One of the internet’s strongest allures has always been the promise of access to an unlimited amount of information at the touch of a button or two, completely free of charge. In some parts of the world—such as our own humble little country—the cost of getting online alone can overcloud all this freedom and make it appear as if this information is not free at all but it still is. That money you pay to gain access to the internet is only going into the pockets of your internet service provider.

Your favourite websites still need to make money and they often do so using a strategy inherited from newspapers and magazines—selling advertising space. Unlike their print counterparts, online publications have historically not charged their customers anything, opting instead to let their advertisers carry all of the cost. Using this strategy thousands of websites have been set up which deliver information free of charge to their customers while the content creators are still able to make some money for themselves. Alas, all of that is going to change as more and more websites are starting to demand money to show their content.

Advertising revenues are drying up

While the world population is growing at a rate that is making some parties anxious, the rate at which we are generating content and putting it online is even higher. The problem is that a substantial portion of these content creators is all competing to use advertising to finance their sites. Unfortunately, the online advertising market has not grown as fast as the number of these sites. This has created a situation where revenue from online advertising is slowly dwindling with big companies like Google and Facebook eating the lion’s share. For many content creators, this means that they must come up with new business models to survive.

Another major reason for the decline in ad revenue is the increased use of Adblocking technology by internet surfers. Originally developed to block annoying ads that slow website load times, these have gained such widespread usage that they have become significant threats to the incomes of many websites.

Traditional media houses are at a disadvantage

When newspaper and magazine readership started dropping, the print media was chided for failing to innovate and adapt. Presently many publications went online to find new revenue streams. They embraced the online advertising business model and became victims of the downturn that market later took. Raising the stakes against them even higher, these now online publications are competing with popular personal blogs for the same limited pool of advertisers and readers.

Unlike their fellow online publications, most media houses have very significant overhead costs. These costs usually take the form of journalists—most of whom are well trained and expect incomes and allowances that reflect this. Unfortunately, as these publications lean more on their online editions for revenue, they find themselves pitted against much leaner competitors, some of which can easily give them a run of their money—at a fraction of the cost.

The internet has liberalized news and information dissemination; this means that the days of journalists serving as filters for experts are passed as the latter can now share their knowledge and opinions directly with the public. This has given rise to an age where online publications exist which offer content which resonates with the needs of the readers better than traditional media houses can.

The Paywall

This is the publishing industry’s main response to dwindling advertising revenue and the results (together with the public response) have been mixed. A paywall is a method used by a site to restrict or limit access to content unless or until payment (or a subscription) has been made. Internet surfers who have become accustomed to free content over the last two decades have cried foul as more news outlets implement these. Some analysts have warned that this practice will ruin the publications but at the end of the day, there are enough success stories to convince site owners to at least try this out.

A paywall can take the form of a “soft” or a “hard” one. The former grants the visitor access to a limited number of articles per day or a limited amount of time in which to read them per day—for unlimited or reduced restrictions the reader then has to pay. A “hard” paywall, on the other hand, does not offer any free content and instead prompts the visitor for payment for them to read, listen or watch the publisher’s content.

The Wall Street Journal was one of the first outlets to implement a paywall as far back as 1999. Other prominent publications that have introduced these include The New York Times and The Guardian. Our own Financial Gazzette and Daily News also went the paywall route with the latter dropping the feature earlier this year. Academia has not been spared: a lot of research nowadays sits behind paywalls which only grant access to subscribing libraries and institutions.

On the other hand…

Not every publisher out there depends on third party advertising, this means that the content offered by these people will always be free. There are also initiatives such as those run by non-profits such as the Wikimedia Foundation (Wikipedia); any information shared, created or managed by these will also always be free.

It is also unlikely that many paywalls will succeed. Success has generally been elusive for general news outlets as visitors often opt to find free alternatives.