Will Paywalls Help or Hurt Newspapers?

Will Paywalls Help or Hurt Newspapers?

Some visitors to www.cincinnati.com were surprised over the weekend to learn they would no longer have unlimited access to news and features on the website, due to the Cincinnati Enquirer rolling out its new metered paywall.

20% of Newspapers Now have Paywalls

Gannett announced earlier this year that it would begin using paid-subscriber models on its 80 newspaper websites by the end of the year, joining dailies like the L.A. Times, Boston Globe, Minneapolis Star Tribune, Arizona Republic and the Columbus Dispatch. The New York Times raised eyebrows when it limited access to its site to paid subscribers in 2011, but now reports that the paywall has grown circulation revenues by 8% through June 2012. The paywall has also partially offset print declines, as many subscribers opt for print-and-digital packages.

The strategy of a metered paywall is that traffic doesn’t nosedive and therefore sabotage ad revenue, which is tied to site traffic. The Gannett papers will be in line with this strategy since much of the site will still remain open and free to casual readers. The home page, section fronts, classifieds, obituaries and affiliate sites like cars.com and homefinder.com will all still be accessible. And users can still read a limited number of articles before the paywall kicks in.

Will Readers Adapt or Leave?

Will charging for online access drive readers away? After all, there is still plenty of free content available online. More and more papers are gambling that it won’t. The Minneapolis Star Tribune, for instance, has reported only about a 12% decline in page views since they began charging for access, but the revenue from new digital subscriptions exceeds revenue lost by declining traffic – by a lot.

A Calculated Risk

Some newspaper execs have been grousing for years about giving their product away for free, and say the paid-subscriber plan is less about adding digital subscribers and more about taking away reader incentives to ditch their print subscription for free online alternatives.

Let’s face it, at this point in time – with circulation and ad revenues in decline – newspapers can’t afford to play it safe. A metered paywall strategy that can generate new circulation revenues, and maybe even re-energize the print product, is a chance worth taking.

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