When even porn is free. Who will pay for news?

How to make money from journalism Part 2

Paywall, the word seems to be everywhere in the online journalism world these days but what does it really mean? And can we ever convince people that they have to pay for news online?

I won't bore you with the details because I'm guessing you're mostly already familiar with paywalls. If not, there's always Wikipedia (not that I condone its use of course).

At first glance, a paywall seems like a no brainer for a news site looking to increase its revenue. Start charging people for something that was previously free. Profits go up. Simple.

The problem with this sort of thinking is it doesn't take into account the (admittedly small) revenue generated by ads.

Every user that hits the paywall has to make a choice: Do they lay down the cash and keep reading, or simply find what they want elsewhere?

Source: Alexa

The above graph shows readers of The Times, in England, left in droves once the paywall was implemented. The smaller line represents the users who subscribed to the paid version of the site. It's impossible to know how this has affected profits without extensive advertising data from The Times but that's a lot of advertising traffic to lose for a relatively small gain in paid customers.

Source: Alexa

And this graph shows what happened to traffic when the New York Times introduced a paywall at the end of March. A massive spike as people checked out the shiny new wall, then traffic settled down to normal. If anything, it's actually increased since the paywall was implemented.

Traffic to The Times was decimated whereas NYT continued on as if nothing happened. So why the difference?

There are obviously many factors involved here (size, relative prestige of the paper, even visitor nationality), but the biggest one of all is moderation. NYT allows users to read 20 articles a month before throwing up the paywall, plus a further 5 from search results and unlimited links from social media. This may sound like a lot of free news but it means casual readers can still visit the site and hardcore followers still pay for the service.

It seems no matter how much free news/porn is out there, there will always be people willing to pay for premium content. If it's done right.