The Great Paywall of the Media Landscape

How Media Affords Its Future

I used to joke that Hulu intentionally made their ads repetitive and terrible just so consumers would be forced to pay for their subscription service. The point being that internet and media have always had a tricky relationship. A lot has been written about the demise and subsequent rebirth of media and how we pay for it. This trend that began with news media and is steadily spreading throughout the wider bevy of industries within the media landscape is taking up more and more of our financial commitments. The Great Paywall will decide how the media we consume is funded and how it will be stable for years to come.

These issues started long ago, and the causes vary. Whether it be publishers and editors unwilling to adapt, ad revenue being eaten up by corporate giants, or customers’ increasingly thrifty spending habits, the fact is that the next decade will determine if media can rise from the ashes or fall by the wayside.

I’m optimistic. People who enter these industries are creative, and there seems to be enough recognition of the problem by the players in the game. The dominant model seems to be some version of a paywall or subscription model. It’s the hit thing nowadays. The execution has been mostly painless though awkward. Whether you’re traditional and subscribe to the New York Times and Hulu or you’re a little more adventurous and regularly pay for razors, guided meditation, crystals, pickles, slime, or makeup, the obvious problem is the hard limit for most people with most people’s disposable income.

Take my own life for example. I use Netflix, but my parents pay for it. I do subscribe to Hulu and on and off to HBO. As far as written media goes, I subscribe to the New York Times, The Atlantic, and I recently got the Medium Membership. Finally, I subscribe to Vimeo and Squarespace for business and Xbox Gold for entertainment. Even now, when I list them all, it seems like a lot, and I couldn’t imagine myself adding any more services on to this. I think it would be safe to assume most people are similar.

In 2018, the consulting firm McKinsey & Company conducted a study in order to figure out just how popular this subscription service was to U.S. consumers and to learn just how pervasive the paywall model was in the U.S. economy. Key takeaways include:

  • 15% of online shoppers have subscribed to an e-commerce service over the past year, with 46% of respondents subscribed to an online streaming-media service including NetFlix.
  • The median number of subscriptions an active subscriber has is two, and nearly 35% have three or more. Men are more likely than women to have three or more active subscriptions (42% versus 28%).
  • 55% of all subscriptions are curation-based, making this category the most dominant in the 2018 subscription economy. Curation-based subscriptions’ dominance reflects online customers’ demand for a continued series of personalized, high-quality experiences. Replenishment-based subscriptions account for 32% and access subscriptions, 13%.

As of February 2018, there were close to 7000 subscription companies in the world, and almost 70% of those companies were based in the U.S. The industry as a whole was valued around 5 billion and at 8 years of age, Birchbox, one of the first companies to popularize the model, is currently valued at $500 million.

In 2017, a Reuters Institute study discovered that just 16 percent of the U.S. population paid for digital news in the past year, about half of which paid for a recurring subscription. While that percentage positions the U.S. near the top of a list of developed digital markets, it only amounts to about 52 million Americans in total, based on the U.S. Census Bureau’s 2016 estimate that the country’s population was 326 million.

The point is that business is booming and the industry is on track to become even more staturated. Tien Tuzo, alumni of Stanford and founder of Zuora, a company geared towards helping business make the transition into a subscription model, was quoted in an interview saying,

“Advertising may never go away, but as subscription services become the norm, readers and publishers alike are starting to appreciate the dividends of a direct consumer relationship. The behavioral insight that comes with membership plans and paywalls helps media companies move away from empty calories like page views toward more valuable engagement metrics like time spent.”

The obvious downside to all of this is that the more metered media becomes, the more services will require a certain amount of privilege to access. We can all feel good about our New York Times subscription, while thousands of people can’t realistically afford the price. This is compounded as the amount of subscription services increases with each year

This hits hardest on the written word. People have this sense that the written word should be free, especially when it comes to the news, reasoning that the public has a right to know. News organizations are here to hold powerful people to account and putting that information behind a gate is contrary to their reason for being.

That being said, most ad-revenue nowadays has been gobbled up by Facebook and Google and the sites that do rely on ads are usually overbearing in their presentation, forcing the consumer to delve through hordes of commercials to get to the actual article. Just take a look at the travesty that is TV news. What’s important gets side stepped by what’s popular and what’s informative gets replaced by “gotcha” moments.

Right now, paywalls seem to be winning, and it’s a step in the right direction. Paying for media gets rid of a lot of the issues that comes along with ad-supported digital products, and customers tend to have a better experience utilizing the product. The issue is always going to be expansion of that base and I think that’s where company morals, quality, and values will play a big deal, especially when it comes to the news.

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Highly-rated member of the political bronze league. https://linktr.ee/thevirtualregister

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