Paywalls on newspaper websites are an increasingly common complaint among content-hungry readers who have gotten used to that old adage that "information wants to be free." But if a new study by the Newspaper Association of America is any indication, the trend of charging for content is not likely to die out any time soon.
Since the New York Times first rolled out its paywall in early 2011 -- amid equal parts skepticism and ire -- other papers around the country have followed suit at an impressive rate. According to the study, 41 American papers adopted paywalls in the third quarter of 2011 alone. That's up from 10 for the same period the year before.
"It's the year of the paywall," wrote Ebyline's Susan Johnston. "American newspapers have committed, for better or worse, to making readers pay for the news online, after years of giving away on the web what they charge a fortune for in print."
In all, the association examined 156 newspapers that have adopted some form of paid content. Perhaps most surprising is that, of the papers included, the vast majority are smaller publications: 89 percent have a circulation under 150,000, while only six percent have a circulation over 250,000, suggesting that community papers are following in the Gray Lady's footsteps. Most papers use the metered approach adopted by the Times, offering a limited number of free articles each month. On average, readers are allowed 11.2 free articles before the dreaded "lights out" ad pops on the screen and prompts them to subscribe.
The report also found that print subscribers don't automatically gain paywall access. Just over half of the papers studied offer print subscribers free digital access, with the rest offering a discount.
Despite the overwhelming growth of newspaper paywalls, there is only limited data to support their effectiveness. When the New York Times Company (NYSE: NYT) released its second-quarter earnings last week, it showed an 8 percent gain in subscription revenue, which includes revenue from paywalls. However, ad revenues fell 7 percent, leaving the company with total revenue gain of only 1 percent. Times publisher Arthur Sulzberger Jr., meanwhile, has been notably mum on the surprising ease with which readers can bypass the paywall by clearing the cookie cache on their browsers -- as many websites have pointed out.
None of this seems to be slowing the paywall trend, however. In February, Gannett (NYSE: GCI), the country's largest newspaper publisher, announced that it will enact paywalls on all of its 80 community papers by the end of the year. (The switch will not include USA Today, which already has a profitable lock on controlled circulation in hotel rooms.) And the McClatchy Company (NYSE: MN), which owns about 30 newspapers -- including the Philadelphia Inquirer and the Minneapolis-St. Paul Star Tribune -- announced its own paywall plan during its second-quarter earnings last month.
So maybe it's time to revise that famous battle cry of technology activists. Information may want to be free, but publishers are apparently tired of giving it away.