The impact of web traffic on revenues of traditional newspaper publishers Programmatic buying requires limited labour input and therefore operates with minimal marginal costs. The low marginal costs and abundant supply of ads has allowed publishers to increase the number of available advertising slots, which has put pressure on its CPMs. However, the lower marginal costs imply that programmatic buying can be used to inexpensively match advertising supply with demand in instances where low CPMs would make direct sales uneconomical. Revenues from both directly sold and programmatic advertising are closely tied to the amount of traffic publishers receive online. The more visitors the site attracts, the more revenue it is typically able to generate. Higher traffic allows better segmentation of visitors who can then be served personalised ads with higher CPMs and attracts advertisers with large budgets that only participate on large sites. 3.2 Paywalls allow experimentation Paywalls are another popular method of monetising content for newspaper publishers online. Advances in web technologies and payment systems in recent years have enabled publishers to erect paywalls in order to restrict access to their content to paying customers. The variety of paywall types (see Table 2) allows publishers to experiment and gives them flexibility to set their revenue mix to a combination of free (ad-sponsored) and restricted paid content. Table 2: Types of paywall Hard paywall Soft paywall / metered Freemium paywall model Description Paywall that does not allow Metered models allow Under the freemium model, any direct access to content access to a limited number the content is available for without subscription. of articles for a selected free but users have the Exceptions could be referrals period, after which a user option of paying for “extras.” from search engines or has to purchase a These may include removal social media sites. subscription to continue of advertising from pages, reading. special mobile apps, or supplements and special reports. Impact of Significant drop Partial drop No / little drop paywall type on page views39 Examples The Times, The Wall Street The Daily Telegraph, El The Guardian, Die Welt, Le Journal Mundo Monde Source: Deloitte analysis Paywalls provide a new source of revenues but can also substitute some of the existing advertising income. A paywall typically leads to a decrease in page views and advertising revenue, as non-paying readers cannot access some or all content and associated advertising. Special focus, e.g., in-depth financial analysis in The Wall Street Journal, or unique content, such as the Premier League videos in The Sun, serve as differentiators for the websites with paywalls and motivate their readers to become paying subscribers. Publishers of general news that have moved to paywalled access include:  The New York Times, a quality US daily, was among the first in the current wave of publishers to institute metered paywalls in 2010. In mid-2014, the publisher reported having over 800,000 paying subscribers of digital products with prices ranging from $3.75/week to $8/week depending on the types of devices used to access the content.40  Bild, a popular German tabloid, instituted a freemium-style paywall in mid-2013 along with other properties owned by its parent, Axel Springer AG. In October 2014, it counted nearly 250,000 paying customers, compared to 56,000 paying customers for Die Welt, a quality daily. Readers can 39 Deloitte analysis of comScore data. 40 New York Times (2014), ‘New York Times Co. gains circulation, but profit falls 21%’. Retrieved from: http://www.nytimes.com/2014/07/30/business/despite-circulation-gains-profit-falls-21-at-new-york-times-co.html Deloitte LLP. 12