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by Stephen Logan on 29th March 2010
The writing has been on the wall for some time. The Times is going to become the first mainstream daily newspaper to fall behind an online paywall. So is this the beginning of the end for free content?
For too long we’ve all been too accepting of free online content. We have become acclimatised to picking and choosing what we read and where we read it. Subsequently the world of print journalism has crumbled. The Independent was sold for a miserly pound to ex-KGB spy Alexander Lebedev [Independent titles sold to Lebedev family company | The Independent], the very same man who took over the Evening Standard and made it free [Evening Standard to be free paper | BBC].
So whilst Lebedev looks to make money from free content in the printed press, Rupert Murdoch is looking to do the exact opposite. From June, The Times’ online content will be held behind the virtual bricks and mortar of the News International’s paywall. For just £2 a week or £1 a day, readers can access content that is currently free.
Leaving the tongue-in-cheek commentary to one side for a moment, this is an important step in the way we access news and monetise online content. The FT here and New York Times in the US are just two of the newspapers to have already adopted Paywall filtering for their online stories. They haven’t really suffered as a consequence.
Speciality News Content Vs ‘Normal’ News
However, will the comparatively non-specialist Times be as lucky? They might have their fair share of quality journalists and break news with regular frequency, but will people really be prepared to pay for content that they can access The Independent, The Guardian, The Telegraph, BBC, Sky (appreciating the slight irony of the latter) and any number of other specialist online resources for free?
Murdoch is no fool. He will have done his research and worked out the figures. Understandably the website will suffer as a consequence; traffic will fall away and strength will be lost as inbound links dwindle. The calculated gamble though is that the loss in revenue from advertising will be less than the profits made from subscriptions.
On the Times website, editor James Harding toes the party line [The Times and The Sunday Times to charge for use of websites from June | The Times]. Harding believes that they have, for some time, been suggesting to their readership that they “really value the quality of our journalism, but online, we think it’s worthless.” But surely content online isn’t free.
Monetising Online Content
News content online, as with most other sectors (take search, social media and most blogs) is funded. It is funded by advertisers. Facebook would have imploded under its own weight if it wasn’t getting significant revenue from wealthy backers and a healthy advertising network. Google would be a tiny fraction of what it is now if it weren’t for their AdSense and AdWords income.
We don’t pay a penny to use Facebook or Google, yet they are the two most widely accessed sites in the world. They have found a way, albeit with Facebook taking some time to find its feet [see: Facebook Now Cash Positive and Profits Are in Sight], to monetise without charging regular users [note: Google does have paid services, Google Apps for instance, as a source of income]. What makes news content any different?
As you can see from the graphic above, The Times’ site isn’t shy of advertising a few products and services. There are no fewer than nine sponsored adverts on this single page (that I counted). This is backed up by classifieds and even Google AdSense beneath the comments. All of this will generate Income.
The Times, being a high traffic and well regarded website, will be able to source advertisers prepared to pay premium prices for each click. If they were to lose a significant chunk of that traffic, would they also lose their attractiveness to sponsors?
The BBC Issue: Will Paywalls Work When Content is Available for Free?
To succeed, News International need to find some brothers in arms. Selling content in an otherwise free market is a risky strategy. If the Guardian, Mail and Telegraph (also the three most popular online newspaper sites) were to follow suit, then perhaps the paywall could work.
But there will always be some that buck the trend. The most dangerous of which, to all newspapers, is the BBC. Free from advertising, free to use and the biggest source of online news. They might be downsizing operations, but the BBC is an online force that has done more to make others think twice about introducing paywalls.
Removing Content from Google: A Step too Far?
Another gamble for the Times is the proposed removal of their content from Google [see: What to Look Out For in the World of Search in 2010]. Rightly or wrongly, News International see the search giant profiting from their free content through hosted advertising. They have had provisional discussions about an exclusive deal with Microsoft; a company who have just under 3% of the search engine market share in the UK, albeit that figure comes to almost 9% when including Yahoo [see: Search Engine Market Share Statistics - March 2010].
As already established, the Times actually feature Google AdSense on their site. This obvious has a slight waft of irony. Because not only are they taking revenue from Google, they are also allowing them to profit directly from the site. Putting that to one side though, search engines are an exceptional source of traffic for any website. Therefore, removing a site that could already be losing some regular visitors from the World’s most popular search engine, might prove a gamble too far.
The major issue is that if the level of journalism has been diminished by providing content for free online, as it has been claimed, then it has to be proven that paid sites are able to redress the balance. This is just one of the many challenges that The Times faces from June onwards.
The world of print journalism is facing tough times. All publications are looking for new ways to keep their businesses operational. One way or the other, News International are being pioneers in the UK. But will paywalls really provide the long-term solution? Well, only time will tell.