Untangling the Web: News shouldn’t be free - Part 1

While it’s understandable that readers are loath to pay, there’s more here to be gained than lost.

January 23, 2012 10:47
Online shopping

Online shopping 311. (photo credit: Thinkstock/Imagebank)

This idea has been brewing in my head for while. It’s certainly not an original one and definitely not a popular one: an industry move towards monetizing online news. Not just one individual news outlet, but rather a group decision and implementation; all of the top organizations in a given country getting together and saying, “Right, from January 1, you’re going to need to sign up, and pay a fee to access the news.”

The only positive responses to the idea seem to come from people in the journalism or online content industries. Outside of that, “I’d never pay for online news” is by far the most common response. Then there are snips about “free press” and “freedom of information,” which I struggle to gloss over so I can get onto my point. Which generally starts with: What about cable television? Still okay with the two hundred odd shekels a month you pay for that? And the newspaper subscription your family has kept for the past 30 years – are they just suckers?

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A solid online news industry needs funding. Otherwise we’ll be stuck with an influx of substandard journalism, too many ads and poorly designed signs for years to come. A huge amount of work goes into getting the news online: Editors, journalists, designers and webmasters need to get paid, equipment purchased, such as the servers needed to host sites with hundreds of thousands of visitors every day, and there’s rent, taxes, infrastructure, incidentals and so on. This is a product like any other, despite the fact that it plays a very real public service role.

Somehow, online news content has become something that people have come to feel that they’re entitled to, something that belongs to everyone. It’s as if because the medium is free, or at least not paid for by the direct consumer, then the content should be too. This situation is not sustainable.

There are various models of paywall out there, ranging from the “hard” paywall, which requires subscription before any content is accessed, to combination paywalls which give free access to some content and require payment for other content, and “soft” paywalls, the prime example of which is metered payment.

In recent years, major publications have toyed with attempts at implementing such systems on their websites. Most famously, The Wall Street Journal launched a “hard” paywall in 1997, and has retained it ever since. The Times of London implemented a similar system in 2010, to much controversy as the site is a general rather than specific news site. When the Times launched its paywall, The Guardian posted an article lauding a “belief in open Internet,” in a move to appeal to Times readers who had found themselves blocked by the paywall and gone elsewhere looking for news. Many other sites, including The Jerusalem Post, have toyed with and continue to try out different models.

The main barrier to introducing a paywall is that most individual news outlets, regardless of reputation, can ill afford to take the risk and see what happens. The well-founded fear is that the readers would just go elsewhere – certainly for breaking news, and potentially for opinion, features and analysis as well, a reality which The Guardian enjoyed when the Times launched its paywall.

But a multilateral industry decision would transcend these concerns, unless everyone decided to give up online news altogether, which is highly unlikely, least of all in Israel where an estimated 70 percent of the population is online. Instead, the industry would be making a statement, that online content is worth paying for. That the time and effort and care and professionalism put into such content has value. Internet news over took every other medium last year; the people have spoken, and they agree. Internet news is immediate and it’s mobile, and that’s the name of the game in the 21st century.

The chances of such a move being made in a market like the US, granted, are slim to none – even if the Federal Trade Commission were to allow it. In Israel, however, with the Anti-Trust Authority’s permission, it could be feasible. The market is smaller and arguably more homogeneous, the entire country is suffering from news addiction, and given the current economic climate, any unilateral move to monetize all content would almost certainly see readers going straight to the competition.

As it turns out, a company called Piano Media was thinking roughly the same thing a few years ago, just not about Israel. The Slovakia-based company provides an independent common-payment system for online content providers which essentially functions as a communal paywall. The system aims to “enable publishers to monetize Web content without fear of losing website ad revenue or audience share,” the company’s PR manager David Brauchli told The Jerusalem Post via e-mail.

The Slovakia paywall was launched in May last year, and in the wake of its success, generating over €40,000 in its first month of operations, a second paywall was launched in Slovenia last week. The Slovakian system works in cooperation with nine major publishers and offers over 40 sites and services, and the Slovene package has been put together with nine major publishers including most of the major daily newspapers. The subscriptions for the new paywall in Slovenia seem relatively inexpensive at €1.99 per week, €4.89 per month or €48.90 per year.

Piano CEO Tomáš Bella, a former editor-in-chief of Slovakia’s biggest news portal, told the Post via e-mail last week that after a trial of the system in its home market, Slovenia was chosen as the second country because the media market is “quite different,” giving the company a chance to “test the system in … different conditions and with different services.”

The most interesting part of such a system, in fact, is not that its monetizing online news, but rather that it turns “the news” back into a bundle – like a newspaper or cable television subscription. So in the same way that someone who doesn’t read sports still takes home the back pages of the newspaper, users are paying for access to the whole content package.

