Online news gradually shifts away from free content and towards pay models

Credit: Photo by NeONBRAND on Unsplash

It is a question that every managing director wants the answer to: how do we make enough money to keep our newsrooms open and journalists in jobs?

It is a much more pressing question for online news outlets reeling from the impacts of declining digital advertising revenue. For online publishers, be that digital-born news sites or newspapers and TV news with their digital offerings, it is a key concern.

From freemiums to memberships, news organisations have employed a range of pay models to increase other revenue streams and, as a result, free content models seem to be falling out of favour.

That is at least what recent research by The Reuters Institute for the Study of Journalism (RISJ) found, showing that online news organisations are shifting, albeit gradually, away from free content in favour of a variety of pay models.

"Pay models are increasing but they are not sky-rocketing," said Felix Simon, research assistant, RISJ, author of Pay Models for Online News in the US and Europe: 2019 Update.

Simon looked at the pay models of 212 leading news organisation across Finland, France, Germany, Italy, Poland, UK and the US. He found that 69 per cent of newspapers operate some form of pay model (freemium, metered paywall, or hard paywall).

It is not, however, the level of change nor the potency that Simon would have expected had you asked him two years ago, when the first study came out. The figure in 2017 was 64.5 per cent.

"It’s a continuation of the fact that our business models don’t work any longer; we still see the decline in print, and the decline in advertising revenue going to the big tech companies - Facebook, Google and now increasingly Amazon.

"Media organisations have to find money somewhere if they want to continue operating, and pay models are probably one of the easiest ways to do that. If you put content behind a paywall, it scares away the free-riders and entices people to pay if the content is good enough."

In some cases, like with Polish business newspaper Puls Biznesu, they made the reverse switch from a hard paywall to a metered one. Simon sees this as an effort to expand its reader base.

Still, the online space has, to some extent, raised the expectancy of news being free. Across all media types and countries in this study, more than half of news organisations (52.5 per cent) are publishing free content, dominating digital output from TV news outlets and digital-born publishers.

It might then not come as a shock that middle-ground options are also becoming popular, with freemium models (23.5 per cent) and metered paywalls (20.7 per cent) closely behind. Conversely, cases of hard paywalls are rare to come by at less than three per cent.

"Freemiums gives you a good balance between getting people to pay for certain content and not affecting reach too much, especially if it is high-quality content, because that usually has the reach to allow people to come to your site and find free content," Simon explained.

"They are usually a good compromise and still allow you to make some money through content which is paywalled."

From his point of view, this shows that audiences are willing to pay for news, buoyed by other RISJ studies citing increased audience willingness to pay for news, and the strides made by voluntary pay models, chiefly the Guardian.

But with nearly all digital-born media outlets offering free content (94 per cent), he indicates that the issue could lie with the editorial side instead.

"Part of the reason why digital-born would probably find it harder to charge for news is that there is a question of whether it's unique or is it good journalism? You can only introduce pay models if you have something nobody else does.

"So for a regional newspaper, they might have the only reporters in the field, so they are monopolists. But if you can find the same thing on BuzzFeed, Vice and Huffington Post, it’s really hard to convince people to pay for your content.

"Digital-born media has to make the case that their content is worth paying for and I’m not sure they can do that at the moment."

In that digital-born bracket is BuzzFeed and BuzzFeed News. That distinction, he said, is evidence alone that they are trying to make their journalism stand-out from their competitors.

However, he remains unconvinced that digital-born media can continue to offer news for free, pointing to the recent layoffs and jobs cuts.

"I’m personally wondering how much longer they can continue to offer news for free. They are probably afraid of scaring away people if they suddenly say ‘By the way, this is now paid for’, at the moment they are wary of going down that route.

"They are clearly under pressure and they have to do something. At the moment, in 2019, they are predominantly free, but personally I’d be hesitant to say this will continue for much longer. I’d expect digital-born to go down the pay models route.”

As one example, amidst dwindling advertising revenue, US online business news site Quartz has introduced a metered paywall last month. It asked readers to sign up for Quartz Membership after reading a tailored-number of articles.

Jay Lauf, publisher & co-CEO of Quartz, said they were simply buying their time to build up a loyal following before introducing the membership, a far cry from hesitating out of fearing audience drop-off.

"We still believe in access. But we have also talked for a while now about going beyond advertising revenue and I believe we’re at a point in time, maybe more than ever, where readers understand the value of and are interested in supporting quality journalism," he said.

"We want to be able to continue to invest and expand our offering, and all of these things work together. We still have a successful advertising business, particularly around expansive Quartz Partnerships that bring in elements beyond just ad units. So we are diversifying, not shifting.

"The success of membership so far has given us confidence that we can have a paywall that still allows for free usage and discovery but generates revenue from readers who value what we provide them."

Clarification: The 2017 study does not use US organisations and as such reports that 66 per cent of newspapers in the six EU countries studied operate a pay model. The 2019 study reports this as 64.5 per cent as an average figure.

Free daily newsletter

If you like our news and feature articles, you can sign up to receive our free daily (Mon-Fri) email newsletter (mobile friendly).