With the prevalence of smartphones and tablets continuing to rise, online publishing is quickly becoming the dominant way writers and print media reach their audiences. As a result, online publishing outlets are beginning to utilize paywalls to ensure that they are not giving their content away for free.
However, many outlets choose to avoid paywalls altogether, and focus on advertising revenue to generate profits.
In this way, it is clear that there are pros and cons to utilizing paywalls, each of which must be carefully weighed in order to determine which is the right fit for an online publisher.
Legitimize the content
To begin, paywalls are an excellent way to legitimize the content being provided, where higher-quality content may be very valuable to a certain audience, and therefore, worth the price of what the publisher asks.
Hamilton Nolan of Gawker.com reported that “sites offering very high quality proprietary longform journalism published on a frequent basis” are ideal candidates for a paywall because the alternative content available online for free is virtually non-existent.
Therefore, when online publishers have a paywall, they are identifying themselves to have content that is not going to be available anywhere else, and to have content that is of a quality deserving of an access fee.
This helps to separate the prestigious news sites such as the New York Times from the “clickbait” sites.
Additionally, using a paywall creates a base of subscribers who are consistently paying an access fee, and thus, are a much more consistent and substantial source of income.
Edmund Lee of Bloomberg.com reported that after the New York Times introduced a paywall to their site, it “now makes more money from readers than advertisers.” They generate 53¢ from readers for every 47¢ it gets from marketers where before that ratio was closer to 80-20 in favor of advertising.
This proves that if an online publisher caters to the demands of the right market, the publisher has created a long-lasting relationship, based on subscriptions, which leads to increased profits.
In this way, the meaningful relationship created by the publisher is the primary way to generate profits, while the advertising can become a supplement.
Paywalls are not only used for newspapers and magazines publishers. Many companies offer services or access to other web content for a fee, for example, music streaming services.
A company selling a product benefits from having the inventory in a physical location that is only made available to the customer after the sale. For businesses focused on the intangible, a way to securely sell access to their site or services is critical to business operations.
Therefore, for a company that does not have tangible inventory needs to have a paywall in order to function as an online business that generates revenue.
It is difficult to convince readers to pay for content when there are countless news sites or similar websites that provide the same content for free. Stories that used to be in magazines and papers that customers had to pay to access are now immediately accessible with a simple Google search.
To put a paywall on content that is available elsewhere just facilitates directing your web traffic to the competition that will offer the content for free, and is no way to generate any profits.
Less advertising revenue
Though paywalls create an easier way to identify a target market, many sites that offer their content for free have discovered that there are greater profits to be had by simply generating web traffic. When online publishers decide not to use a paywall, advertising on their site becomes the main source of revenue
For these publishers, a paywall is detrimental to their bottom line because it detracts from their popularity and visitors to their site. The online publisher, Buzzfeed.com, is an excellent example of how an online publisher can provide free content, while also remaining profitable, primarily due to the way they have combined content with advertising.
Josh Constine of TechCrunch.com reported that Buzzfeed has carefully crafted a way to actually disguise advertising within their legitimate content. He states that Buzzfeed’s method of advertising “helped monetize otherwise free content mediums and could be critical to the future of journalism, even if they’re meant to fool people.”
This is because the effectiveness of merging the content with advertising, to the point that even if an article is explicitly labeled as an ad, the content may be so compelling to the reader that they click on the article anyway.
For sites with heavy traffic, or a large amount of daily visitors, creating web traffic to inflate the price of advertising on their site is a much more worthy of investment than a paywall is.
Paywalls can be hacked
Many online publishers have discovered that there are ways for consumers to get around having to pay to access content. Just a simple Google search leads to thousands of results with detailed descriptions on how to “hack” a paywall.
For a publisher to invest in the paywall, only to have its expensive content made available for free is a huge vulnerability to sites that utilize a paywall that is not adequately securing the content they are trying to protect.
Further, if paid subscribers find out that the content is available for free, they may feel cheated, and even unsubscribe in order to benefit from the hack. This will lead to the exact opposite outcome publishers’ hope for when utilizing paywalls, and it is a risk free sites simply do not ever have to worry about.
For a paywall to be effective, and worth the investment, the paywall needs to be secure.
Altogether, the fundamental argument for an online publisher regarding paywall implementation comes from whether a site wishes to bank on advertising revenue or subscription revenue. For sites with unoriginal content, advertising revenue is really the only option, thus a paywall prohibits the much-needed web traffic that leads to ad revenue.
If the content that is being provided is unique, expensive to create, and catered to a niche market, then a paywall is certainly a beneficial feature that will ultimately prove profitable.
Many sites offer a form of a middle ground where a limited number of free views are permitted before a customer is prompted by a paywall. This, in turn, allows customers to determine the value of the content, and be exposed to something they may be very willing to pay for.
Ultimately, online publishers must find a way to profit off of the content they provide, as such, their content dictates what revenue stream they are able to seek out.