What is a paywall and is the system working for the media industry?

The ‘paywall’ has been around for almost as long as the world wide web itself but it’s only in the past year that the word has become common.

We’ll take a look at whether paywalls could be the future of how we read news online – but first, just what is a paywall?

The word ‘paywall’ sounds like jargon but it’s a simple, short way to describe a well-known idea: putting content on the internet and then charging people to see it. This isn’t a new idea, and there are lots of websites that already using such walls to sell photos, video or music files.

The fuss that is currently being made online, however, generally refers to paywalls in one specific area: selling access to the websites of newspapers and magazines.

Money never sleeps
Again, this isn’t a new idea. The Wall Street Journal, available in print since 1889 and the most-read newspaper in the US, charges for access to most of the content on its website if you’re not a subscriber to its print edition, and has done for years.

At the beginning of 2010 it had 400,000 online subscribers, each paying around $2 per week. In the UK the Financial Times offers only limited access to its stories online: anyone wishing to read frequently also has to pay.

The sudden interest in paywalls, however, stems from this July when Rupert Murdoch’s News Corporation, owner of the Wall Street Journal and The Times and Sunday Times in the UK, placed both of those newspapers behind a paywall. Access costs £1 per day, or there’s a £2 per week subscription package that includes access to the mobile edition.

The Times, they are a chargin’
Given that paywalls are hardly a new idea, why has the introduction of paywall on the Times’ website – and not long afterwards on the website of the company’s Sunday tabloid the News of the World – caused such a fuss? The largely negative reaction can be broadly attributed to three things.

First there’s the fact that it was The Times that went first. Rupert Murdoch’s News Corporation is one of the biggest media organisations in the world, and besides the Times, The Sunday Times and News of the World it controls The Sun and numerous overseas newspapers and broadcasters.

It also holds a large stake in Sky Television, and recently made a bid to acquire the rest of the company.

Many are concerned that such a huge media empire wields too much political power and, as such, any discussion of changes it makes is often tied up with criticism of the company. 

Alan Rusbridger, editor The Guardian newspaper, said in a recent speech that he wouldn’t criticise the paywall, which “may well make sense for how they see the future”, but also spoke of the “chilling effect… on public life and institutions” that “one large media company” had created.

Free and easy
The second issue is almost philosophical: some people believe that the internet is a driving force towards ‘intangible’ things such as news being available at no cost, and that moving towards charging for things online is a backward step.

One important cheerleader for this idea is Chris Anderson, former editor of Wired magazine in America, whose book entitled Free: The Future of a Radical Price explains that “in the digital realm you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win”.

It’s true that paywalls were tried in the 1990s, the early days of the world wide web, and since then most publications have abandoned them in favour of a system that encourages as many visitors as possible and hopes instead to make money from advertising. They wouldn’t do this, the argument goes, if it wasn’t working.

On the other hand, others say that this system is failing. The Guardian, for example, gets around 4.5 million visits to its websites each month but last summer its parent company Guardian News and Media announced a loss of just under £54m.

And although Chris Anderson’s book proclaims that free is the future, the book itself is no longer available to read free online – you have to pay to get it.

The money
This ties into the third argument: the economics of paywalls. Discussing The Times’ paywall statistics, American writer Clay Shirky wrote on his (free to read) blog that “general-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem”.

Once news has become a commodity – something that’s easily and cheaply available – it’s hard to charge more for it because readers will simply get their news elsewhere, an idea that has found wide agreement.

The Telegraph’s head of technology Shane Richmond said shortly after The Times’ plans were announced: “The more organisations that go behind a paywall, the greater the advantage to those outside it.”

Our verdict
So will we soon see every newspaper and magazine website disappearing behind a paywall, or will The Times and News of the World retreat back to free access?

In truth, neither option seems likely in the short term. In October News Corporation announced 105,000 'sales' on The Times website, of which more than half were subscribers – a huge drop for a website estimated to have over six million readers, but there’s no way for us to tell if they are paying more than the adverts were making before.

Its fortunes should soon be clearer – but in the meantime, one thing’s certain: the Computeractive website remains free for everyone to visit and read.

Would you pay to read news or other articles online? Do you subscribe to The Times, and if so what do you think of it? Let us know by emailing letters@computeractive.co.uk.