How Paywalls Work


The New York Times paywall went live on March 28, 2011.
The New York Times paywall went live on March 28, 2011.
alextorrenegra/Flickr Creative Commons

On March 28, 2011, a grand online experiment commenced. Or rather, re-commenced.

At the stroke of 2 p.m., a paywall, or online system charging visitors to access content, went live on The New York Times Web site, and many wondered whether the "Gray Lady" was about to fall flat on her face by charging readers to browse articles. After all, The Times had already dabbled in this concept in late 2005 when it attempted to cordon off its most popular opinion columns and archived articles under the TimesSelect paywall. The paper dismantled TimeSelect in 2007, a defeat of sorts that seemed to make the stakes for the second go-around even higher.

Granted, this shiny new paywall is designed much differently than TimesSelect. Rather than charging an upfront monthly or yearly rate ($7.95 and $49.95, respectively), the media machine opted for a metered approach instead. Visitors can access their first 20 articles per month at no cost, but have to fork over for online subscriptions beyond that [source: The New York Times]. Or if people choose to go rogue, they can simply "hop over" the paywall, which we'll discuss in more detail later.

Paywalls are of particular concern to the Web sites of print publications, hence the back-and-forth over The New York Times. In the past, a number of newspapers and magazines have attempted to charge readers for access, and then later backed down due to dwindling online traffic. As many print publications folded and shrank during the recession, sites struggled to figure out how to bridge their revenue gaps, and for a while, it seemed like online advertising surrounding freely accessible content was the answer.

However, The Times and other publications aren't so sure that ads are profit panacea they've hoped for. And since it costs these businesses to serve up the articles the wired public gobbles up for free, isn't it time users start footing some of the bill? That's been the question for many online content providers -- the folks who bring you libraries of music, movies, television, commentary, journalism and research -- as they struggle over whether or not to charge visitors for access, streaming and downloads. Also, the rise of mobile devices and tablet computing is revolutionizing traditional content and providing consumers with new ways to interact and engage with online publications, which some consider worth a premium toll. And so the debate over free versus paid online content rages on.

Paywall Architecture

This is what a paywall looks like.
This is what a paywall looks like.
dullhunk/Flickr Creative Commons

Before delving into the great paywall debate, it helps to understand what exactly those virtual gates are. While we might like to envision these subscription portals as being heavily guarded by Internet gnomes that deflect non-paying IP addresses by brandishing tiny swords, paywalls sadly aren't all that magical.

Paywalls are Web site coding systems that allow only authenticated users to pass through into the land of free access. For an idea of how this works, consider how a couple Northwestern students figured out how to hop over The New Yorker magazine's paywall by fiddling with its Web site coding, which, the students noted, is publicly accessible, so it's not like they were breaking in through some sort of backdoor. The paywall consisted of an encryption file and an authentication file that would prompt the user to log in, then verify whether that user has paid access to gawk at those hilarious New Yorker cartoons [source: Shalvey]. Obviously, different paywall systems -- including metered, freemiums (which allow readers some, but not all, articles for free) and full restriction -- will involve different types of encryption, authentication and data tracking that all boil down to coding and more coding.

How much does it cost to build one of these codified walls? In a nutshell: It depends. A paywall system for a smaller daily with lower traffic will undoubtedly cost far less than the $40 to $50 million The New York Times reportedly coughed up for its metered system, which represents only part of the site-wide infrastructure [source: Carlson]. For an idea of just how pricey a paywall that is, consider that it took $25 million to get the almighty Google up and running. Analysts aren't sure why The Times' gilded wall was so exorbitant, and its publisher Arthur Sulzberger claims costs were closer to $25 million, but regardless, it's a lot to pay -- especially considering that some people quickly figured out how to hop right over that golden gate [source: Kramer].

Just like the Northwestern students who found a crack in The New Yorker paywall, folks quickly tinkered with The New York Times JavaScript, CSS and URLs and passed right on through to the site's protected content without having to pay a penny. Internet browser add-ons have even been developed to automatically break the paywall code. If you feel like too much of a content thief to directly dodge the paywall via code, you could take advantage of a way in which The Times intentionally made it porous, leaving side doors open via Google, Facebook and Twitter. Link to a Times article off of any of those sites, and it won't count against the 20-article monthly limit.

