Very few local online media houses have implemented paywalls on their sites. Instead, many ask for public donations and use crowdfunding campaigns as a means of creating different income streams.
But what are the benefits of each of these methods, and is one preferable over the other?
The Guardian in the UK recently revealed it has 500 000 paying supporters of its content. But how does this compare to media houses in South Africa? Daily Vox, amaBunghane and GroundUp are just some titles that have chosen to go the donation route. The vast majority of the latter’s contributions come from institutional donors. In 2017 these included the Open Society Foundation, the Millennium Trust, and the Raith Foundation. Around 2% to 3% of GroundUp’s income is sourced through individual contributions.
“This is far less than we would like, but the reality is we have not found the right way yet, or perhaps put enough effort, into pushing for individual donations. Most of our articles have an appeal for donations, but I think this has had a limited, though tangible, effect,” says editor, Nathan Geffen.
Donation requests vs. traditional revenue generating methods
While donations are the only way that some online media can survive, Geffen believes this is a precarious position to be in, but no different than relying on other revenue generating methods. “Depending on donations to survive for the long run is precarious. But is it any more precarious than depending on hard copy sales and advertising? I’m not sure that it is. The problem is, as has been articulated by many media experts, is that with the rise of the internet, the traditional way of media publications making money has eroded.”
Utilising crowdfunding campaigns is another way of either making money or adding to existing revenue streams. “One advantage of ‘formal’ crowdfunding campaigns, which may result in us pursuing them, is that they have the potential to create a sense of community among your readers,” says Geffen.
Defending unbiased journalism while chasing funding
The major challenge with asking for donations is the agenda of the people or organisations that the money is coming from. Receiving money, while ensuring that journalism is still impartial, is a fine balancing act. Geffen explains, “Chasing revenue often means being faced with difficult decisions about what and how to publish. We have to be very conscious of not falling under the influence of our donors’ agendas … The main reason why we would like to have a larger percentage of funds coming from small individual donors is that it will lessen the risk of undue or even ‘subconscious’ (for want of a better word) influence. But more importantly it will make us more sustainable and able to handle the knock of, say, losing one of our big donors.”
Tiso Blackstar Group excels with a paywall
Other media houses have chosen to attach paywalls to their offerings. This includes Mail & Guardian, Netwerk24, and Tiso Blackstar Group. The latter’s strategy has been arguably the most successful with more than 10 000 paid-for active subscribers on the BusinessLIVE site. Head of digital, Lisa MacLeod, adds, “The new digital-only subscribers represent a more than 20% uplift in our total business subscriber base. The Sunday Times paywall has only recently been relaunched and we are not ready to release figures on that yet. Print subscribers have full digital access to the relevant products.”
Content sales and online subscriptions is a growing revenue stream for Tiso Blackstar. “This time last year we had negligible revenue from digital subscriptions and I would it expect it to add 20% to our revenue stream by next year,” MacLeod reveals.
Why use a paywall?
Explaining why Tiso Blackstar Group chose the paywall route, MacLeod says, “Digital advertising is under pressure from the duopoly of Google and Facebook and media houses need alternative forms of revenue. Circulation or cover price revenue that is part of the print revenue bundle has inexplicably not been part of the online revenue stream, but that is changing. Offering premium, compelling packages for readers and asking for payment is becoming more commonplace and helps us media houses maintain our newsrooms and continue to practice quality journalism.”
Much of the group’s success can be attributed to the packages it has created for subscribers. Incorporating several titles into the BusinessLIVE offering, as well as partnering with reputable international media houses such as the Wall Street Journal and UK’s Telegraph, at affordable rates has appealed to online news readers.
Attracting and keeping subscribers
With the majority of online news still free for South Africans, media using paywalls have to give very good reasons for a person to even consider paying money for access. “The average revenue per user of a paying subscriber is about a hundred times greater than a unique browser on a site monetised by digital advertising alone. We see paying subscribers as incredibly valuable annuity income providers, and we make sure they are getting excellent bang for their buck,” comments MacLeod. She stresses that a media house can’t just put up a paywall without adding value for customers and that very good editing, curating and marketing of content is also integral to engagement, which keeps subscribers with you.
Tiso Blackstar Group is ensuring value through the quality of its content as well as the pricing model it has chosen. “In an era of fake news and misinformation, we are distinguishing ourselves by being a trusted and verifiable source of news,” says MacLeod. The introduction of paid news to maintain quality is not new, and we are following the lead of quality publications the world over. We have been very careful to make sure that we are providing lots of value for clients and readers at different levels of access. We don’t believe in closing down access to news, especially at a time when a vibrant media is critical to our country’s future.”
A restructured paywall at Netwerk24
A recent move by Netwerk24 saw its 11 Afrikaans lifestyle titles migrated to the digital news channel, which sits behind a paywall. These are Huisgenoot, Sarie, Kuier, Tuis, Weg! and Weg! Ry & Sleep, Landbouweekblad, Baba en Kleuter, TV-Plus, Finweek and SA Jagter.
It seems the move was well received by the Netwerk24 audience with the group announcing, in a press release, that it saw weekly paid views in November reaching 2 232 123, the highest number in Netwerk24’s history. Another all-time high was reached with 725 017 (700 499 in app and 24 518 desktop) weekly unique browsers in the same period.
“We are very pleased with the success of the migration. The numbers speak volumes to reinforce our belief that we are forging a digital future for our much-loved and read magazine brands,” says Gaafele Mbele, Ads24’s digital sales manager.
So are paywalls or donations better?
Paywalls and donations both have their own benefits and it seems to depend on the nature of the media publication. For paywalls, it is imperative that the costs are not too high and the reader is given value for money. For donations and crowdfunding, impartiality of content should be the main focus, because while it is crucial that funding is received, compromising the ethics of the organisation on request from a donor should never be considered.
Michael Bratt is a multimedia journalist at Wag the Dog Publishers, publishers of The Media Online and The Media. Follow him on Twitter @MichaelBratt8