for free.” “Cold” customers are pitched to advertisers with all that enlightened data.

A different but related study of a sample of European publishing companies was recently reported by Spanish media news outlet Dircomfidential (April 29). Data collected by Digimedios shows a definite and specific north-south digital divide. Media houses based in northern Europe are making far more digital revenue than neighbors to the south. The report does not specifically define the sources of digital revenues, which appear related to platform.

Diversified specialty publishers Wolters Kluwer and RELX, formerly known as Reed Elsevier, top list, taking 77% and 74% of revenues from digital sources. Next is big German publisher Axel Springer, 71% digital. Next are Schibsted, Sanoma and Guardian Media Group, all above 50%. Spanish and Italian publishers fall below 23%. Digital revenues comprise less than 5% for Atresmedia and Mediaset.

The report observed that publishers are more advanced in digital transformation than broadcasters “because the later began the transformation much later.” Publishers were hit first - and hard - by the advertising migration to digital platforms, broadcasting retaining primacy in advertising. This gave big publishers, named above, a reason to explore digital opportunities. Broadcasters, TV mainly, sat back and waited for the media buyers. Then came Netflix.

Guardian Media Group moved into digital platforms quickly. But their primary UK titles - The Guardian and the Observer - continue to resist the paywall trend. Indeed, the Guardian has recently posted a profit, noted Bloomberg (May 1), “in a snub to critics who predicted the demise of any publication that gives its news away for free.” The printed editions continue to be sold at newsstands and through home delivery subscriptions.

But the online effort is supported by paywall-free memberships and contributions from readers, similar to the US public broadcasting model, and ads. About a million folks contribute. The Guardian has 3.3 million readers via the mobile phone, 1.5 million online and 733,000 in print.

See also...

• Hot Topics - Paywalls

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