Why Media Paywalls Are Coming Into Fashion

Why Media Paywalls Are Coming Into Fashion
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In this opinion piece, Iman Ghodosi (pictured below), vice president and general manager for Australia, New Zealand and Southeast Asia at Zuora, analyses how fake news and changing consumer demands are impacting paid media.

Iman Ghodosi

There was a time when many people thought newspapers were heading towards extinction as news became widely available online – for free. When those same media companies introduced paywalls and began charging for online news, critics thought this shift would be equally self-destructive.

Up until one or two years ago, this was true; consumers reacted negatively and we saw a compression of the media market worldwide. This was mainly because readers were questioning why they had to suddenly pay for content they had previously accessed for free.

Now, however, we’re starting to see the pendulum swing back. This has been triggered mainly by the fear of consuming ‘fake news’, following recent political uproar surrounding events such as Brexit and the US election.

Readers are beginning to believe their only chance to eliminate the noise created by fake news is to pay for content they deem to be trustworthy and upholding in journalistic integrity.

Some of the world’s most respected titles, for instance, saw a rise in subscription numbers after Trump won the presidential election. The New York Times received 130,000 new subscribers in November 2016 – a 10-fold increase on its average monthly growth rate. Similarly, subscriptions at The Wall Street Journal and the Los Angeles Times spiked 300 per cent and 61 per cent respectively.

Introducing a paywall is just one form of pricing experimentation that can yield clear economic benefits.

Some publications offer free subscriptions or access to content for a period of time, such as in the lead-up to Brexit, before encouraging new registrants to subscribe through a pricing and promotion packaging strategy. UK’s Financial Times took this approach and saw a meaningful increase in paid subscriptions post-Brexit.

Another approach, used by UK’s The Telegraph, is allowing the editor to decide which content is put behind the paywall and which is free. This places the economic decision point in the hands of the editor, rather than the engineer.

Fairfax Media also splits its online content into free and subscriber-only. Last year, the company reported that its paid digital subscriptions revenue increased 21 per cent. The Sydney Morning Herald, The Age and The Australian Financial Review have around 236,000 paid digital subscribers.

Digital media companies are also beginning to unbundle their long-time, multi-channel cable strategies in the face of growing competition from on-demand, subscription-based streaming services such as Netflix. Consumers are now more willing to pay for an unbundled service than pay a premium price for a 150-channel package which is under-utilised, because they’re only really watching about five of those channels. Consumers want to pay for what they use; they want price points aligned with perceived value. And we’re seeing this shift accelerating across the major media markets.

Foxtel responded to this consumer demand when it launched Foxtel Now in June 2017, which featured five entry-level packs to match viewers’ interests – Drama, Pop, Lifestyle, Docos and Kids – plus separate Movie packs and Sports packs that range in price from $10 to $39 per month. Both the Drama and Pop packs include access to season seven of the in-demand HBO series Game of Thrones. Foxtel reported that 48 hours prior to the screening of the first episode of Game of Thrones, subscription to Foxtel Now jumped 40 per cent – the equivalent of 820,000 viewers.

It’s still early days, but we are certainly witnessing an increase in willingness to pay for quality content and trusted reporting. Smart media companies recognise this shift and are responding to consumer demand by reinventing their pricing and packaging strategies.

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