Can Independent Journalism Thrive under Paywalls?

Quality journalism in digital media can no longer be supported by an advertising-driven business model. As competition for viewer attention grows more intense, several digital new-media organisations are resorting to sensational journalism and generating “clickbait”, which has been degrading the quality of news online (McDonald 2016). 

At the same time, the use of ad-blockers across desktop and mobile devices increased by 142 million, year-on-year, to reach 615 million devices between December 2015 and 2016. As a result, digital publishers are expected to lose more than $25 billion in advertising revenue globally by 2020 (Barker 2017). A large share of online advertising is captured by internet media companies. For instance, Google and Facebook alone attracted almost one-fifth of the global advertising spending in 2016 (Kollewe 2017, The Hoot 2017).

This leaves us with news-producing organisations that are financially crippled and unable to invest in high-quality journalism. Consequently, they become biased and end up bowing down to the advertisers’ wishes (Sibal 2018). 
This lack of independence that news organisations are facing today is detrimental to the proper functioning of democratic politics. Voters rely on the media for information that helps them elect their representatives. An increase in media coverage of an issue increases voters’ awareness about it, which forces politicians to put more effort in convincing voters to vote for them (Prat and Stromberg 2013). Evidence suggests that electoral accountability is greater in areas where newspaper circulation is higher: state governments in India are more responsive in intervening via the public food distribution system and calamity relief expenditure when there is a fall in food production and crop damage in such areas (Besley and Burgess 2002). Quality journalism, therefore, enables voters to choose better politicians. 

Possible Business Models for Digital News Media

As more users switch to smartphones for consuming news, digital media has become a vital addition to traditional newsrooms (Hoot 2017). A typical new digital media website starts with seed funding from philanthropic foundations, venture capitalists or crowdsourcing campaigns, which allows them to establish their credibility and brand value in the first few years. Once the money runs out, the websites are expected to develop their own revenue streams and become self-sustaining. This brings us to the question of how independent news media should be funded. 

Subscriptions for accessing news content behind paywalls is one way by which independent media can be funded. The philosophy is simple; readers must pay for high-quality news content because the advertising-based business model hinders the publication’s independence and the quality of news it is able to produce. Globally, news organisations like the New York Times, the Economist, Financial Times and the Washington Post have put a majority of their digital content behind paywalls (Madrigal 2017). Most of them follow a metered approach, where access to a fixed number of articles is free per month, beyond which the readers have to pay for access. The New York Times has been extremely successful in this endeavour:  2.9 million of its 3.8 million subscriptions are digital, which accounts for nearly two-thirds of the company’s revenue (Peiser 2018). 
The Guardian, on the other hand, keeps access to its content open and readers can support the organisation by becoming paid subscribers. Katharine Viner, the Guardian’s editor-in-chief, says they want, “all of their journalism to remain global, free and accessible for our readers – and not restrict it, only to those who could afford to pay for it” (Viner 2018). Recently, the Guardian achieved a milestone with one million subscribers who pay to support its journalism, which will help it break even by April 2019. 

In India, digital news media is taking the lead in breaking important news stories, leading investigations into corruption, and providing sustained coverage of issues concerning farmers, minorities and under-represented groups. They have formed an important constituent of the public sphere. Some of the more established digital news media organisations now have mature audiences and they are experimenting with different subscriber-funded business models. For instance, the Wire is trying a subscriber-based model without putting their content behind a paywall. Scroll is working along a similar model by providing subscribers with an ad-free experience and some premium features while all content on the platform remains open and free. Newslaundry, on the other hand, is completely ad-free and makes some of its content freely available, while the rest is available only to subscribers. 

At another end is The Ken, a subscription-driven digital publication that has a majority of its content behind a paywall. Its co-founder Rohin Dharmakumar believes that “when someone pays you money, it shows they feel what you are doing has value.” (Gangal 2017). 

Paywalls Can Divide the Public Sphere

The discourse on funding independent news media has overwhelmingly revolved around economic sustainability. It has ignored the role of the media as a platform that is necessary for initiating a dialogue on civic issues. We blame social media algorithms for creating echo chambers, so that the content we encounter online matches our prior behaviour and preferences. Paywalled news content, once it achieves a critical mass, will be no different in the way it will segregate news content. 

If someone subscribes to the New York Times, it would become their default source of news. However, non-subscribers will not have access to the depth of coverage that is provided by the publication. Eventually, a lack of open access to multiple news platforms will divide the public sphere (Habermas 2007). Paywalled news media will thwart mutual engagement between news publications because each publication will have a different conception of what qualifies as a public good, depending on the kind of business model that they operate on. 

Paywalls will separate online news readers into paying and non-paying categories. This will influence the advertising market around news websites, as users who pay for news will be identified as the ones with a higher spending capacity. They will therefore be more attractive to marketing companies. So, advertisements are likely to gravitate towards paywalled news media website, which would end up impoverishing free access publications. This will lead to an erosion in the quality of stories that free access websites can cover. At this point, a section of the society will likely be consuming well-curated investigative journalism while another will probably be reading only tabloid news, which will have serious consequences for deliberative democracy. 

Evidence suggests that there is a demand-driven bias in news media content (Gentzkow and Shapiro 2006; Mullainathan and Shleifer 2005; Chan and Suen 2008). Consumers tend to choose media whose biases match their own preferences or prior beliefs. In one scenario, if those who pay for the news also tend to be rich urban residents, then paywalled news websites will have a tendency to cover issues concerning these readers in order to keep subscription revenues steady (Gentzkow et al 2014).

This means that issues that affect those who are unable to pay will be covered less and less, because paywalled publications will generate demand-driven content, while those publications providing free access will not have enough resources for high-quality journalism. Proponents of market-oriented solutions have suggested that the entry of new players into the media market can correct the problem of restricted reportage.  However, this solution fails in a divided (in terms of the willingness of the readers to pay for news) media market that has two homogenised sections (Cage 2014). The separation of readers into two groups based on their potential to pay for news creates two homogenous groups of readers in the digital news ecosystem. The entry of new websites in paywalled and free access media markets respectively, might lead to an overall decline in news quality as there is little scope for product differentiation in homogenous markets.

From a human-rights perspective, Article 19 of the Universal Declaration of Human Rights includes the right “to seek, receive and impart information and ideas through any media and regardless of frontiers.” By focusing on ways to monetise news content through paywalls, we are creating barriers that inhibit access to information. Information inequality will eventually exacerbate economic and social inequalities and polarise the public sphere. 

Public-funded Subscription Subsidies 

A public-funded media is, perhaps, one option. But we must be wary of the fact that governments enjoy the power to allocate funds to the media. For instance, the Ministry of Information and Broadcasting, through its Directorate of Advertising and Visual Publicity (DAVP) empanels newspapers, television channels and radio stations for the allocation of government advertisements. Despite policies to ensure objectivity and fairness in the allocation of advertisements, evidence to the contrary exists (Sibal 2018). This often leads to regulatory and financial abuse aimed at curtailing press freedom. Similarly, public broadcasters like Prasar Bharti, tend to become a mouthpiece for the government and enjoy little journalistic credibility (Pande 2018). 

However, government subsidies for the media, in the form of tax deductions for contributions made to non-profit media, ensure that the allocation of funds to the media is based on the choice of the readers. News websites with a higher number of subscribers tend to receive a greater share of government subsidy. This limits the government’s power to interfere with the media. For instance, Canada has announced tax credits for digital news subscriptions in addition to funding support for not-for-profit organisations creating open source news content under creative commons license (Department of Finance Canada 2018). 
Access to news must remain open while we explore other opportunities to fund independent news media.