The year of the paywall: a mid-year checkup
In January, The Economist declared 2010 “The Year of the Paywall,” when newspapers would begin veiling all or much of their online content to those without a subscription. (Coincidentally, that link — which displays an article which was originally published in the Economist’s print edition — is behind a subscription paywall.)
Online newspapers struggle to stay affloat
Yesterday The Guardian reported that The Times, which moved to a full-scale paywall system last month, “lost almost 90% of its online readership compared to February since making registration mandatory in June.” Though The Times is making new revenue from the folks who’ve opted to subscribe, that’s still a pretty hefty hit (or rather, loss of hits) for one of the world’s premier newspapers. With such a dive in daily readership, it seems unlikely that The Times would be able to continue charging advertisers the same prices for their ad inventory when these advertisers could easily shift to un-walled sites that can offer more impressions.
In a world where most consumers, especially the so-called digital natives, have been trained to expect free content from even the highest tier publishers, how can newspapers continue to offer their high-value content for free (or at least for prices the public will agree to pay)?
As with print newspapers, the costs that are not covered by online subscriptions are to be made up by (digital) advertising revenues. But Advertising Age reports that, though newspapers still fetch higher prices for ad space than other online publishers, their share of the web’s overall digital advertising spending is shrinking year after year — and this in spite of the fact that overall spending on digital advertising continues to rise.
So what can newspapers do to help increase ad revenues and compete with the aggregation websites and “content farms” that are threaten to win their audiences?
There are many ways that newspapers are attempting to up the ante to compete with these kinds of sites, sometimes including partnering with them for local news coverage. But are newspapers exercising the right muscles when it comes to getting the right prices for their ad inventory? (FYI: In the ad industry both on- and offline, the price of an ad space is calculated in CPMs, or cost per thousand impressions.) The article from AdAge (linked above) suggests that that competing news sites are winning advertisers by taking advantage of the newest digital ad technologies.
“Advertisers are warming to competing news sites because they’re finding a better combination of scale and ad technologies like targeting,” warns Advertising Age. “When Michael Hayes, a former newspaper pro who’s now a digital-media buyer as executive VP and managing director at Initiative, wants to target an auto dealer group’s ads to local consumers actively shopping for cars, he usually goes to big, technologically advanced players.”
To stay in the game, it seems that in addition to exploring new ways of reporting and distributing news, newspapers will need to step up to the digital advertising plate and begin to match their opponents’ interest in cutting-edge digital marketing technologies. With companies like sociomantic offering the possibility to deliver the most relevant ads to best-matched potential buyers, newspapers and other online publishers can benefit from the higher CPMs they can charge for offering a higher-quality audience, and advertisers can benefit from reaching audience members are are more likely to convert.
Which side of the audience line do you fall on?
Are you willing to pay a subscription fee to access high-quality content, or would you rather that online newspapers start showing you ads that are more specifically tailored to your lifestyle and interests? It may take a combination of the two to save the players in this struggling industry, but only time will tell.