These concerted efforts to storm and bring down paywalls may make you wonder whether sites should ask people to pay in the first place. Read on to find out who agrees with you.

The Great Content Debate: Free Versus Paid

In 2008, Wired magazine editor Chris Anderson made a fairly bold, though not inconceivable, statement in his in book "Free." He declared that "a decade and a half into the great online experiment, the last debates over free versus pay online are ending" [source: Anderson]. A year prior, The New York Times had abandoned its efforts to get people to pay for access to its leading opinion columns, The Wall Street Journal was planning to release many more of its online articles for free and Google continued churning out free applications as merrily as a goose laying golden eggs. After all, sites could charge advertisers a fee based on the number of people who viewed their billboard on a Web page -- a unit referred to as costs per impression, or CPM -- to make money. The more popular the site, the higher the CPM and everyone could go home happy.

Rewind 24 years prior and futurist Stewart Brand was saying essentially the same thing at the first Hackers Conference in 1984. Brand coined the phrase that "information wants to be free," and he stands behind that notion -- for the most part. In a response to Apple co-founder Steve Wozniak, Brand noted that the need to be free dominates the information superhighway, while a certain cache of information -- the innovative stuff that can't be replicated, such as a handy app -- does not [source: Siklos]. On the contrary; that kind of quality knowledge demands a high premium, which explains why The Wall Street Journal didn't unbridle all of its financial market content to the teeming masses. For people deeply involved in that industry, they'll pay for the inside scoop.

Anderson's "Free" premise recognized this tension between information that wants and doesn't want to be free. Nowhere has that tension been more hotly debated than with The New York Times' metered paywall. Months before it even went live in March 2011, a host of tech pundits, bloggers and journalists had declared it dead on arrival, while many others also held out hope that the site would turn a profit and signal a new era in online business models. In spite of the diversity of voices tossing their two cents into the paywall debate, most echoed a common cluster of pro and con arguments:

  • Pro: People should have to pay to access quality content because news doesn't report itself, and the online advertising model can't support print publications for the long haul.Conclusion: Paywalls can save the publishing industry.
  • Con: People shouldn't have to pay because it drives away loyal customers, and they'll find the same content elsewhere for free or figure out a way to hop over the paywall.Conclusion: Paywalls will kill the publishing industry.

Yet, details of The New York Times previous paywall "failure" with TimesSelect indicate that the free-versus-paid debate isn't quite so black and white. While the site removed TimesSelect two years after its inception, it wasn't a total flop: The service reportedly earned $10 million per year and had 227,000 paying customers [source: Arthur]. However, since digital advertising rakes in at least $300 million annually for the company, its decision to remove TimesSelect and focus on ads appears to have made fiscal sense [source: Cervieri]. But with the ubiquity of mobile devices and the rise of tablet computing, the company now senses it's time to diversify its revenue base through subscription services.

However, that still doesn't answer the ultimate deciding factor in the free-versus-paid content war: If you build it, will they pay?

Will people pay for Web content?

Are the days of paying for news over?
Are the days of paying for news over?
ElvertBarnes/Flickr Creative Commons

People have largely gotten used to accessing Web content -- particularly news content -- gratis. That fundamental fact is a primary reason why so many mainstream sites keep their gates wide open rather than charging an entrance fee. But the work that goes into cooking up that content -- whether it's done by a reporter in the field or a designer creating an infographic or a photographer snapping shots -- doesn't materialize for free. And when the product is high-quality to boot, such as that created by The Wall Street Journal, The Economist, The New York Times and other publications that have erected paywall systems, there's an understandable onus to ask patrons to pony up.

How willing are we, the Internet masses, to bear that financial burden? Surveys say: not very.

