For years, media companies had hoped to be able to finance their online presences with advertising alone. Initially, this was not quite as naive as it must seem today. When the Internet took off in the mid-1990s, the search engine and advertising giant Google was still unborn, and e-commerce (for subscriptions, for example), as it is taken for granted today, was more cumbersome (and unreliable) back then. Today, Steven Neubauer, Head of Marketing & Products at NZZ, for example, states: "Like the entire industry, we expect even stronger competition from other providers in the advertising market in the future. This is not a question of reach, but a technology-driven development that we have to live with." Customers are migrating more and more to mobile devices, where they remain difficult to reach for advertising. To do so, they are not only leaving behind publishers' websites, where prices for traditional display advertising are under pressure, but their revenue-generating print products are also increasingly losing readers. It is therefore obvious that media companies are looking for ways to attract not only advertisers but also users to finance their journalistic activities. Paywalls are therefore not just a product, but the word also stands for the process of finding out how to raise money from readers. That's why paywalls vary from publisher to publisher, from title to title, from year to year, and if you analyze the various examples from Germany and abroad, you'll find a lively variety of solutions and approaches (see "Many Ways").
Unwilling readers
What's more, users have long since become accustomed to the free culture on the web, and an entire generation has grown up for whom such things are a matter of course. "Empirical studies show that only a small part of the Internet population is currently willing to spend money on digital content on the Web," says Klaus Miller, Business Development & Strategic Analysis at Ringier's Blick Group. After all, news of the day is the same for everyone, and in a British survey of Internet users last August, for example, 80 percent said that paywalls at newspapers were bad and that they would not pay for online news content, or that they were pointless because the same news was available for free elsewhere. At Ringier, this is no reason for resignation: "But we still see the potential to generate additional revenue with selected, innovative content that meets readers' needs." The formula is simple: If you want to be successful with paid content, you have to offer more.
Simply putting a price tag on existing web content is simplistic to that end. The New York Times, which is often used as a model by publishers, has also noticed this. After a three-year period of success with its metered paywall ($160 million per year), growth is leveling off, and new recipes are being sought. For example, a new mobile app, a low-price subscription for opinion pieces only combined with the restaurant and recipe pages, or a more expensive subscription with additional services. According to Steven Neubauer, the NZZ Media Group also wants to move in this direction: "We are convinced that there is a market for quality journalism in online and mobile. However, our customers expect offers tailored to their needs. They are also willing to pay for that." That's why the company wants to better address the specific needs of customer groups in the future and "instead of the classic 'newspaper' bundle, put together new bundles that meet their interests ". And according to company spokeswoman Ursulina Stecher, the AZ Media Group also wants to pay "even more attention to measuring user behavior" in the future. Because: "Only those who know their users know where and when they are willing to pay for content." It's not just marketing that has to come up with new product bundles, but also the editorial teams in creating new content. Whether this is economically feasible in the small Swiss market is judged differently: It is "not only feasible, but absolutely necessary," thinks Ursulina Stecher. And NZZ-Neubauer concludes: "Basically, the Swiss market is big enough for additional offerings." Meanwhile, Klaus Miller of Ringier cautions, "Producing innovative and exclusive content is time-consuming and cost-intensive. Remonetizing these costs is certainly easier in large markets such as the United States or Germany than in Switzerland." And BaZ CEO Rolf Bollmann says: "Such novel content still has to be invented first. In any case, it can't be news content."
A great experiment
It becomes clear that paywalls are a great experiment. It's not just about finding out how to make money from users, but also about driving out page views that are not relevant to the advertising market. Tamedia is aware of this, as company spokesman Christoph Zimmer explains: "The decisive advantage of the metered model, in which readers can read a certain number of articles free of charge, is precisely that the reach should not decline significantly. We have analyzed various examples internationally, which show that the decline in reach over a longer period of time is not significant." Rolf Bollman, CEO of Basler Zeitung (and founder of 20 Minuten at the time), is less optimistic: "The same development will take place as with print media. Free equals high reach, equals higher advertising revenues. Since 20min.ch will always offer online content for free as well, they will be the big winners in terms of advertising revenue there, too - and the paid newspapers or the news portals with pay barriers will be the big losers. Content revenue can't even compensate for a fraction of what's lost in the advertising market because of lower reach, since paywall." He estimates the additional revenue with a paywall to be "in the order of ten percent maximum of the subscription revenue of the printed newspaper." And Andrea Masüger, CEO of Somedia AG, assesses the chances of additional revenue from the reader market as "uncertain": "If we succeed in making up for the loss of subscription revenue from print, that's already a huge success." After all, the introduction of a metered paywall also opens up new opportunities in the advertising market: If additional freely accessible content is offered exclusively to registered users, profile data can be gained or existing data can be improved. In addition, registered or paying customers can be sold as a special inventory group for display advertising at a better price, since they can be assigned to a higher purchasing power group (business people) overall. However, it is hardly possible to catch up with the heavyweights in the online advertising market in this way.
Piano Media shows the way
Because in order to be able to stand up to the high-tech attackers, media companies are advantageously taking joint action, as is the case in France, Denmark, the Czech Republic, for example. But whether in the advertising or reader market, the path to such national industry solutions is not easy, because publishers are confronted with the prisoner's dilemma (which often arises in sociological and economic issues: Two spatially separated prisoners face the choice to deny or confess. For the individual, it is safest to confess, but bilateral denial promises the best overall outcome): If everyone retreats behind a paywall, everyone is fine. If no one does it, everyone suffers. If everyone does it and one of them backs out, he profits handsomely, while the others suffer.
