Analyst Report: Building a better paywall: strategies for monetizing news content

Analysis

Changes in technology have shaped the economics of news gathering and publishing for centuries. The impact of digital technology, however, has undermined rather than improved those economics by shattering long-established publishing monopolies. And with that loss comes the loss of pricing power, which had long sustained publishers’ advertising-supported business model.

Newspaper publishers, then, must find ways to subsidize content-creation costs directly. Some publishers are beginning to design new, more flexible paywalls and new ways of packaging content.

Others have begun charging users directly for access. And some publishers are looking to other content industries, such as online gaming, to navigate similar transitions, with varying degrees of success. Information publishers can look to the experience of those allied industries to learn important lessons about the importance of audience segmentation, trade-offs between audience size and audience engagement, and factors that influence users’ willingness to buy.

Going beyond such consumer-facing innovations, the industry needs to look for more effective ways to cultivate business-to-business (B2B) commerce. Both ends of the online information pipeline – content originators and downstream aggregators – could benefit from the reduction in legal tension that effective B2B commerce would bring about.

Technology providers and venture capitalists could gain a significant opportunity by helping to create the tools and platforms needed to instigate B2B commerce.

Table of Contents

  1. Summary
  2. Introduction
  3. Economic challenges
    1. The end of CPMs
  4. Searching for a new model
    1. Market segmentation
  5. Paying for content
    1. Cash or credit?
    2. Music and video
    3. Beyond the bundle
    4. Getting beyond subscriptions
    5. Retail trade
    6. The audience-size paradox
    7. Other revenue streams
  6. Aggregation and investment
    1. New tools needed
    2. The investment case
  7. Conclusion and key takeaways
  8. About Paul Sweeting
  9. About GigaOM Pro
  10. Further reading

Join Gigaom Research! Become a subscriber and get reports like these, plus our collection of over 1,700 reports from world-class analysts for just $1495 a year.

Tags