THE BLOG

Is the Future of the Fourth Estate Hidden Behind a Paywall?

30/03/2013 20:03 GMT | Updated 29/05/2013 10:12 BST

"We are witnessing the start of a new business model for the internet. The argument that information wants to be free is only said by those who want it for free."

Rupert Murdoch, 2010

The idea that the media is in a state of transition has been given more weight in the last week, with The Daily Telegraph annoucning that it is joining the paywall club. The title will be introducing a new pay to view policy that will charge readers up to £9.99 per month. On the same day the Scotsman/ Scotland on Sunday announced that they will be cutting up to 30 staff. Both of these are commercial decisions born from the same simple problem; less of us are buying newspapers.

The reasons for introducing a paywall are obvious; they may reduce web traffic but they open up a new revenue stream by putting a monetary value on every visitor, they can also help to steady print sales and supplement any shortfall from their decline. Many, including Wikipedia founder Jimmy Wales, see them as a failure in the making, but they are nothing new; in Britain they are already used by The Times, The Financial Times, The Herald and The Sun, even The Guardian has talked about bringing one in.

The holy grail of pay walls is the one used by the New York Times/ International Herald Tribune, which after a year and a half is predicted to be worth an additional $91 million in revenue. Since The Times of London began charging for access in 2010 they have experienced a significant fall in online readers, with only 131,000 registered subscribers. However, it has helped the publication to retain its print readership. The ABC circulation figures show that over the last 12 months The Times has only shown 1% drop, the lowest of any national newspaper.

The figures make for some pretty grim reading for the rest of the industry, with The Independent and The Guardian showing decreases of 34% and 11% respectively. Of the tabloids the Daily Star has fared worst, with a 14 fall, while The Sun has had 12%. One obvious factor is the growth of online news. The Mail Online is now the most read news source in the world, and traffic for The Guardian and The Independent has increased by 13% and 95% respectively. The problem is that improved traffic doesn't translate into improved revenues, with The Guardian group losing £76 million in 2011/12.

The problem is that advertising revenues for online publications are far lower than print. The simple reason for this is because we spend significantly less time reading online stories. The other issue is that although more of us are consuming news we're doing so in a more targeted sense.

One outcome of declining sales has been the merging of news teams and titles. This has already begun at The Independent, where the daily paper and the Sunday version are being merged into one team, and the business, sports and newsdesks are shared with the Evening Standard. The Daily Telegraph is entering a similar process with the Sunday Telegraph, and it is possible that others will follow suit.

Another change to consider is the rise of The Evening Standard. Free papers have always been with us, but since the Standard joined their ranks in 2009 it has increased its circulation by 300,000 and turned over its first profit for 12 years. In contrast the price of national papers has steadily increased, with The Guardian hitting £1.40 this year.

In the digital age newspapers are out of date by the time they are published. This is one of the reasons why publishers are investing more in their wider media strategy, with the Evening Standard recently announcing the forthcoming launch of a television channel. One side effect has been the rise of some very successful online publications, but most blogs are volunteer run and don't have enough resources or attract a broad enough readership to compete with the established media in quality terms.

It is highly unlikely that any national newspapers will be launched for the foreseeable future, but it would be short-sighted to rule out potential closures. I expect that there will always be a demand for print news, but there are serious questions about the long term viability of the industry. With most major titles in the process of cuts or consolidation it's obvious why paywalls look so attractive to cash-strapped editors and publishers. When The Times initially brought in the paywall many were sceptical, but with short term revenues under pressure it's a question of how much longer their competitors can afford to hold off.