Op-Ed: Canada's Globe and Mail and Postmedia Network set up paywalls

Toronto - The giant Postmedia Network Inc. newspaper chain will set up paywalls on all of its titles by early in the New Year. The company blames the loss on a weak print advertising market.

Postmedia reported a $28 million third-quarter loss In order to make up for the decline in advertising revenue it hopes the paywall will bring in a new flow of income. I expect that what it will do is cause a sharp decrease in readership online with a resultant decrease in revenue from advertisers. The New York Times has been able to offset losses in ad sales of more than 10% last quarter by an increase in revenue from its paywall. However, the New York Times is a globally read newspaper that many will want to continue to access. It is useful as a means of finding out what the U.S. administration wants to be leaked out or is thinking. Many of the Postmedia papers are local city papers. They will hardly be able to entice subscribers in the manner of the New York Times. The Times has seen its subscriber base increase by 11% last quarter. The Times may actually do better at the expense of other paywall papers, as readers move to one or two prominent papers as a source for their news. Postmedia Chief executive officer Paul Godfrey said:“Newspapers are realizing you can’t spend millions on content and give it away for free. We know there’s a digital world out there, and we know people want news on the platforms of their choice … I think we’re at the point where pay metered systems will be put in all over the world.” However, there are hundreds of newspapers online. People are not going to subscribe to more than a very few, if they subscribe to any. There are still plenty of foreign newspapers and outlets that provide free access. Those that remain will attract many more eyeballs than those with paywalls. Postmedia has seen a decline in revenue during its fourth quarter with an 8.3% decline in print revenue but a 3.5% increase in digital revenue. Print advertising was $112 million while digital advertising was $22 million. No doubt in the future the trend to declines in print ad revenue with increases in digital ad revenue will continue. In time many papers may cease print editions altogether. The Postmedia group have already installed metered paywalls at the Montreal Gazette, Vancouver Sun, Vancouver Province and Ottawa Citizen. The chief operating officer Wayne Parrish said that although it was to early to measure the success of the move, the situation in Montreal was encouraging: “We’ve been pleasantly surprised by the response. It’s been very positive to this point. The renewal rates and conversion rates are much higher than we probably anticipated.” Many analysts point out that only a very few newspapers around the world have been able to make a profit through paywalls. As more newspapers join in the move, even fewer will probably be able to make a profit through the move. The rest may lose even more. However, costs are lower in digital as compared to print media, so as readers move to digital sources, it costs less to provide the content for companies. The Globe and Mail paywall began on October 22nd. People who subscribe to the Globe five or six days a week can access the paper online for free but it requires them to sign up. Non-subscribers will be able to access ten articles a month. The "Globe Unlimited" has a first month price of just 99 cents but after that the cost is $19.99 a month, quite a significant fee. More affluent business readers are apparently being targeted. On the day the paywall was erected the most common up-voted comment of the 1,500 left by mid-day was "Bye". One other much up-voted comment said: “I do not believe that the [New York Times] meter model will work with your publication ... because very simply put your content is nowhere near the world class quality and quantity of the NYT. Moreover, there is still a large volume of good quality content from other internet ad based media that are still available to online users. This is where I will be taking my news-reading eyes.” The lower tier service of the New York Times would be five dollars less a month than the Globe Unlimited service, although the premier NYT service is up to $35 dollars a month. I notice that the New York Times has blog material that one can still access free often written by well known people. Personally I do not bother with any papers that have paywalls or even require registration. There are still plenty of other sources available. I notice that on a couple of lists I am on, people will deliberately post large sections of material or whole articles from the New York Times and comment on it. This makes the material available to those on the list who are non-subscribers.This type of activity will no doubt increase. Will newspapers try to prosecute for this? No doubt state-sponsored media outlets will gain more traffic as other international outlets retreat behind paywalls. Search engines should now have a filter that allows you to filter out from your search sources that are behind paywalls. The move to paywalls will help out citizen journalism outlets since they are free. I imagine that people may group together and have each member of the group subscribe to a different paper and then share with all the other members.