Restricting access to Internet content via a paid subscription is often called a paywall. Three high level models of paywall have emerged: hard paywalls that allow no free content and prompt the user straight away to pay in order to read, listen or watch the content, soft paywalls that allow some free content, such as an abstract or summary, and metered paywalls that allow a set number of free articles that a reader can access over a specific period of time, allow more flexibility in what users can view without subscribing. Newspapers started implementing paywalls on their websites in the mid-2010s to increase their revenue, which had been diminishing due to a decline in paid print readership and advertising revenue. Academic papers are often subject to a paywall, and available typically to researchers via academic libraries that subscribe.
Paywalls have also been used to increase the number of print subscribers; for example, some newspapers offer access to online content plus delivery of a Sunday print edition at a lower price than online access alone. Newspaper websites such as that of The Boston Globe and The New York Times use this tactic because it increases both their online revenue and their print circulation (which in turn provides more ad revenue).
Creating online ad revenue has been an ongoing battle for newspapers – in 2011 an online advertisement brought in only 10–20% of the funds brought in by an identical print ad. It is said that "neither digital ad cash nor digital subscriptions via a paywall are in anything like the shape that will be needed for [newspapers] to take the strain if a print presence is wiped away." According to Poynter media expert Bill Mitchell, in order for a paywall to generate sustainable revenue, newspapers must create "new value"—higher quality, innovation, etc.—in their online content that merits payment which previously free content did not. Most news coverage of the use of paywalls analyzes them from the perspective of commercial success, whether through increasing revenue by increasing print subscriptions or solely through paywall revenue. However, as a solely profit-driven device, the use of a paywall also brings up questions of media ethics pertaining to accessible democratic news coverage.
The Wall Street Journal set up and has continued to maintain a "hard" paywall. It continued to be widely read, acquiring over one million users by mid-2007, and 15 million visitors in March 2008.
In 2010, following in the footsteps of The Wall Street Journal, The Times (London) implemented a "hard" paywall; a decision which was controversial because, unlike The Wall Street Journal, The Times is a general news site, and it was said that rather than paying, users would seek the information without charge elsewhere. The paywall was deemed in practice to be neither a success nor a failure, having recruited 105,000 paying visitors. In contrast The Guardian resisted the use of a paywall, citing "a belief in an open Internet" and "care in the community" as its reasoning – an explanation found in its welcome article to online news readers who, blocked from The Times’s site following the implementation of their paywall, came to The Guardian for online news. The Guardian since experimented with other revenue-increasing ventures such as open API. Other papers, prominently The New York Times, have oscillated between the implementation and removal of various paywalls. Because online news remains a relatively new medium, it has been suggested that experimentation is key to maintaining revenue while keeping online news consumers satisfied.
Some implementations of paywalls proved unsuccessful, and have been removed. Experts who are skeptical of the paywall model include Arianna Huffington, who declared "the paywall is history" in a 2009 article in The Guardian. In 2010, Wikipedia co-founder Jimmy Wales reportedly called The Times's paywall "a foolish experiment." One major concern was that, with content so widely available, potential subscribers would turn to free sources for their news. The adverse effects of earlier implementations included decline in traffic and poor search engine optimization.
Paywalls have become controversial, with partisans arguing over the effectiveness of paywalls in generating revenue and their effect on media in general. Critics of paywalls include many businesspeople, academics such as media professor Jay Rosen, and journalists such as Howard Owens and media analyst Matthew Ingram of GigaOm. Those who see potential in paywalls include investor Warren Buffett, former Wall Street Journal publisher Gordon Crovitz, and media mogul Rupert Murdoch. Some have changed their opinions of paywalls. Felix Salmon of Reuters was initially an outspoken skeptic of paywalls, but later expressed the opinion that they could be effective. A NYU media theorist, Clay Shirky, was initially a skeptic of paywalls, but in May 2012 wrote, "[Newspapers] should turn to their most loyal readers for income, via a digital subscription service of the sort the [New York Times]"  Paywalls are rapidly changing journalism, with an impact on its practice and business model, and on freedom of information on the Internet, that is yet unclear.
The "hard" paywall, as used by The Times, requires paid subscription before any of their online content can be accessed. A paywall of this design is considered the riskiest option for the content provider. It is estimated that a website will lose 90% of its online audience and ad revenue only to gain it back through its ability to produce online content appealing enough to attract subscribers. News sites with "hard" paywalls can succeed if they:
Many experts denounce the "hard" paywall because of its inflexibility, believing it acts as a major deterrent for users. Financial blogger Felix Salmon wrote that when one encounters a "paywall and can’t get past it, you simply go away and feel disappointed in your experience." Jimmy Wales, founder of the online encyclopedia Wikipedia, argued that the use of a "hard" paywall diminishes a site's influence. Wales stated that, by implementing a "hard" paywall, The Times "made itself irrelevant." Though the Times had potentially increased its revenue, it decreased its traffic by 60%.
