A model to save newspapers: Where paywalls actually work

As news organizations worldwide wonder if they can charge for content that readers are accustomed to getting free of charge, two Eastern European countries have pioneered a new model: erecting national paywalls and charging a monthly fee for access to most of their newspapers.

Media executives are now wondering if the model can be scaled up for larger, Western countries, or if it is uniquely suited to small countries, to European nations with a history of mandatory broadcasting taxes, or even to post-communist societies with, some say, a greater thirst for news than those with a longstanding democratic history.

Piano Media launched Europe's first national paywall in Slovakia in May 2011. The company is already approaching profitability there, recently expanded to Slovenia, and has now set its sights overseas. Is this the breakthrough the beleaguered news business has been waiting for? The company's chief executive, Tomas Bella, thinks so.

"Our next priority would be to prove it's not only for small countries or Eastern Europe. We need to do two to three medium-sized countries," he says.

Slovak users pay just under $4 a month to access nine news websites, including mainstream newspapers SME, Hospodárske Noviny, and Pravda, plus business, sports, and technology publications. In wealthier Slovenia, users pay $6.50 for a similar mix. The model does not require all newspapers to participate in order to succeed, Mr. Bella says.

"It's not about getting everyone, but it is about getting enough to provide value," he says. "We need to change the mind-set of people, break the barrier of 'I will never pay,' and then you have years to work on 'how much' [people will pay]."

European newspapers are notoriously partisan. Piano Media's model is designed to ensure readers only pay for publications they read: rev-enue from subscription fees is distributed based on which publication each reader signs up through and which ones are read the most.

Many in the news industry worry that free online access is a genie that can't be put back in the bottle.

Roy Greenslade, former editor of Britain's Daily Mirror and a visiting journalism professor at the City University of London, says it is too late because the Internet's founding motto of "information wants to be free" has gone too far.

"Our funding mechanism, our business model, is over. We can lament it, we can bemoan it, but we can't do anything about it," he says.

But venerable newspapers worldwide, including The New York Times, The Times of London, Germany's Handelsblatt, and France's Le Monde are attempting to claw back losses by asking readers to pay for some or all news online. Andrew Calcutt, journalism professor at the University of East London, says that if newspapers want paying readers, they need to get back to providing hard news that is relevant to people's lives.

"The Piano Media model could possibly work elsewhere if people got used to the idea that news was something special, but the papers have spent too much time disguising what they are and what they do well.... People have become so habituated to mush that they may not know what to do with hard news."

Some argue that paywalls may have a greater chance of success in post-communist societies that, having lacked a free press for decades, understand its value and are more willing to pay for news.

"Slovakia is a place that didn't have an easy, free press. [The success of] the emergent press is specific to the political conditions of the country," says Mr. Greenslade, explaining why he thinks a paywall has more chance of success in Eastern Europe.

But Matija Stepisnik, a journalist with the Slovenia daily Vecer, says that the lack of free press in the past is no longer relevant and that the implementation of the Piano Media paywall – of which Vecer will be a part – has been controversial.

"The results after [the] first weeks will be very interesting and some sort of litmus test. The audience in Slovenia is accustomed to free access to Internet news, although there are [already] some media houses with their own pay systems. The media culture [needs to] change quite a lot [so] that people will recognize that quality content, analysis [and] columns can not be [had] for free any more," he says in an e-mail. "The reputation of media has fallen quite dramatically in the last years due to crisis of credibility of owners, so it is a big question how Piano will be accepted."

There are legal considerations as well. Some say a national paywall could violate antitrust laws. In the United States, proposals that the major papers go behind a paywall simultaneously have sometimes been discredited on those grounds.

Robert Levine, author of "Free Ride: How Digital Parasites Are Destroying the Culture Business, and How the Culture Business Can Fight Back," says any collective effort would be resisted by major Internet businesses such as Google and that they might try to block it with antitrust legislation.

"Google has incredible negotiating leverage with individual newspapers, because each paper in the US doesn't have a lot of power. If they acted together, Google would lose that advantage, and it would act," he says in an e-mail.

Besides, it is unlikely that Piano Media violates any European Union competition laws, says attorney Mary Catherine Lucey, a law lecturer at University College Dublin.

"The arrangement is not necessarily anticompetitive," she says. The paywall might be comparable to groups that collect royalties for writers for use of their work in libraries – a setup exempt from EU anticompetitiveness legislation.