2011 Forecasts: Publishing industry will shrink

In 2011, the big trend in publishing will most probably be the return of paid subscription, as an increasing number of websites ask users to pay. The most prominent example is the New York Times, which will switch on a new paywall in January or February. During the next few months many newspapers around the world will  follow.

2010 was the year of the iPad. Publishers of  books, newspapers and magazines were eager to provide their content to  Apple for distribution. Apparently, readers can pay for content on tablet devices, such as music, games and other apps. Publishers can also benefit from this willingness, but not if  they are give it away on the web.

Much more important reason for the introduction of paywalls in 2011 is that  web-based advertising revenue  doesn’t cover the costs, therefore readers should be charged to add up the numbers. Until now newspapers didn’t figure out a profitable business model for news on the web. Publishers are expected to focus on extracting revenue from their core readership, which means charging for content.

The paywalls are created following  different strategies and models. At one extreme are very strict paywalls: only paying subscribers are allowed to see articles, which are even hidden from internet search engines. At the other extreme are newspapers that give everything away and allow anyone to read anything, in order to attract as many readers and  advertisers as possible. The most successful  model is the limited paywall  structure that lets users read a limited number of articles without paying, but asks for payment if they go beyond that number. The advantage of this approach is that publishers can  adjust how many free articles readers are allowed to see, depending on the market conditions.

Publishers are expected to focus on extracting revenue from their core readership. However, that does not mean that paywalls will save many newspapers. Online readers produce smaller revenue than print subscribers. Many newspapers and magazines  that rely heavily on press releases and syndicated stories for national or international news face a similar problem. Consolidations are expected to continue and the publishing world will become much smaller than it was a decade ago. As you read the news online in 2011, expect to be asked for  payments!