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Talk to any digital publisher these days, and they’ll probably admit they have some sort of paywall strategy in place or are seriously considering creating one. The reality is that, in a world where all the digital advertising dollars are going to Facebook and Google, publishers don’t really have a choice. After all, for a digital media business, there are only two primary ways of monetization: subscriptions and advertising revenue. If advertising revenue is disappearing, then all they have left is the paywall.
Proof of concept for a paywall
Admittedly, the concept of the paywall has had some success stories. Certainly, the nation’s largest publishers – including the New York Times, Wall Street Journal and Washington Post – have had varying degrees of success in training their readers to pay for content. The New York Times, for example, reportedly now derives 20 percent of its revenue from digital-only subscriptions.
Go to any of these big paid content websites, and you’ll probably run across a message like, “You have read 3 of your 10 articles this month.” That’s by design – it’s a way of making the wall “porous” enough for new readers to discover great content, but also solid enough to make some money from loyal readers.
However, just because a few of the top media companies have had some success doesn’t mean that others will. If everyone is charging $5 – $10 per month for their content, do consumers really have the willingness (and the wallet) to pay for several sites per month? Most likely, they’d rather spend that money on a Netflix or HBO subscription.
Paywalls are not the answer
Speaking of HBO, all this talk about a paywall has to remind you of “Game of Thrones” and the wall dividing the North from the army of the undead. The wall has stood for centuries, but winter is coming. And we all know how Season 7 ends by now, right? The wall crumbles in a massive storm of dragon hellfire.
Even publishers, when pressed on the topic, will admit that paywalls aren’t the final solution. They’ve discussed other options for paid content, including the concept of micropayments. Other options include paid live events, affiliate commerce and, get this, paid merchandise from online stores. As anyone who has ever worked in media or publishing knows, those are incremental revenue streams and not anything that is really going to move the dial.
A new business model for media
So what else is there? It’s getting harder and harder to think outside the box, but publishers need to think beyond advertising and subscriptions. We no longer live in a world of media scarcity, and new technological innovations like social networking have forever changed not only what kind of news we consume, but also how we consume it. Add in the mobile revolution, and things get even dicier for publishers. It’s annoying enough to flip past ads in a print magazine, but flipping past ads on a mobile device is downright painful.
The sad reality is that traditional advertiser-funded media as we know it could be doomed to fall. There are a lot of brave men and women in the Night’s Watch guarding the paywall for future generations, but sooner or later, the barbarian hordes and White Walkers are going to break through.