Examples in Slovakia and Poland show that joint action by publishers is also possible in the reader market. Under the umbrella of Piano Media, national paywalls have been established here, which currently comprise 25 media with a total of 80 websites, including those of the most important publishers. Anyone who has registered can download content from all participating media in exchange for money. The revenues are divided between the operators of Piano Media and the publishers according to a certain key.
Christop J. Walther
Paywalls in Switzerland
The hard
Norbert Neininger, publisher and editor-in-chief of Schaffhauser Nachrichten, is known for his pronounced views on the Swiss media industry. So it's not surprising that he has been releasing his content on the web for over three years now only in exchange for good money. He has been able to win 300 customers for this, while print subscribers can access the online offering at no extra charge. The front page and all non-editorial content is free, and there are premium offers such as news alerts and PDFs in the archive that cost extra. Philipp Honegger, Managing Director of Sobag Schaffhausen Online Betriebs AG, recalls: "The outcry was great and there were many bad words. User numbers plummeted by about 30 to 40 percent. " But for him it is clear: "Since SN was not really able to generate advertising revenue on shn.ch before, this factor could be faded out. So the consistent implementation of selling good editorial content can only be called a success." But Neininger was not the first to charge for content in Switzerland. As early as 2009, publisher president Hanspeter Lebrument's Südostschweiz-Medienverbund made its online content chargeable. According to Lukas Joos, Head of Online, this only applies to "a few selected online articles or multimedia contributions". In contrast, the content of the paid daily newspapers is only freely accessible to subscribers of the respective title. Those who want to read individual articles can register and benefit from a start-up credit of ten francs. Since the beginning of 2013, the exclusive content of the Fribourg News has also been available for a fee and only to subscribers.
The points
The best-known example to date in German-speaking Switzerland of a paywall is the NZZ, which launched a digital subscription on NZZ.ch at the beginning of October 2012, relying on the metered paywall model. At the end of March 2014, the Tages-Anzeiger was the first title in the Newsnetz network to introduce a holey paywall. In the coming months, this system will also be introduced at the other Tamedia regional newspapers.
The undecideds
As a member of the Newsnet association, the Basler Zeitung will, according to CEO Rolf Bollmann, "in the foreseeable future", analogous to the Berner Zeitung, Der Bund and the other members of Newsnet, "also examine and introduce a payment model". As recently as the end of 2012, Christian Dorer, Editor-in-Chief of the Aargauer Zeitung, announced an online payment barrier for 2013 in his newspaper's "Weekly Commentary." Nothing came of it, and in 2014 Ursulina Stecher, Head of Corporate Communications at AZ Medien AG, doesn't like to get specific: "Like many other publishers and media houses, we believe that our content is also valuable in the digital world. Accordingly, we are looking for ways to bring this value to bear. The so-called paywall is one of them." Ringier had also announced a paywall for Blick in the fall of 2013, but revised those plans last spring. In a recent radio interview, Ringier CEO Marc Walder said on the subject, "We don't expect people to pay for it on the digital platforms at the moment. In other words, Ringier is one of the few media houses that have not installed a so-called paywall at the moment. Because at the moment we are doing very well by generating free access for users on our platforms, which means we have very high numbers on these platforms and finance this primarily via the advertising market."
The profiteers
Free titles like 20 Minuten and start-ups like Watson are happy about every paywall that flushes unwilling surfers in their direction. The SRG's free news sites should also gain more attention in this way, even though they are not currently allowed to exploit them commercially (due to licensing requirements). Which titles that are currently on hold should be listed in this category is beyond the research (but not the imagination) of the author (and possibly the reader).
Many ways
There are various methods to collect money from consumers for journalistic content. Here is an overview of the most important ones:
Hard paywall: All content is only available for a fee. The best-known example is The Times and Sunday Times in London, which has over 150,000 digital subscribers and generates annual revenues of around CHF 55 million.
Soft payment barrier: often described as a metered paywall or a paywall with holes. The first few articles are free, then the hard paywall kicks in. This is the case with The New York Times and Financial Times. However, this paywall can easily be circumvented by deleting the relevant cookies in the web browser, for which there are various browser extensions. Further circumvention possibilities arise if access via search engines or social media is still permitted in order to enable the sharing of content.
Freemium: Some of the content is freely accessible, while other content is behind the paywall. For example, the Wall Street Journal. Time pass: Access to all content, including the archive, for one day, one week or one month. Unit sales: Articles are sold individually, often offset against a prepaid credit. Bulk sales: call-off quotas are sold to companies. Apps: Content is available only through paid apps on smartphones or tablets. In some ways, ePaper editions from the early Internet days are precursors to this variant. Combi: Regardless of whether print or digital: A subscription is sold for the content regardless of the distribution platform.
Donations: Readers are asked to voluntarily transfer an amount per article. The Berlin TAZ has raised over 200,000 euros in this way since April 2011.
Time: Instead of paying with money, users fill out questionnaires about their consumer behavior, for example. The profile data obtained in this way can be used for more targeted and better paid targeting of advertising.