The "soft" paywall is best embodied by the metered model. The metered paywall allows users to view a specific number of articles before requiring paid subscription. In contrast to sites allowing access to select content outside the paywall, the metered paywall allows access to any article as long as the user has not surpassed the set limit. The Financial Times allows users to access 10 articles before becoming paid subscribers. The New York Times controversially implemented a metered paywall in March 2011 which let users view 20 free articles a month before paid subscription. In April 2012 New York Times reduced the number of free articles per month to 10. Their metered paywall has been defined as not only soft, but "porous," because it also allows access to any link posted on a social media site, and up to 25 free articles a day if accessed through a search engine. The model is designed to allow the paper to "retain traffic from light users", which in turn allows the paper to keep their number of visitors high, while receiving circulation revenue from the site's heavy users. Using this model The New York Times garnered 224,000 subscribers in the first three months. While many proclaimed The New York Times' paywall a success after it reported a profit in the third quarter of 2011, the profit increase is said to be “ephemeral” and “largely based on a combination of cutbacks and the sale of assets.” Though the success of a metered paywall would create revenue for the newspaper and increased freedom for the public, the profitability of the metered model has yet to be sufficiently proven.
A "softer" paywall strategy includes allowing free access to select content, while keeping premium content behind a paywall. Such a strategy has been said to lead to "the creation of two categories: cheap fodder available for free (often created by junior staffers), and more 'noble' content." This type of separation brings into question the egalitarianism of the online news medium. According to political and media theorist Robert A Hackett, "the commercial press of the 1800s, the modern world’s first mass medium, was born with a profound democratic promise: to present information without fear or favour, to make it accessible to everyone, and to foster public rationality based on equal access to relevant facts.".
The Boston Globe implemented a version of this strategy in September 2011 by launching a second website, BostonGlobe.com, to solely offer content from the paper behind a hard paywall, aside from most sports content, which was kept open to compete against other local sports websites. BostonGlobe.com operates alongside a second, pre-existing news website Boston.com, which now only contains a limited amount of content from the subscription website on a delay, but carries a larger focus on community-oriented news. The Boston Globe editor Martin Baron described them as "two different sites for two different kinds of reader – some understand [that] journalism needs to be funded and paid for. Other people just won't pay. We have a site for them." By March 2014 the site had over 60,000 digital subscribers; at that time, the Globe announced that it would replace the hard paywall with a metered system allowing users to read 10 articles without charge in any 30-day period. The Boston Globe editor Brian McGrory believed that an ability to sample the site's premium content would encourage more people to subscribe to the service. At the same time, McGrory also announced plans to give Boston.com a more distinct editorial focus, with a "sharper voice that better captures the sensibilities of Boston", while migrating other content by Globe writers, such as blogs from Boston.com to the paper's website, but keeping them freely available.
Professional reception to the implementation of paywalls has been mixed. Most discussion of paywalls centers on their success or failure as business ventures, and overlooks their ethical implications for maintaining an informed public. In the paywall debate there are those who see the implementation of a paywall as a "sandbag strategy" – a strategy which may help increase revenue in the short term, but not a strategy that will foster future growth for the newspaper industry. For the "hard" paywall specifically, however, there seems to be an industry consensus that the negative effects (loss of readership) outweigh the potential revenue, unless the newspaper targets a niche audience.
There are also those who remain optimistic about the use of paywalls to help revitalize floundering newspaper revenues. Those who believe implementing paywalls will succeed, however, continually buffer their opinion with contingencies. Bill Mitchell states that for a paywall to bring new revenue and not deter current readers, newspapers must: "invest in flexible systems, exploit their journalists' expertise in niche areas, and, crucially, offer readers their money's worth in terms of new value." The State of the News Media's 2011 annual report on American journalism makes the sweeping claim that: "[t]o survive financially, the consensus on the business side of news operations is that news sites not only need to make their advertising smarter, but they also need to find some way to charge for content and to invent new revenue streams other than display advertising and subscriptions." Even those who do not believe in the general success of paywalls recognize that, for a profitable future, newspapers must start generating more attractive content with added value, or investigate new sources of earning revenue.
Proponents of the paywall believe that it may be crucial for smaller publications to stay afloat. They argue that since 90 percent of advertising revenues are concentrated in the top 50 publishers, smaller operations can't necessarily depend on the traditional ad-supported free content model the way that larger sites can. Many paywall advocates also contend that people are more than willing to pay a small price for quality content. In a March 2013 guest post for VentureBeat, Malcolm CasSelle of MediaPass stated his belief that monetization would become "something of a self-fulfilling prophecy: people [will] pay for content, and that money goes back into making the overall content even better."
