No hope of paywalls crumbling down

TORONTO -- Whether they're lauded as the future of online media or labelled a scourge on the flow of digital information, opinions abound on the rise of paywalls in Canada, and the conversation is only going to get louder.

The concept itself -- asking readers to pay for editorial content online -- isn't a new one, but it's now being instituted at many media outlets across the country.

Those in the newspaper industry say it's a natural and necessary evolution. But are Canadians willing to fork over their credit cards to sign up?

Observers say it's too soon to tell, but they warn that those who hope paywalls will crumble could be waiting a long time.

"I think the paywalls are here to stay," says Vincent Mosco, a Queen's University sociology professor who studies the media.

"I think it's an inevitable development that has no guarantee of success."

Experts say quality journalism costs a lot of money, and declining revenues from print advertising coupled with lagging digital ad sales have created a funding dilemma for many news organizations.

The economic downturn of 2008 compounded the problem as it diminished advertising spending in general and forced many people to cut back on spending, which included cancelling subscriptions to newspapers and other print products, said Mosco.

Many in the industry hope paywalls will provide a new source of revenue as personal spending picks up once more. One frequently cited example of such success is The New York Times, but observers caution the paper is an elite product.

"One of the reasons why the elite newspapers succeeded while the day-to-day kinds of newspapers have not is because the former have invested in top notch journalism a whereas what we've seen in the mainstream of 'next tier' newspapers is that they've been cutting back substantially on their investment in good journalism," says Mosco.

Canadian media companies implementing paywalls, which range from $6 to $20 per month, seem well aware of the challenge they face in maintaining the size of their readership while simultaneously trying to make a new funding model succeed.

"The one thing we did learn about the audience is that people don't like change at the beginning," says Paul Godfrey, president and CEO of Postmedia Network.

Some Postmedia papers -- including the Montreal Gazette, the Ottawa Citizen and the Vancouver Sun -- experimented with paywalls in 2012. The company plans to put the rest of its newspapers behind a paywall in the first quarter of this year.

"We knew that, ultimately, in order to really succeed or save the industry from total collapse that you had to start charging for online, knowing full well that this wasn't an instant cure. It's a marathon, not a sprint, to bring in more revenue," Godfrey says.

The Postmedia papers with paywalls have seen "slow, steady growth" so far, and while Godfrey expects a minor dip in online readership numbers when all the company dailies start charging for digital content, he expects the decline to be a short-term one.

"If you provide compelling content the reader is looking for -- high journalistic quality, columnists that are fan favourites -- people will return," he says.

Similar feelings are echoed at The Globe and Mail, which launched its paywall just a few weeks ago.

Although many griped about the newspaper's plans to charge for digital content, the Globe's publisher says the paywall's initial performance has been pleasing.

"I think it's safe to say that the response so far has been in excess of our expectations," says Philip Crawley.

"Long term, I think we see digital subscription revenue playing a pretty big role, but it's going to be a slow, steady build. We have both new and traditional revenue areas that continue to do well, so this is another string to our bow."

Perhaps even more important than the revenue it could eventually bring, paywalls will allow newspapers to provide richer data about their readers to advertisers, and that, says Crawley, is incredibly valuable.

"The agencies are saying, 'We want you to tell us what the intentions of your audiences are,"' he says.

"We are working very hard to develop more intelligent data. The paywall, by gathering more information about how people consume our content, helps us to do that."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition January 2, 2013 B5