While the overall impact of the initiative is hard to analyze after only eight months, Bella told the Post that Slovakian attitudes towards paying for news are slowly shifting. “More and more [people] understand the economic logic behind the payments and begin to accept that not everything on the Internet is free anymore.” He also noted that journalists’ attitudes have been affected by the paywall, as commenters on sites are seen as “paying customers” rather than “just freeloaders.” As such, he said, reporters are taking readers’ opinions more seriously, which he sees as “healthy for journalism, when it is regaining stronger connection with the readers.”

For Tanja Robic, the chief marketing officer of regional Slovenian daily Primorske, the success of the Slovakian model is “promising.” She said that while it’s too early to talk about concrete numbers, the paper is confident that it won’t be long before Slovenians reconcile to the concept of paid online news. “The younger generation of readers is focused on the Internet as a primary information source,” she wrote to the Post. “We believe that paid digital content will be treated and as broadly accepted as printed [content] in the near future.”

Robic explained that Primorske is trying out putting just 10% of its content behind the Piano paywall, mainly exclusive material which is currently only available in the print edition. The content includes regional news, and crime, opinion, sports and lifestyle articles.

The Primorske CMO agreed with the view that a group of outlets taking the leap together – in this case all of the major players in the national market – is a win-win for the industry and for readers. “[The] great benefit is that all major newspaper joined this project simultaneously. For the readers the model has a lot of benefits, mostly in affordable prices and easy access to all other digital editions with only one subscription and the access account.”

In terms of who gets what, it seems like Piano has put together a smart system: 70% of revenue goes to the content providers, with a pro rata system for where the user signed up and where he spends most of his time, and the remaining 30% goes to Piano.

“We found out that the thing that readers like most about the system is that they have access to all the content, but their money goes only to the media that they actually use in a given month, so there is direct connection and they support the ones they like most,” Bella said. “Also this way Piano actually encourages competition between the media while keeping the system as convenient for the user as possible.”

Bella said that in both Slovakia and Slovenia, Piano expects to have “about 1% of the Internet population signed up after one year of operations.”

When asked about plans for the future, Bella replied that Piano is in negotiations with 11 countries, and hopes to launch two or three more countries this year. “I am unable to say which it will be, but our focus for this year will be mainly small to middle-sized European countries,” he wrote.

And what about launching such a system in Israel? Bella said that the country seems like “an ideal market,” citing the points that Israel is “technologically very advanced, yet small and with a single language, not facing direct competition of foreign publishers writing in the same language.”

“We’ve had almost no contacts with Israeli media, yet, but we would be happy to share our experiences if invited, since the country seems fit for exactly our kind of approach,” he added.

In the best case scenario, a news site which unilaterally launches a paywall would have to be prepared to lose the vast majority of its advertising base, in return for getting paid by a small percentage of readers. However, signing up for such a service, or indeed the big players getting together and (legally) introducing a new system, could significantly change the outcome.

The Piano CEO explained that while participating news outlets are not bound by any advertising code, they are rewarded for providing an ad-free version of their site. This way, he said, Piano encourages a decrease in online advertising on news sites, though “each publisher decides for himself if he wants to show ads to paying users or not.”

Media house Delo, which publishes two of Slovenia’s leading newspapers, has decided to make site pages ad-free on the article-level, but not on the site overall. The media house’s head of marketing and PR, Estera Lah Poljak, told the Post, “We do not expect any major changes in advertising. Studies from Piano’s project in Slovakia have shown that reach will not be affected, as only a small number of articles will be put behind the system, thus leaving the regular reader and the advertising market undisturbed.”

She added that the only change to site design would be to position the Piano bar, a requirement for all content behind the paywall.
The fact that the industry would not have to rely on advertising for all of its income would be a massive game-changer. It would mean more freedom in terms of website design, fewer annoying pop-ups and flashing banners, and most important, higher quality content. Outlets would presumably be able to pump more resources to where they’re needed most – staff salaries and modern equipment.
At the moment, anyone can tweet breaking news, upload amateur videos, set up his own news site and call himself a reporter. The industry is desperately lacking regulation, and either a communal payment system or an industry decision would significantly increase accountability. This way, readers would know that they could trust news coming from outlets included in the package.
While it’s understandable that readers are loath to pay for a product which has been free until now, there’s more to be gained here than lost. The monetization of the industry would bring in desperately needed funds to help push the industry up to the next level, and the side effects of proper regulation would ensure ethical conduct that is often lacking on the waves of the Web.

The writer is The Jerusalem Post’s Internet desk manager

Click here to read Part 2

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