Charging for online content is fine

By Gauntlet Editorial Board

The New York Times launched its paywall in Canada on March 17 and started charging for digital content globally as of Monday. While many papers, including The Times, have tried paywalls in the past and taken them down, this is a significant step toward improving many of the problems with the current print news business model. Making users pay for online content is the best chance at fixing the floundering industry.

The newspaper business model has effectively remained stagnant for the last 50 years. Many people love to blame the Internet for the death of the newspaper (and disagree over whether that’s good or bad) but newspapers have witnessed declining sales since the end of the Second World War. American households bought an average of 1.4 newspapers a day in 1947, according to the Newspaper Association of America. The number is currently below 0.5. This has, therefore, been an ongoing problem for quite some time.

But the Internet made the problem much worse. Classified advertising used to account for 30 to 40 per cent of a newspaper’s revenue. Websites like Craigslist and Kijiji– which have destroyed that revenue stream for newspapers– offer the service for free and make it much quicker to search for products.

The final step to destroying the old newspaper business model was taken by the papers themselves. To attract readers who were moving to online content, newspapers began putting their content online for free in the hope of attracting advertising there. It’s well-known that it didn’t work– according to the NAA, online ad revenue accounts for less than five per cent of total ad revenue. Print advertising accounts for up to 80 per cent of newspaper revenue, now that classified no longer contribute much.

It’s unclear, of course, if The New York Times will succeed with charging for online content. They previously had a paywall, but abandoned it in 2007. Some magazines, like The Atlantic, have tried paywalls, but took them down. The Financial Times, a British newspaper, has successfully had a paywall since 2002 and the Wall Street Journal, the American competitor to the Financial Times, was the only major American paper to have a paywall until The New York Times put theirs up this week.

The specifics of each paywall are a business decision and there are certainly different options available. Importantly, the success of a few big papers charging for online content shows that people are willing to pay for online content, provided the quality is high enough and the costs are reasonable.

The various models also show there isn’t one answer to the problem of getting people to pay for online content. Papers will continue to experiment with different variations– including continuing to give away online content.

In addition to the charge for online content is the issue of charging for access with different devices. Most papers with paywalls charge extra to access their content with a smartphone or iPad, increasing the costs to the user. These are some of the issues newspapers will need to refine as time goes on.

There are two main reasons to support paying for online content. It will allow newspapers to abandon the print delivery method. The average paper in America could cut its production costs by more than half by producing solely online content. This is not only good for the environment. It will also enable newspapers to spend more money producing real journalism– in-depth investigating, serious research, overseas bureaus and professional reporters are expensive. Most papers spend only around 15 per cent on paying reporters and editors and most of the other costs go toward print and delivery of the paper. But it’s the reason we need businesses like The New York Times to continue reporting– blogs and amateur reporting aren’t a replacement.

Over the last decade there have been dramatic cuts to newsrooms and many papers have shut down entirely. The Times cut 100 newsroom jobs in 2008 and another 100 in 2009. The Seattle Post-Intelligencer stopped producing print editions in 2009. Closer to home, the Jasper Booster also shut down in 2009, leaving Jasper with only one paper.

The newspaper isn’t dead. It will undergo change and may even stop printing, but only if it succeeds in finding alternative sources of funding.

. . Gauntlet Editorial Board

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