Logo Cost of Free







Threats to Traditional Journalism

Newspapers/New media and Paywalls

PaywallThe digital revolution has caused upheaval in newspapers and traditional media outlets world-wide. It can be argued that open and free may well be hurting traditional media business models. As more and more people move to 24/7 cable news networks and the internet to get their news, advertising dollars for newspapers and networks have decreased. Sites like criagslist who offer free ads have eroded newspapers' classified advertising incomes, and information from newspapers is being taken in whole or in part by bloggers who now also report the news.

Blogs and sites like Twitter and YouTube have become places that break the news. Major cities have also seen the rise of free tabloid newspapers which often provide transit riders with news, sports and of course advertising. In a fight to remain relevant newspapers and television networks have developed websites whose only income source has been from online subscriptions or advertising dollars.

One way that newspapers have tried to make money is to erect a so called paywall. In 2005, the New York Times erected a pay wall. Their website had a certain amount of content free, but if users wanted specialized content, they would have had to subscribe. Called Times Select, the online content was open to paper subscribers and to some educators and students.The subscription was to get beyond the paywall. In 2007, the NYT dropped its paywall and also opened its archive from 1987 on. According to the NYT, their projections for growth with the subscription model were lower than their projections for advertising dollars associated with an totally open site. (Perez-Pena, 2007)

Newspapers' past experiments with paywalls have not been very successful, but recently in July 2010 Rupert Murdoch resurrected paywalls in his London newspapers and the New York Times has announced that in 2011 they will begin to charge "frequent users" for access to their website. Unlimited access will be allowed with a flat fee. (Perez-Pena, 2010) Reports say that 2/3rds of Murdoch's audience has been lost because of the paywalls. In July 2010, Time magazine also announced a paywall.

Clay Shirky believes that in 50 years printed newspapers will not exist. He says,"if you are 25 or younger, you're probably already reading this on your computer screen...And to put it in one bleak sentence, no medium has ever survived the indifference of 25-year-olds." Shirky is convinced that Murdoch's paywall will fail. He suggests that what Murdoch is doing is "preventing his value from escaping." "Shirky argues, that people are more creative and generous than we had ever imagined, and would rather use their free time participating in amateur online activities such as Wikipedia – for no financial reward – because they satisfy the primal human urge for creativity and connectedness." (Aikenhead, July 5, 2010)

The Oriella Digital Journalism Study 2010

The above study looked at how publications are responding to digital media opportunities and threats. (link to Study) The study of 770 journalists in 15 counties found that many are worried about the future of traditional media formats. Over half feared their outlet or channel may fold or be taken off market. Almost 1 in 6 report this has almost happened, but they also say that new online sources of revenue like paywalls, memberships and premium mobile content is being implemented or considered. Many feel the impact of change is positive for quality; only 21% felt quality at their organization had decreased. Trends include more digital, journalist authored blogs and organizational Twitter accounts, and a decrease in the use of expensive online video. (O'Dell, 2010)

What happens with paywalls will be certainly playing out in the future. One thing is clear: open and free for businesses only works when a third party pays the cost. If these institutions can not find a way to transform and make money, they face extinction.

Next up: Clay Shirky-How Cognitive Surplus Will Change the World