In April 2013 the Newspaper Association of America released its industry revenue profile for 2012, which reported that circulation revenue grew by 5 percent for dailies, making it the first year of circulation growth in ten years. Digital-only circulation revenue reportedly grew 275%; print and digital bundled circulation revenue grew 499%. Along with the shift towards bundling print and online into combined access subscriptions, print-only circulation revenue declined 14%. This news corroborates a growing belief that digital subscriptions will be the key to securing the long-term survival of newspapers.
General user response to the implementation of paywalls has been measured through a number of recent studies which analyze readers' online news-reading habits. A study completed by the Canadian Media Research Consortium entitled "Canadian Consumers Unwilling to Pay for News Online", directly identifies the Canadian response to paywalls. Surveying 1,700 Canadians, the study found that 92% of participants who read the news online would rather find a free alternative than pay for their preferred site (in comparison to 82% of Americans), while 81% stated that they would absolutely not pay for their preferred online news site. Based on the poor reception of paid content by the participants, the study concludes with a statement similar to those of the media experts, stating, with the exception of prominent papers such as The Wall Street Journal and The Times, that given the "current public attitudes, most publishers had better start looking elsewhere for revenue solutions."
Hackett argues that a "forum on the internet [...] can function as a specialized or smaller-scale public sphere." In the past, the internet has been an ideal location for the general public to gather and discuss relevant news issues – an activity made accessible first through free access to online news content, and subsequently the ability to comment on the content, creating a forum. Erecting a paywall restricts the public’s open communication with one another by restricting the ability to both read and share online news.
The obvious way in which a paywall restricts equal access to the online public sphere is through requiring payment, deterring those who do not want to pay, and barring those who cannot from joining the online discussion. The restriction of equal access was taken to a new extreme when the UK's The Independent in October 2011 placed a paywall on foreign readers only. Online news media have the proven ability to create global connection beyond the typical reach of a public sphere. In Democratizing Global Media, Hackett and global communications theorist Yuezhi Zhao describe how a new "wave of media democratization arises in the era of the internet which has facilitated transnational civil society networks of and for democratic communication." By placing a paywall on their international readers, The Independent hinders the growth and democratic quality of the public sphere created by the internet.
The use of paywalls has also received many complaints from online news readers regarding an online subscriptions' inability to be shared like a traditional printed paper. While a printed paper can be shared among friends and family, the ethics behind sharing an online subscription are less clear because there is no physical object involved. The New York Times' "ethicist" columnist, Ariel Kaminer, addressing the question of sharing online subscription, states that "sharing with your spouse or young child is one thing; sharing with friends or family who live elsewhere is another." The reader comments following Kaminer's response focus on the dichotomy between paying for a printed paper and paying for an online subscription. A printed paper's ease of access meant that more individuals could read a single copy, and that everyone who read the paper had the ability to send a letter to the editor without the hassle of registering or paying for the subscription. As such, the use of a paywall closes off the communication in both the personal realm and online. This opinion is not just held by online news readers, but also by opinion writers. Jimmy Wales comments that he "would rather write [an opinion piece] where it is going to be read", declaring that "putting opinion pieces behind paywalls [makes] no sense." Without easy access to both read and share insights and opinions, the online news platform loses an essential characteristic of democratic exchange.
The use of a paywall to bar individuals from accessing news content online without payment, brings up numerous ethical questions. According to Hackett, media are already "failing to furnish citizens with ready access to relevant civic information." The implementation of paywalls on previously free news content heightens this failure through intentional withholding. Hackett cites "general cultural and economic mechanisms, such as the commodification of information and the dependence of commercial media on advertising revenue" as two of the greatest influences on media performance. According to Hackett, these cultural and economic mechanisms "generate violations of the democratic norm of equality." Implementation of a paywall addresses and intimately ties the two mechanisms cited by Hackett, as the paywall commodifies news content to bring in revenue from both readers and from increased circulation of printed paper’s ads. The result of these mechanisms, as stated by Hackett, is an impediment to "equal access to relevant [news] facts." The commodification of information–making news into a product that must be purchased–restricts the egalitarian founding principal of the newspaper. Editor’s Weblog reporter Katherine Travers, addressing this issue in a post discussing the future of The Washington Post, asks, "is digital subscription as permissible as charging a couple of dollars now and then for a paper copy?" While subscription fees have long been attached to print newspapers, all other forms of news have traditionally been free. The UK's Daily Mail argues that print revenue is unique because "people pay for the convenience of print in recognition of the special cost of production and delivery of a tangible product and because they purchase it whole." Online news, in comparison has existed as a medium of free dissemination. Poynter digital media fellow Jeff Sonderman outlines the ethical tension created by a paywall. Sonderman explains that "[t]he underlying tension is that newspapers act simultaneously as businesses and as servants of the public’s interest. As for-profit enterprises, they have the right (the duty, even) to make money for shareholders or private owners. But most also claim to have a social compact, in which they safeguard the entire public interest and help their entire community shape and understand its shared values." By implementing a paywall before experimenting with other revenue-increasing initiatives, a newspaper arguably puts profit before the public.
