The Publisher's Dilemma
3 min read

The Publisher's Dilemma

Covid has brought one of the media world's most existential debates to center stage: Should publishers put up paywalls?
The Publisher's Dilemma

And a song to read by: “Oh I Wept,” by Free

Good morning, Lytes of my life, and welcome to what promises to be another bombshell newsletter that will have media pundits gawking, tabloids howling and my galaxy-brained followers growing even more unstoppable in their massive intelligence.

As we are all now aware, Covid-19 has curb-stomped the bottom lines of most publishers. For evidence, look no further than this list, compiled by Poynter, of all the lay-offs, furloughs and shut-downs in the industry, which you’re more than welcome to read if you’re a masochistic freak.

However, there is an important paradox at play right in the center of this ink-bath (play on bloodbath), one that I touched on in my inaugural post for Medialyte. In short: Despite an unprecedented spike in traffic for publishers across the country, ad revenues have plummeted.

The Los Angeles Times, for example, has reportedly lost one-third of its advertising revenue, and The Seattle Times projects that April advertising revenue will be down 45% from a year earlier. In a plea to its readers, Vox states the problem pretty plainly:

“It’s true, more people are turning to Vox right now than at any other time in our six-year existence. … But while the economic crisis continues, advertising dollars will shrink as the public need for our service grows.”

Variations of this same story are playing out across the country. Traffic is either slightly up or back to normal, but advertising has fallen off a cliff.

But that’s where things get interesting.

You see, there is an ongoing debate in the media world surrounding subscription-based models. For the last year or two, analysts have suggested that if publishers use metered paywalls to encourage readers to subscribe, they might be able to make up for their dwindling advertising revenue with the subscription revenue.

This has played out along a spectrum. Some publishers, like The Athletic or The Information, went the route of employing steep, impregnable paywalls: You have to subscribe before you can even see the content.

Others, like The New York Times or Wired, allow you to read a few articles before the paywall forces you to pay or get off the pot. This is probably the most common approach.

And then still others, like Vox, have resisted implementing paywalls at all, for various reasons, most of which are high-minded in nature. Many journalists believe that information is a right, and that charging readers for access to knowledge is tantamount to discrimination.

The issue is nuanced, and the context of the news organization — is it rural, a trade publication, a literary magazine, a hot-takes factory, a metro daily — largely determines what kind of paywall, if any, a publisher might use.

It should be known that I, in almost all cases, am pro-paywall. After all, it takes time and resources to produce the news, and if advertising does not cover those costs, publishers can’t operate at a loss continually. (Non-profit newsrooms are another story, and the subject of a future post.) Or, to be more Hobbesian in my argument, plenty of things are vital to survival — food, clothing, medicine — but they are not free. So why should the news be?

In any event, Covid-19 is rapidly changing all of this. Publishers once committed to providing news for free to all are beginning to throw up hastily erected paywalls. Vox, as I mentioned, is asking for reader donations, which is a gateway drug to paywalls. The Guardian, the UK’s famously egalitarian publisher, has recently begun experimenting with a “registration wall,” another slippery slope.

McClatchy, one of the largest newspaper chains in the country, dropped its paywall to give readers free access to Covid coverage, but then put it back up. And within the last week, Digiday laid out two case studies, of Tribune Publishing and The Daily Beast, that exemplified how a pivot to a subscription model could save a flagging publisher.

The problem for both enterprises was the same: for a variety of reasons, advertising revenue had plummeted in the last six weeks. As a result — and brace for some soft math here — the revenue publishers earn per pageview has dropped, which has provided them the financial incentive to employ strategies that sacrifice pageviews for subscriptions.

In other words, if your paywall turns away 50 potential readers, each of whom might have generated $.77 per article view, but it nets one subscriber, whose annual value is, say, $100, the tradeoff was worth it.

And while advertising rates are, at the moment, artificially low because advertisers are pulling back and/or shrinking their ad spend, they weren’t much to look at beforehand anyway. So as more publishers find success in targeting subscriptions rather than pageviews, the likelihood decreases that they will abandon their newly lucrative subscription model when Covid subsides.

The net effect is that Covid has accelerated a process that many thought would take years to play out, if it ever played out. Revenue-starved publishers can only thumb their noses at a working solution for so long, especially when all their competitors are doing it.

If the entire news industry transitions to a subscription-based model, this of course brings with it an entirely new host of problems. But, at least the news media will be alive to cover them.