Paywall Systems Erecting Financial Barriers Around News Sources

paywallPaywall systems are erecting financial barriers around news sources, limiting access to information on the basis of the consumer’s ability to pay. News periodicals, which now includes everything from the daily New York Times to the monthly Rolling Stone, are considered a primary, “quotable” source for information about public events based upon the original reporting published under the names of respected reporters.The ability to access this material is being impaired by the implementation of  “pay to play”  utilities designed to extract fees from website visitors.

A “paywall” puts a user name and password between the visitor and the website. Visitors have to pay for a subscription to access the site. That sounds innocuous enough, but the rapid spread of paywall barriers across the internet is making it more and more difficult for researchers to gain access to data on newspapers, news magazines, and scholarly journals.

There are several different paywall models. Rupert Murdock’s London Times has a hard paywall, that requires an upfront payment for any access at all. The Times of London expects to make $60 million from the pay wall this year, reversing a previous $10 million loss.

The New York Times, which charges anywhere from $11 to $35 a month for digital access, is already making $160 million a year from its paywall. The company is now re-branding the website as “NYT Now,” adding more levels to the paywall, lowering the price to $8 and restricting visitors to certain sections of the website, such as the food and opinion spaces.

The Boston Globe, formerly owned by The New York Times, has ditched the hard paywall for a metered pay wall such as the Times is now using, which allows visitors up to 10 articles a month before the pay wall goes up. Unlike the NYT paywall, the Globe pay wall will allow visitors who link to stories by referral or through social media unlimited access to articles.

This monetization process is a last gasp effort by mainstream periodicals to resurrect themselves from financial ruin resulting from decreasing readership, lower advertising rates, and decreasing number of ads per issue. Defenders of the practice point out that it costs a lot of money to gather the news the periodical sell as their stock in trade, and publications like the Times have to find a way to make money from their reporting or go out of business altogether.

There are two theories of monetization One theory is that websites gain more advertising revenue from the “free for all” approach. The other theory is that the pay wall model generates instant revenue, but it also generates higher advertising rates because advertisers are willing to pay more for access to readers who are willing to pay for access to a website.

Websites belonging to broadcast news media such as CNN, MSNBC and Fox are not protected by a paywall, and the information on those sites remains free of charge…but that may change, too. Latest statistics indicate that advertising revenues have fallen drastically at all of the news channels, in direct response to falling viewership figures.

Speculation about the fall-out points to the problem of information saturation. The 24  hour news cycle forces news channels to constantly repeat the same top news stories hour after hour, whether or not there have been any further developments. The continual reiteration of the same stories is turning viewers off in droves. The obviously slanted news coverage, conservative for Fox and increasingly liberal for the other news channels, has polarized the market to the point where Fox viewers never watch anything else, and people who watch the other networks never watch Fox.

This polarization has allowed each camp to present progressively more slanted news stories cut to reflect the prejudices of their audiences, and the polarization of the audiences is allowing the respective political parties to put their money where their constituents are by spending their advertising budgets on the outlets that are most likely to attract their voters.

The erection of paywalls by outfits like the Times and the Globe is a tacit admission that old guard news media cannot make ends meet on income from their advertising revenues from either print or online advertising alone. At the same time, there is ample evidence that “new news media” websites are making ends meet on advertising revenues alone through a combination of editing practices that tailor articles to earn higher rankings on the search engines, and lower operating costs.

Websites that have to generate revenues to support both print and digital cannot show enough of a profit on advertising revenues alone to support both products. The new news media websites, not associated with a print version of their product, have dramatic cost advantages over traditional news media allowing them to survive, and sometimes thrive, on advertising revenues alone.

The question for some social critics is simply, “Where is this going to end up?” There is already a disparity between the earning power of people who have access to the internet and people who do not . Research indicates that having access to the internet at home leads to better job prospects, less unemployment, higher grades in school, and a more rounded individual.

The imposition of paywalls around websites that provide more or less objective reporting of breaking stories, as well as in-depth coverage of complicated news events, is creating another class division on the internet, between those who access to all of the information on the internet, and those who have access to less information, less reliable information, and less current news because those items are behind the paywalls for which they do not have the passwords.

Paywall systems are erecting financial barriers around news sources to the point where the New York Times might consider changing its motto from “All the News That’s Fit to Print” to “All the News You Can Afford to Buy.”

By Alan M. Milner

Sources:

Columbia Journalism Review
Columbia Journalism Review
Media Post

One Response to "Paywall Systems Erecting Financial Barriers Around News Sources"

  1. Phil Cooper   March 13, 2014 at 4:24 pm

    Perhaps it is time for the old Dinosaur Media to shuffle quietly into the night. Most of them have been presenting slanted news for a long time, even before the advent of the Internet, so losing them will be — well, no loss at all. The reason they’ve been losing readership and revenue at an accelerated rate in the last 20 years isn’t because of the Internet; it’s because of the disservice they’ve been rendering to their readers.

    Reply

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