A 2010 study from the Pew Research Center's Internet & American Life Project found that 65 percent of Americans have paid for online content [source: Jansen]. Sounds like great news until you break down the data into precisely what we'll spend money on and how much we'll shell out. Out of that majority, only 18 percent have bought access to "digital newspaper, magazine, or journal articles or reports" [source: Jansen]. Instead, Internet users are far more likely to purchase digital music, ringtones, apps and games. Granted, selling apps is sort of like selling one-way tickets to unique content and user experiences, but it doesn't account for standard Web traffic.

Results from an April 2011 survey conducted by Harris Poll didn't hold much more promise for restricted news sites in particular. Only 20 percent of respondents said they'd be willing to pay for online news, down 3 percent from 2009 [source: Bazilian]. This isn't a case of Americans being a bunch of online misers, either. Canadian Media Research Consortium found only 4 percent of adults who'd buy online news, and 92 percent said they'd simply find another free news outlet [source: Phelps].

There also seems to be a price point cut-off for what people consider a reasonable rate for online subscriptions. According to both the Pew and Harris polls data, willing paywall participants begin to drop off beyond $10-per-month. For that reason, some industry analysts suspect that The New York Times' metered paywall system ranging from $15 to $35 per month might be too rich for Internet users' blood [source: Outing]. Sure, some loyal readers will gladly purchase the product, but the paper may be casting a narrow net -- especially when, as we've mentioned, it's possible for people to bypass the paywall altogether.

The Future of Paywalls

A number of premium publications have had no problems with paywalls.
A number of premium publications have had no problems with paywalls.
karen horten/Flickr Creative Commons

Although online subscriptions and paywalls are sometimes portrayed like Internet pariahs, there are actually a number of publications that have enforced them on their Web sites and haven't necessarily suffered readership and advertising blows. For instance, if you want to browse the online versions of the following magazines and papers, you'll need to pay:

  • The New Yorker
  • The Economist
  • The New Scientist
  • The Times of London
  • The Dallas Morning News
  • Harper's

Many of the media companies have been cagey about reporting the exact number of online subscribers and revenue they've reaped after erecting paywalls. Surprisingly, a couple of standout success stories haven't been among the big media players. Between 2000 and 2010, the Arkansas Democrat Gazette saw an uptick in Web traffic after implementing a paywall system [source: Spivak]. Then, there's the case of the monetized obituaries. When Pennsylvania's Intelligencer Journal-Lancaster New Era started charging for online access to the newspaper's death announcements, page views bumped up 3.7 percent, and unique visitors inflated by 6.8 percent [source: Spivak].

When debating the future of paid content online, the obituary case study might serve as type of blueprint. It's an example of niche information that serves a specific population. One couldn't, say, click over to The Philadelphia Inquirer to hunt down the same obituaries for free. Similarly, you'd be hard pressed to find verbatim copies of Harper's articles scattered around the Web on open access sites. Forrester analyst Nick Thomas refers to this need for niche as media companies finding their "popcorn" [source: Smith]. If you think of the Internet like a movie theater, it isn't enough to just screen the newest films. Similar to how independent gas stations make their profits not from gasoline but convenience stores sales, movie theaters reap revenue from popcorn and snacks. Therefore, it isn't just enough to produce articles and other content online. That's the type of stuff that Stewart Brand predicted would "want" to be free. What will woo a Web audience to honor paywalls are quality content, innovative apps and experiences that they can't browse, download or stream anywhere else.

Whether The New York Times will achieve this lofty goal remains to be seen, but clearly certain people will pay for certain types of content. However, to simply toss up a paywall without first carefully considering what's behind those JavaScript and HTML gates is asking for the Internet to abandon the entire castle.

