From free to fee: How U.S. dailies decide to use paywalls

Before charging for digital content, doing research seems like good business. It can help publishers learn how particular audiences will react to a transition from free content to paying for content. But a recent study shows that rarely do publishers report doing audience research before making the transition to a paywall.

University of Missouri School of Journalism scholars Mike Jenner, Esther Thorson, and Anna Kim analyzed paywall practices by surveying 416 publishers, or designees such as executive editors, from daily newspapers across the U.S.

Less than three in 10 dailies conducted focus groups, fielded audience surveys, or tested paywalls with a subset of site visitors prior to moving to paid content. Academics, one possible resource for modeling the financial effects of paywalls, were consulted by 15 percent of publishers. The most common practice employed by publishers was to solicit advice from their peers. According to Jenner and his colleagues, 85 percent consulted with other newspapers.

Data Source: Mike Jenner, Esther Thorson, and Anna Kim (2014) "How U.S. daily newspapers decide to design and implement paywalls"

AMERICAN PRESS INSTITUTE

Although seeking input from others in the newspaper industry is useful, audience research can help news organizations make better decisions about pricing, can allow for greater understanding of their particular audience, and can turn the introduction of a paywall into an opportunity to learn more about their readers.

Jenner and his colleagues’ work illustrates precisely what motivated us to start this blog: to feature academic research with relevance to the news industry. This post is the first in a new monthly series. As associate professor of communication studies, assistant director of the Annette Strauss Institute for Civic Life, and director of the Engaging News Project at the University of Texas at Austin, I will be working with the American Press Institute to identify and highlight important news-related scholarly findings. We also hope that this series will spark ideas among academics with an interest in researching the news.

Jenner and his colleagues’ findings, presented in early August at the Association for Education in Journalism and Mass Communication (AEJMC) conference, provide baseline data about the use of paywalls. In 2012, 47 percent of U.S. dailies reported charging for online content. The Missouri survey, conducted between August and October of 2013, found that 70 percent are now doing so. Paywall use seems poised to grow. Of those without paywalls, 55 percent intended to adopt a paywall.

The trio of researchers found that metered paywalls, where site visitors are charged after a certain number of free views, are common. Eighty-one percent of newspaper publishers with circulations exceeding 75,000, for instance, had a meter. Of those using a meter, 28 percent allowed five or fewer free views, 44 percent allowed six to 10 free views, and 18 percent allowed 11 or more free views.

Data Source: Mike Jenner, Esther Thorson, and Anna Kim (2014) "How U.S. daily newspapers decide to design and implement paywalls"

AMERICAN PRESS INSTITUTE

Whether paywalls actually pay off is another question. Case-studies suggest mixed signals. A recent article identified the Financial Times’ 455,000 paywall subscribers as one success story. Sustaining progress is one challenge. Although The New York Times subscription model has had success, recent growth has been more modest. Given that circulation historically has represented only about 25 percent of newspaper revenue, one review of the state of the industry by scholars Victor Pickard and Alex Williams noted that paywalls most likely will not “offset steep losses in advertising revenue.” Most importantly, what Jenner, Thorson, and Kim highlight is the lack of research informing these decisions.

Jenner and his colleagues’ work confirms our suspicion that more can be done. Our goal is to use this blog series as a way to share relevant academic research. We invite you to send along thoughts or ideas about research findings of interest and look forward to your feedback as we experiment with this new feature.

Study highlights

• Daily newspapers infrequently conduct audience research prior to implementing paywalls.
• Consulting with peers is far more common.
• Paywalls exist on 70 percent of daily newspapers’ websites, up from 47 percent in 2012.
• Metered paywalls are common; a near majority (49 percent) of those with meters allow six to 10 free views before charging.
• The study reports on a survey of 416 daily newspaper publishers or their designees.

Next steps

Scholars and news organizations interested in continuing this line of research could collaborate to evaluate how paywalls work, using the following as starting points:

• Analyze how paywalls affect site traffic. This could include analyzing how both market factors (e.g., circulation) and paywall policies (e.g., how much the content costs) influence post-paywall traffic.
• Determine when a paywall is worth it and when it is not by identifying the key predictors of financial success.
• Examine how to best implement a paywall (e.g., meter or subscription, number of free views, etc.) to maximize revenues.

Citation

Mike Jenner, Esther Thorson, and Anna Kim. (2014). How U.S. daily newspapers decide to design and implement paywalls. Paper presented at the Association for Education in Journalism and Mass Communication Annual Conference, Montreal, Canada.