Marking the first time that a major Israeli media organization is charging for its Hebrew content, the Haaretz group will next week introduce a paywall across all its Hebrew-language digital platforms.
The change comes 10 months after Haaretz successfully introduced a subscription plan for its English-language website.
In a letter to readers on Tuesday, publisher Amos Schocken explained why Haaretz was taking the step.
"Instead of one print edition every morning, Haaretz now provides round-the-clock, 24/7 coverage of news and views on Israel and the Middle East. The cost of maintaining such an enterprise is substantial, and can be maintained, of course, only if it is paid for," he said.
With reading habits rapidly changing as users migrate from print to web, tablet and smartphone platforms, digital readers must now cover their fair share of the costs as well, he said. "Those who buy digital subscriptions are investing in the future of high-quality journalism in Israel, without which democracy cannot survive," Schocken said.
Subscriptions to Haaretz's digital content in Hebrew will be NIS 40 a month, but readers are being offered a special introductory price of NIS 31.90 a month for the first year during the launch. A subscription to the digital media combined with home delivery of the newspaper's printed weekend edition will cost NIS 90 a month. An iPad application for the weekend magazine insert is also being introduced. Non-subscribers will be limited to 10 articles a month for free.
At this stage, however, the website for TheMarker, the Haaretz group's financial newspaper, will continue allowing free access. Print and digital subscribers to Haaretz's English online offerings are not affected by the changes.
Until now, Israeli content providers allowed free access to their websites, including content published in print. Over the past year several publications, including Yedioth Ahronoth, as well as the financial dailies Calcalist and Globes, have tried generating revenues by charging for special iPad applications for viewing their printed editions. But most content has remained freely available on their websites.
Haaretz is now applying a paywall to its Hebrew edition after doing so for its English edition in May 2012. The number of subscribers to its digital format in English already outnumbers subscribers to its English print edition. Haaretz has not experienced a significant drop in the level of traffic on its English website nor in the level of advertising revenues.
"An active, lively and engaged community has developed in and around Haaretz's digital environment in both English and Hebrew. We at Haaretz view the members of this community as our partners in the ongoing development of our newspaper," said Schocken. Haaretz says it doesn't intend to completely block all content to non-subscribers, but only content classified as having added value. Breaking news or generic stories appearing simultaneously in other media will remain open to all, while magazine articles, exclusives and special content will be kept behind the paywall. "The decision will be localized to create a balance between open and closed content," explains Lior Kodner, the head of digital.
Haaretz will also allow free access to items shared on social media networks or found by unregistered users via Google searches.
"We have a sophisticated system that prevents exploiting Google or social networks too much for content," says Kodner. "We are trying to educate a market: In Israel people aren't accustomed to paying for Internet content. I suppose many will need time to adjust and some will choose to pay. If other publishers follow and I hope they will this will become the only outlook for the press."
Other news outlets may follow
Experiencing heavy losses over recent years partly due to free access over the Internet, where advertising revenues are slim major content providers have been searching for new models to ensure their survival.
Limiting free access to websites is a risk: Viewer traffic could decline, along with advertising income. Media also need high exposure to promote a following, and blocking content could hurt content distribution down the line.
"This is beyond doubt a welcome move. All publishers clearly are eager to also switch to the model if they were confident that the damage wouldn't be fatal," says a senior executive in an Internet content organization competing with Haaretz. "This is a risky move because once you switch to a pay model you need to be less aggressive in displaying advertising and your traffic could also easily be hurt, possibly cutting into advertising revenue."
A leading economic consultant says the move by Haaretz strengthens the view that media models need to be changed. "If we shut our eyes and open them in five years, we'll clearly see that the market looks completely different," he says. "Today we are at a point where 70% of revenues still come from the old media, but this is no longer enough."
In the media industry, sources say Haaretz needed to pioneer the paywall strategy for financial reasons but that it also had a unique market position that gives it the measure of confidence needed to charge subscription fees. "There are economies of scale," says the economic consultant. "A larger and stronger newspaper can survive with shrinking revenues, but a smaller paper needs to make the change in order to continue. It's a matter of timing, but everyone will eventually be forced to make the change. The big question is whether the other publishers will follow quickly or grit their teeth hoping a player will leave the market."
For Haaretz, the transition should be easier because its branded content has no equivalents in the Israeli market, says an Internet executive. A year and a half ago the venerable New York Times joined The Wall Street Journal in charging to access its website content, and the results have been encouraging: Its digital platform now accounts for 12% of the Times' subscription base and the organization has regained its profitability thanks to the change, according to Bloomberg News.
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