It’s no secret that news organizations, especially traditional print-based journalism, has been failing over the last few years. In an attempt to mitigate their revenue losses, many legacy news outlets are turning to digital, but they have been going about it the wrong way. News organizations that rely on a paywall to make up for the loss of print subscriptions will find that this plan is failing too, and it’s all because the paywall is dead.
Paywalls, especially those that exist on news websites, are modeled after the old business of subscription-based content. In an age ruled by digital native Millennials, this is simply no longer a suitable way of doing business. For these companies to stay in business, they will need to adapt to accommodate Millennials, who are set to become the cohort with the greatest spending power over the next few years. Millennials grew up surrounded by options. The internet turned news sources into news channels, and loyal customers now have the ability to flip the channel and discover their “something new.”
Likely a byproduct of the era they grew up in, recent polls have shown that Millennials value entertainment over news sources. The digital world offers options that didn’t exist 20 years ago, so there is no longer any reason to buy into the subscription-based news model. According to Business Insider, only 25% of US Millennials will pay for a digital news service, including newspapers, magazines, and news apps. Meanwhile, 55% will pay for entertainment content, like movies and TV, music, and video games. Customer loyalty has also changed as Millennials become the most powerful generation in America.
According to Pew Research Center, 51% of Americans claim to be loyal to their news sources, while 48% are not loyal. The study also confirms that 76% of Americans will turn to the same news sources, which means 46% can be described as loyal and also use the same sources for news. That sounds like a promising number for the pay-for-content model, except for the fact that most of those loyal readers are older. Those age 65+ make up 58% of those loyal readers, while only 28% fit into the 18-29 bracket. This means that millennials are less loyal than their elders, and in the next 10-20 years, legacy news outlets are going to flounder if something isn’t changed.
Millennials are less brand loyal than their predecessors. The lack of loyalty can be seen in the postmodern landscape that they grew up in. The death of the author–the idea that the author is no longer needed to give value to a piece of writing–was already a fixture in modern society when these Americans came of age. As Millennials grew, they became less reliant on the same voices, unlike older generations who followed the teachings of a small, reliable elite. In the age of social media, anyone can become a source for reliable content, making loyalty a fleeting concept.
At the same time, our society has put less value on scholars and authoritative voices, and has granted more attention to our entertainers. This is why you don’t know who wrote your school textbooks, but will follow the work of your favorite fiction writers. Paywall subscription numbers only confirm that Millennials are more interested in subscribing to Netflix than to the news. Those news organizations that use paywalls are still assuming that people care where their news comes from, but people can now find their own reliable content wherever they go. Now legacy news brands like the New York Times and the Wall Street Journal have become less valuable to a public that has access to more than a handful of news sources.
In a study by the American Press Association, 77 out of 98 US newspapers have implemented a digital paywall, while the top digital news sources have yet to put them in place. The study finds that Millennials are more hesitant to pay for news subscriptions, and that publishers will need to consider alternative models, such as micropayments, membership programs, and user data exchange to monetize their readers. There are different variations of the paywall format, but there is no formula to make it a successful practice. At this point, publishers are simply poking around in the dark and hoping something works. It’s time to kill the paywall and try something different.