The Great Debate: Paid vs. Free Content

By Jessica Jenkins, Intern – inXcess Pty Ltd (April, 2013)

“Life today would have been easier if newspapers, magazines and other print-to-Web media had recognized in the first place that their content was too valuable – and too expensive to create – to simply give it away on the Internet …. Why would consumers buy the cow when the milk is free?”

As online audiences grow and print audiences shrink, newspapers will have to face the reality of needing to increase digital revenue to support operations. The world of free content has begun to shrink sharply, as dozens of newspapers worldwide announce plans to erect pay walls and subscription models around content.

This could be a make-or-break change for many in the industry and sadly, it’s really a case of too little, too late.

It has actually been recognised that more revenue can be generated from advertising supported digital models than from subscriptions. As Digital Media First’s CEO John Paton put it, “I don’t think paywalls are the answer to anything. If we’re swapping out print dollars for digital dimes, I think paywalls are a stack of pennies.”

Admittedly, ad overload can lead to overcrowding and fatigue amongst readers but paid content may also stunt online audience growth. Those who can not or do not want to pay to access content will go elsewhere for news and information. Suddenly, due to pay walls, established news brands aren’t top of mind for accessing news.

Furthermore, free content attracts extensive traffic, further bolstering the fee structures established for advertising. Simply put, the more people visiting, the more revenue. How do we get people to the site on mass? Free content.

Finally, it’s very difficult for publishers to erect pay walls when other publishers are choosing not to. Such publishers that have attempted to wall all their content behind a subscription charge have experienced declines in online market share – which aren’t therefore making up for declines in print sales. Case in point, the New York Times failed pay wall ‘TimesSelect’. OK, so it wasn’t a complete flop, as it earned $10 million and had 227,000 paying customers, but digital advertising rakes in at least $300 million annually, so is it any surprise that The Times chose to remove their pay wall and focus on selling ads, via a value laden proposition. That’s another point to note – it not just about selling the space you have valued by the audience you generate, but also too about selling comprehensive value-add campaigns that encourage cross-platform integration and consumer/ reader interaction for advertisers.

And so, the great debate of free vs. paid isn’t black and white, there are many pros and cons for both approaches but when considering the long-term strategy and the behaviours of the ‘internet generation’, it will be difficult to build value in paid content among the masses, who will simply seek content elsewhere.

 

Sources:

Berger, P, Dinah, E, LaFontaine, D & Siegel, DJ (2009) davidlafontaine.com, “The Free v. Paid Online Content Debate” http://www.davidlafontaine.com/case-studies/final-pdf-paid-content.pdf

Conger, C (2013) howstuffworks.com, “The Great Debate: Free Versus Paid” http://computer.howstuffworks.com/paywall2.htm

Ingram, M (2013). GigaOM via paidcontent.org, “Digital First Media’s John Paton on newspapers and paywalls”, http://paidcontent.org/2013/04/08/digital-first-medias-john-paton-on-newspapers-and-paywalls/