Paywall: there will be casualties

Styli Charalambous, CEO of online publication Daily Maverick, says that with compressed levels of digital advertising spend in SA, digital publishing will continue to see casualties.

Earlier this month, one of South Africa’s leading publishing houses, BDFM, which includes title Business Day announced its online content would be going behind a paywall.

“But not just any paywall: one priced so high that the walls of Jericho would struggle to compete. Time will tell whether BDFM has overestimated the South African market, and itself,” Charalambous said.

He notes that the history of digital publishing makes for compelling reading, which one day will make a great Hollywood movie.

“Right now, we don’t know how that movie ends, whether it’ll be a mockumentary, action-thriller or Greek tragedy. The one thing we know for sure is there will be casualties.”

Digital advertising

Charalambous says that real figures are hard to come by in the industry that is poorly regulated and quite fragmented, but a number often thrown about is that digital advertising commands just 3% of the total ad spend in South Africa.

“Put in perspective, our more developed cousins like the US and UK are passing the 25% mark. It was two years ago that, at a global level, that digital advertising overtook print in terms of absolute revenues,” he said.

“In essence, we have two parties to thank for this poor state of affairs in Mzansi. The first is government. Poor Internet penetration, roll-out and speeds have retarded the growth of the Internet in this country,” he said

But Charalambous argues that this blame only accounts for the early years, as South Africa has largely caught up with access: more than 14 million people now enjoy the world-wide web in some form.

Traditional media

He also points the finger at a second group of saboteurs, namely major players in the traditional publishing and advertising space. “It really hasn’t been in the big publishers’ and agencies’ interest to curate and develop digital properties that would cannibalise their big money spinners in the traditional spaces of TV, radio and print,” Charalambous said.

The evidence: a struggling-to-survive online advertising market and a mobile advertising market, which could best be described as an abortion, in a country where sim cards outnumber people, the editor says.

At what price

Charalambous opines that it comes as no surprise to see a publisher like BDFM asking its readers to pay R4,233 a year for full access to its online content. He notes that an annual subscription to the Wall Street Journal, for the print and digital versions, costs R2,599, while The Economist costs R2,100.

“It’s no wonder the big media houses have fought so hard to avoid this juncture where the old way no longer works and no one really knows what does.”

Charalambous argues that paywalls may work in the bigger markets where you can factor in less than a 1% take-up of 50 million readers to generate meaningful paywall revenue.

But he notes that success has come from gold standard publishers, The New York Times, The Wall Street Journal, Financial Times and The Economist, which have existed for centuries, employ thousands of journalists, and routinely win the highest global honours in journalism.

“And even then we don’t agree that the readers should be paying for a lean-forward content delivered on websites. Tablet publishing, with premium reading experience and where additional costs are incurred to create and distribute content, is a different case,” he said.

The answer

So if online paywalls aren’t the answer, what is? questions Charalambous. “In our opinion, it’s quite simple. More meaningful advertising. Let’s stop this spraying of as many ads across a page to maximise the revenue per impression. Less clutter, more value to the advertiser and more respect for the reader,” the editor said.

By Styli Charalambous, CEO of Daily Maverick

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Paywall: there will be casualties