Knowledge Bridge

Global Intelligence for the Digital Transition

Paid Content: Myriad models but metered is the rising star

For years, the debate of paid content versus “free” advertising-based models of paying for journalism raged on. It was a binary debate of extremes, and neither extreme has proven successful.

The divide between the extreme approaches is illustrated perfectly in the UK, where the main protagonists in this bitter battle are Rupert Murdoch, owner of The Times, and Alan Rusbridger, editor of The Guardian. Murdoch grumpily put The Times behind a true paywall, putting all of the newspaper’s content out of reachReach1) unique users that visited the site over the course of the reporting period,…

At The Guardian, Rusbridger continues to champion “open journalism”, although when he uses the term, he is speaking about an editorial strategy of embracing social media and audience engagement, rather than a commercial strategy. In an interview with GQ, Rusbridger said, “We just have to work out how to make money out of it.” As an editorial strategy, it has garnered much praise, but as a commercial strategy, Rusbridger’s open journalism is proving far less successful. In July, The Guardian announced £44.2m in losses. The Guardian is seeking to eliminate about 100 positions to stem these losses.

Neither of these extremes – Murdoch’s fortress paywall nor Rusbridger’s open journalism – have answered the industry’s woes. Juan Señor, a visiting fellow in news media at Oxford University and partner at Innovation Media Consulting, told the Economist’s Intelligent Life magazine:

There are Talibans on each side and that’s what is hurting the industry. Both extremes are wrong because they do not make money – the Times with its paywall and the Guardian being free. The truth is somewhere in the middle.

Multiple models, but one emerging leader

Many of the models are hybrids, offering some content for free while charging audiences for other content. Here is an overview of the different hybrid paid content models, showing the range and nuance of the models that have developed.

Free on web, paid on mobile – Even leading advocates for free content on the web, the Washington Post and The Guardian, do charge for mobile and tablet apps. It is not clear that that these generate meaningful revenue, but it does show that most companies are operating somewhere between the poles of entirely free and entirely paid.

Freemium – The term freemium is a combination of the words free and premium because in this hybrid approach, either editors choose which content is free and what is behind the paywall, or different kinds of content are free or premium. For instance, at the Slovakian weekly newsmagazine Týždeň, content from the magazine and premium video content is only available to subscribers of the Piano national paid content scheme. Posts written by their bloggers and non-premium video content is available for free. Even The Wall Street Journal, which is often held up as an example of a hard paywallHard paywallHard paywall (as used for example by The Wall Street Journal), requires paid…Free/closed hybrid networks – Indeed, The Wall Street Journal network uses this model. The Wall Street journal isn’t a single site but actually a network of sites which operate a range of digital revenue strategies. The Journal itself uses the freemium modelFreemium ModelA type of business model that works by selling basic services, or a basic…Metered – This model allows casual readers to read some content for free, but then asks readers to pay after they have read their monthly allowance. This is the model the Financial Times has used for years, and this was the model that the New York Times chose.

The New York Times also allows “unrestricted access to browse the home pageHome pageThe page designated as the main point of entry of a Web site (or main page) or…

The New York Times has raised its print cover price as it has rolled out its digital paid content strategy. Kannan Venkateshwar, an analyst for Barclays, recently told Bloomberg, “The increase in circulation revenues from the (The New York Times) digital paywall is now meaningful enough to offset the decline in print advertising.”

Metered strategy proving successful

It is no wonder that the metered strategy has become one of the most popular paid content strategies. In Hong Kong the South China Morning Post, which has long kept its content behind a paywall, recently announced that it was shifting to a metered paywall.

The appeal of the hybrid and metered models is that they address one of the long-standing issues with paid content strategies, including an early and aborted paid content project at the New York Times. Before these hybrid models, the discussion was largely one of a closed paywall system versus an open website. Critics of the closed paywall system said that any gain in subscription revenue would be offset by a loss in advertising revenue as the paywall cut into traffic volumes. Critics also thought traffic would be further reduced by cutting off sites from search engines and social sharing.

The metered model seems to address this issue, especially at the New York Times where they allow people to see more pages if they come from social media and search engines. The metered model doesn’t prohibit access to casual consumers of your digital content, but it does ask loyal users to pay for a service they value. Whether this would work was one of the most contentious issues of debate when metered paywalls were first being introduced.

The result has been that traffic to the New York Times is “broadly unchanged” after the introduction of its paid content strategy in March 2011, according to paidContent. Press+, a paid content services provider in the US, has long advocated the metered model adopted by the New York Times and now has more than 300 publishers using its services. Newspaper business analyst Ken Doctor, writing at Harvard’s Nieman Lab site, said that Press+ has found:

Allowing 10-20 free articles a month has meant that traffic loss has been minimal; given the near-infinite amount of digital ad inventory, such traffic loss has had practically no effect on digital ad sales.

Print and the ‘all access’ subscription

As Juan Señor says, success with a paid content strategy lies somewhere in the middle, not in the fundamentalist extremes of paid versus free or print versus digital.

The New York Times and several other newspapers adopting the metered paid content strategy have also linked their digital subscription to their print subscription strategy. Subscribers to the New York Times get an all-access digital subscription, access on the web, mobile, smartphone and tablet, and the New York Times has seen an increase in people buying a Sunday subscription, one of its least expensive subscription options.

Success at the New York Times, the Financial Times and the success of Slovakia’s Piano Media national payment scheme has encouraged local and regional publishers as well as national and international media brands to adopt paid content strategies. Gannett, one of the largest media groups in the US, began rolling out a metered paid content strategy earlier this year to 80 of its local print titles. Depending on the market, audiences can access between 5 and 15 articles per month before being asked to subscribe. Gannett has implemented a similar strategy to the New York Times and Financial Times. It has increased the cover price for its print titles, rolled out print-digital bundles and metered paywalls.

In its most recent results, Gannett said that circulation revenues were up despite continuing declines in print circulation, and CEO Gracia Martore said that the company was on track to increase circulation revenues by $100m by the end of 2013. Poynter Institute’s Rick Edmonds said, “With an assortment of freestanding digital businesses as well, Gannett is moving gradually away from lopsided dependence on print advertising.”

These new hybrid paid content models, with metered paywalls leading the way, are starting to shift news organisations away from their reliance on print as well as their reliance on advertising, and away from the fractious and fruitless paid versus free debate, towards a more sustainable future.

Article by Kevin Anderson

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