The rise and fall of the paywall: is it on the way out?

While 2012 is being billed as the ‘real’ year of mobile etc., surely for the publishing industry it is the year of the paywall? That’s to say, the year that the paywall will be put to the test and will prove itself one way or another. While more and more publishers are experimenting with the paywall amidst an increasingly competitive print market, we haven’t yet seen conclusive evidence that this is the right move for traditional publishers to make in the digital sector. With the Times in the UK having first launched their paywall back in March 2010, how has the paywall concept performed since then?

Express & Star drop their paywall

The Express and Star is the biggest regional newspaper in the UK and their paywall lasted just nine months. In this relatively short time after the launch of their paywall, they removed it, returning to free access for online content. Instead, the paper is turning its attentions to their iPhone and iPad applications – also paid – at £3.99 per month. Interestingly, this isn’t the first time a paywall experiment by a regional paper has failed. The Johnston Press in the UK launched a paywall across six regional titles, but they were dropped after a few months.

Regional newspapers have been fairly quick to adopt the paywall model, with major titles in the U.S. including Chicago Sun Times and San Francisco chronicle introducing them last year. But is charging for regional news a step too far for readers? With Twitter and other social networks being increasingly effective at co-ordinating local, breaking news (or at least their users are), it may be difficult for consumers to justify paying for access to this news. And with regional newspapers largely operating on a skeleton staff and struggling to compete with the speed of news online, this cost is even harder to justify.

New York Times – making it work

Of course, it’s not all bad news for publishers using a paywall. The New York Times introduced their paywall last year, and they were one of the most high profile papers to do so. But the success of this is being seen where you might not expect it: with an increase in their print circulation. Practically unheard of in the publishing industry now. While the increase stands at just 0.2 per cent for the 6 months up to September 2011,  according to the Times: “This marks the first increase in print home delivery circulation in five years.”

The New York Times also have another trick up their sleeve to make their paywall pay off: price hikes on their print editions. It is now up to 70 per cent cheaper to read the New York Times online each day than it is to buy the paper edition. Indeed, if they’re seeing increased print circulation why wouldn’t they introduce a price hike, that at the same time also helps the digital edition? The interest and intent to pay is clearly there, showing that the paywall may indeed be the right strategy for major papers, but it needs to be boosted by a complementary offline strategy to encourage the switch. The increase in print editions is also being echoed in the UK by the Financial Times,  who increased their weekday print edition cost from £2.20 to £2.50 .

Facebook’s Role

The publishers that are making the paywall work are sending a very clear message: get online. Whether this strategy will work across the board however, remains to be seen. The biggest, most significant threat to the paywall model lies with Facebook. They are getting more and more serious about their news offering, with some high profile hires and increased support for the journalist community.

The huge success of the Guardian app – one of the best news stories of Facebook’s new open graph – has seen news consumption on the site increase. The app now boasts 2.4 million users. The benefit of a model like this, for the publishers, is the potential for a partnership opportunity with Facebook, who are certainly not struggling to attract advertisers to the site. It’s not difficult to see this taking off as the default way to consume news, which could pose a real challenge to the paywall model this year.