While there has been little coverage and discussion of the ethical implications of the paywall regarding newspapers' obligation to maintain a generally informed public, there are two prominent instances where companies have addressed the restriction of online news coverage. First is the removal of paywalls in the face of breaking news (news covering national or local emergencies). Second is Google’s "First Click Free" application, which news providers can implement if they wish to make news stories of interest accessible to readers regardless of a paywall.
Some newspapers have removed their paywall from blocking content covering emergencies. When Hurricane Irene hit the United States' east coast in late August 2011, The New York Times declared that all storm related coverage, accessed both online and through mobile devices, would be free to readers. The New York Times' assistant managing editor, Jeff Roberts, discusses the paper's decision, stating: "[w]e are aware of our obligations to our audience and to the public at large when there is a big story that directly impacts such a large portion of people." In his article discussing the removal of paywalls, Soderman commends The New York Times' action, stating that, while a publisher "commits to a paywall as the best business strategy for his news company, there may be some stories or subjects which carry such importance and urgency that it is irresponsible to withhold them from nonsubscribers." While creating holes in a paywall demonstrates an ethical conscience, it also suggests that The New York Times does not believe they have "an obligation to their audience" to provide in-depth coverage (beyond the limits of their paywall) on subjects other than natural (or even major man-made) disasters.
Given the overwhelming opinion that, regardless of paywall success, new revenue sources must be sought out for newspapers' financial success, it is important to highlight new business initiatives. In addition to erecting paywalls, newspapers have been increasingly exploiting tablet and mobile news products, the profitability of which remains inconclusive. Some newspapers have also embraced targeting niche audiences, such as the Daily Mail's Mail Online in the UK. Another strategy, pioneered by The New York Times, involves creating new revenue by packaging old content in e-books and special feature offerings, to create an appealing product for readers. The draw of these packages is not just the topic but the authors and the breadth of coverage. According to reporter Mathew Ingram, newspapers can benefit from these special offerings in two ways, first by taking advantage of old content when new interest arises, such as an anniversary or an important event, and second, through the creation of packages of general interest. The New York Times, for example, has created packages on baseball, golf and the digital revolution.(ebooks)
An open API (application programming interface) makes the online news site "a platform for data and information that [the newspaper company] can generate value from in other ways." Opening their API makes a newspaper's data available to outside sources, allowing developers and other services to make use of a paper's content for a fee. The Guardian, in keeping with its "belief in an open internet", has been experimenting with the use of API. The Guardian has created an "open platform" which works on a three level system:
While an open API is regarded as a gamble just like a paywall, journalist Matthew Ingram ethically notes that the use of an open API aims at "profiting from the open exchange of information and other aspects of an online-media world, while the [paywall] is an attempt to create the kind of artificial information scarcity that newspapers used to enjoy." An open API keeps news content free to the public while the newspaper makes a profit from the quality and usefulness of its data to other businesses. The open API strategy can be commended because it takes the pressure off of the news room to continually investigate and explore new means of revenue. Instead, the open API strategy relies on the interest and ideas of those outside the newsroom, to whom the site's content and data are attractive.
The Wall Street Journal was for a time the last major newspaper in the US to still have its website behind a paywall, until The New York Times reinstituted one on 28 March 2011. The Journal has almost one million paying online readers.
Recent extensions include the idea of a "soft" paywall, one that is relatively porous, with The New York Times version noted as "so porous that it can be considered to be a genuinely freemium model." In such cases the difference between a paywall and a Freemium model disappears.
In the UK, MoneyWeek started using a paywall in 2005. Now 60% of the magazine content stays behind the subscriber paywall for one month. This includes cover stories and in-depth articles. Managing Director Toby Bray says they are keen to emulate the FT.com model which gives access to a certain number of articles per month across the entire site.
No wonder Rupert Murdoch's in no hurry to do away with The Wall Street Journal's online paywall. Even with it still in place around large sections of the site, traffic is still growing at a most impressive rate.
These indirect readers, unable to get access to articles behind the paywall and less likely to pay subscription fees than the more loyal direct users, were seen as opportunities for more page views and increased advertising revenue.