Related Articles

Sources

  • Anderson, Chris. "Free! Why $0.00 Is the Future of Business." Wired. Feb. 25, 2008. (April 22, 2011)http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all
  • Arthur, Charles. "More pay, less wall: the Web sites that already successfully charge for content." Guardian. Dec. 2, 2009. (April 22, 2011)http://www.guardian.co.uk/media/2009/dec/02/Web sites-charge-content-paywall-murdoch
  • Bazilian, Emma. "Slovakia Erects Country-Wide Paywall." Adweek. April 19, 2011 (April 22, 2011)http://www.adweek.com/news/press/slovakias-country-wide-paywall-130759
  • Bazilian, Emma. "They Still Won't Pay for News." Adweek. April 18, 2011. (April 22, 2011)http://www.adweek.com/news/press/they-still-wont-pay-news-130727
  • Bell, Emily. "New York Times paywall: built for the digital future?" Guardian. March 2011. (April 22, 2011)http://www.guardian.co.uk/media/2011/mar/26/new-york-times-paywall
  • Carlson, Nicholas. "How Did the NYT Paywall Cost $40 Million to Build? Google Took $25 Million!" Business Insider. March 29, 2011. (April 22, 2011)http://www.businessinsider.com/how-did-the-nyt-paywall-cost-40-million-to-build-google-took-25-million-2011-3
  • Cervieri, Michael. "Playing the Numbers with the NYT Paywall." March 2011. (April 22, 2011)http://michael.cervieri.com/2011/03/18/playing-the-numbers-with-the-nyt-paywall/
  • "Digital Subscriptions and Premium Products." The New York Times. (April 22, 2011)http://www.nytimes.com/content/help/account/purchases/subscriptions-and-purchases.html
  • Fallows, James. "How to Save the News." The Atlantic. June 2010. (April 22, 2011)http://www.theatlantic.com/magazine/archive/2010/06/how-to-save-the-news/8095/
  • Jansen, Jim. "65 percent of internet users have paid for online content." Pew Internet & American Life Project. Dec. 30, 2010. (April 22, 2011)http://www.pewinternet.org/Reports/2010/Paying-for-Content.aspx
  • Koblin, John. "David 'Mr. Paywall' Remnick Defends His Turf." The New York Observer. June 1, 2010. (April 22, 2011)http://www.observer.com/2010/media/david-%E2%80%98mr-paywall%E2%80%99-remnick-defends-his-turf
  • Kramer, Larry. "Why I Won't Pay for 'The Daily' And I Will Pay for the Digital 'NYT'." PaidContent. March 19, 2011. (April 22, 2011)http://paidcontent.org/article/419-why-i-wont-pay-for-the-daily-and-i-will-pay-for-the-digital-nyt/
  • Kramer, Staci D. "The NYT Pay Plan's Most Dangerous Foe: Perception." PaidContent. March 27, 2011. (April 22, 2011)http://paidcontent.org/article/419-the-nyt-pay-plans-most-dangerous-foe-perception/
  • Outing, Steve. "NYTimes' new pay model: They blew it!" March 17, 2011. (April 22, 2011)http://steveouting.com/2011/03/17/nytimes-new-pay-model-they-blew-it/
  • Phelps, Andrew. "Canadians are also hostile to paywalls, survey finds." Nieman Journalism Labs. March 30, 2011. (April 22, 2011)http://www.niemanlab.org/2011/03/canadians-are-also-hostile-to-paywalls-survey-finds/
  • Shields, Mike. "Pay Walls Crumble." Adweek. Jan. 30, 2011. (April 22, 2011)http://www.adweek.com/aw/content_display/news/digital/e3i543ab57159cb298ade90321cea7cd6b3
  • Siklos, Richard. "Information wants to be free…and expensive." Fortune. July 20, 2009. (April 22, 2011)http://tech.fortune.cnn.com/2009/07/20/information-wants-to-be-free-and-expensive/
  • Shavley, Kevin. "The New Yorker has a Paywall Problem, Part 2." Flood Magazine. Oct. 25, 2010. (April 22, 2011)http://floodmagazine.com/2010/10/25/the-new-yorker-has-a-paywall-problem-part-2/
  • Spivak, Cary. "Pay to Play." American Journalism Review. Feb. 23, 2011. (April 22, 2011)http://www.ajr.org/Article.asp?id=5017
  • Smith, Patrick. "Paywall Strategies 2011: Forrest Analyst Nick Thomas on 'monetising the user, not the content'." The Media Briefing. Feb. 24, 2011. (April 22, 2011)http://www.themediabriefing.com/article/2011-02-24/paywall-strategies-2011-forrester-analyst-nick-thomas-on-monetising-the-user-not-the-content