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NZME paywall: industry players react to the Herald's premium content

After a being denied the opportunity to merge with nearest rival Stuff after a two-year battle, NZME has finally drawn first: pushing ‘premium’ digital content behind a paywall for the first time. We talked to industry players about the introduction of the paywall and what it could mean for advertisers going forward.

By Caitlin Salter | May 7, 2019 | news

Among other reasons, the Stuff/NZME merger process was long rumoured to be a way for both companies to avoid competition when monetising online content, but the Court of Appeal rejected the media companies’ appeal in September last year. A short while later in October, NZME announced it would introduce paywall.

Officially going live on 1 May, ‘regular’ articles and wire news on the Herald remains free to view, but ‘premium content’ is only available to paying customers – those who already have print subscriptions to the Herald or NZME’s regional papers: the Northern Advocate,Bay of Plenty Times, Rotorua Daily Post, Hawke’s Bay Today and Whanganui Chronicle, all have automatic access to premium content.

Digital subscribers also have access to selected articles from theNew York Times, the Financial Times, Harvard Business Review and The Times (UK) – all of which run their own paywalls.

Within the next 12 months, NZME is aiming to convert 10,000 of the Herald’s half-a-million registered online users into paying subscribers. Within three years, between 70,000 and 100,000 people will need to be paying for NZME digital content in order to meet targets the company has adopted from the experience with online paywalls in Australia.

NZME currently makes a total of $80 million a year in print subscriber revenue, and if those digital targets are reached it will see an increase in between $13 million and $19 million a year (so the digital subscribers will need to be added to the print subscribers that can access premium as part of their package).

The initial subscriber-drive offer is $2.50 per week for the first eight weeks (and then the full price of $5 per week), while there is also the option to pay annually for $199.  

Within hours of the NZME paywall going live, a Reddit thread had popped up instructing users how to avoid the paywall, and after 24 hours, an easy-to-use Google Chrome extension had been made.

Some paying customers took to Twitter to question just how ‘premium’ the experience behind the paywall is. One user suggested the word ‘premium’ implies ad ad-free experience – as it does on Spotify.

Herald journalist Kirsty Johnson replied to the Twitter thread explaining that the premium experience is still a work in progress.

“We aren’t quite there yet! FYI tho, most things that are long will be in a cleaner template with bigger pics and will almost be ad free. It’s a really nice experience [sic],” she wrote.

MBM co-founder and owner Sean McCready says NZME have executed the launch of the paywall well so far, with a good intro offer and easy sign-up.

“Good journalism needs to be funded and personally I have no problem paying for good content. There is an expectation that ‘premium’ content will be good quality – I don’t want to pay for puff-piece stories about NZME radio DJs, but [I’m] happy to read their in-depth content which the New Zealand Herald has increased in the last year or so.”

McCready believes the New Zealand Herald is producing better content and products than nearest rival Stuff.

While from an advertising perspective the paywall will mean smaller available audiences, McCready says this doesn’t have to be a problem because there are plenty of options across other digital channels, website and networks to reach people.

“In some cases,New Zealand Herald will be able to deliver a more engaged audience which can benefit advertisers. NZME clearly sees a better revenue upside in the subscription model than the potential loss of advertiser support.”

Carat New Zealand general manager Alex Lawson says the move to install a paywall is bold and aggressive, but time will tell if it works.

“I think that theoretically, the whole point is if you want good quality journalism there has to be some methodology to pay for it. That’s either an advertising or consumer-pay model.

“They [NZME] should have done it a long time ago, before they started giving content away and introducing a consumer-based model mode with the type of content they produce, we’re not sure it’s a long-term successful proposition.”

As NZME has been building up its business and sports offerings – most of which is now behind the paywall – Lawson says their audience will be reasonably niche.

“They’re beefing up the business offering which should drive some interest, but that’s just a single area of appeal. There are plenty of other places you can get that content.

“Finding a positive in it, you could argue a paying consumer is more valuable to us as an industry, but we’re yet to see whether that will be reflected in financial gains.”

With so much of advertising bought programmatically now, Lawson says site traffic is more of a publisher issue than an advertiser one, be he says he will be watching closely and advising clients on the best ways to take advantage of content and offerings on the Herald.

“The suspicion is [NZME] will see declines in site traffic – will non-paying customers still stay for the stuff that’s free? The pressure will come to decline the price of tenancy buys, there will generally be a bit less inventory and naturally, the algorithms will move to other sites.”

PHD strategy director Simon Bird says the paywall is an understandable reaction to the dramatic drops in revenue that newspapers have suffered in the last decade, but his feelings are mixed.

“As an avid reader, I hope it works for them, but as an advertiser, the jury is out and I’m sceptical.”

From the consumer point-of-view, Bird says he doesn’t believe NZME has done enough in recent months to prove some of its content is worth paying for.

“The premium content could be a positive but it all depends on how good the content is and how much of the premium content is from the likes of Harvard Business Review and the [New York] Times is made available.

“I doubt the average news reader would say there’s much difference in the content between the likes of Stuff and NZ Herald.”

Bird expects Stuff will initially end up with an influx of new readers as a result of NZME’s paywall, and predicts they will not make significant changes in the long term – however, he says if the paywall is a success New Zealand audiences should expect out media companies to follow suit.

While the Herald may be the first major newspaper in New Zealand to introduce a paywall, trade publications are no stranger to monetising online content. The National Business Review has charged its readers since 2009, Consumer NZ requires a paid online membership, and Newsroom already has a paywall in place for ‘premium content’.

Adding paywalls to online news is not a new thing.

Perhaps one of the most well-known (and reasonably early adopter) of the paywall is The New York Times. The Times is now eight years into its ‘metered paywall’ which it introduced in 2011 after falling print advertising revenue and projections of continued decline. The metered paywall charges frequent readers for access to its online content, initially allowing other readers access to up to 20 articles free per month.

The number of free articles was reduced to ten per month in 2012, and then again to five in December 2017. There are a number of packages available for customers looking for a digital subscription and during semi-frequent new subscriber promotions, the cost can be as low as $1 per week. As withThe New Zealand Herald, subscribers to the paper’s print edition get full access without any additional fee.

The New York Timesalso reserves the right to remove the paywall at certain times, such as for 72 hours during the 2016 US presidential election, plus it lifted the paywall on political content during the 2018 US midterm elections. The New York Times recently lifted the paywall for three days – May 3-5 – in celebration of World Press Freedom Day.

While The New York Times runs a different model of paywall to The New Zealand Herald’s ‘premium content’ model, it’s metered paywall has cemented the paper’s place as one of the world’s most trustworthy sources of news. In February 2018 it was reported that online subscription sales had jumped 46 percent in 2017 to $340 million and digital ad sales rose 14 percent to $238 million.

At the same time, The New York Times had cultivated more than 2.2 million paying online readers, as well as an extra 400,000 who pay for the Times’ standalone crossword and cooking apps.

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