After adopting paywall, Brazilian newspapers gain record audiences and sell more and more digital subscriptions

Contrary to common assumptions, the implementation of paywalls – barriers that restricts non-paying users' access to websites – has contributed to growing the audiences of major Brazilian newspapers, which have also recorded a significant increase in the sale of digital subscriptions.

According to newspaper executives interviewed by the Knight Center, the adoption of this "paywall" has had an impact on the mentality and functioning of newsrooms, and has altered business models and the profiles of readers, with repercussions for editorial policies.

From 2014 to 2015, average digital subscriptions grew by 27 percent, while the average paid circulation of print newspapers fell by 13 percent, according to the Verified Communication Institute (IVC for its acronym in Portuguese), which for decades has monitored newspaper circulation and paid digital subscriptions.

In September 2016, the digital subscriptions of 33 online journals monitored by the IVC reached 818,873, a number 20 percent higher than the average of all 2015. Comparing the average of all 2015 to the average of September 2016, print circulation fell by almost 20 percent, resulting in 2.6 million copies now being sold in Brazil.

Folha de S. Paulo, one of the first Brazilian newspapers to implement the paywall in 2012, announced in August 2016 that its digital circulation surpassed that of its print. In September 2016, the newspaper sold 164,000 digital editions and 151,000 printed editions. O Globo is also very close to this transition: with 150,000 in digital circulation and 163,000 in print, according to the IVC.

"This is the trend, for all the newspapers, even the regional newspapers," president of IVC, Pedro Silva, told the Knight Center. In fact, newspapers like Correio Braziliense and O Tempo (from Belo Horizonte) had digital circulation growth of 76 percent and 87 percent, respectively, between 2014 and 2015.

The implementation of a paywall is one of the main explanations for the increase in the number of digital subscribers, according to experts. "It encourages the reader to become a customer," Silva said.

According to the circulation and marketing director of Folha, Murilo Bussab, the newspaper had 297,000 subscriptions, including  print and digital, in 2012, when the paywall was installed. In September 2016, this total reached 315,000, despite the fall in circulation of the print edition.

"There are people who stopped subscribing to the print newspaper permanently, there are people who get out of print and go digital, and there are others who start straight from the digital. So we managed to keep circulation and have a small gain of 18,000 subscribers, since 2012," Bussab told the Knight Center.

In addition to increasing the paid digital circulation, the paywall also generated an increase in audience. According to the president of the National Association of Newspapers (ANJ), Marcelo Rech, who is also the editorial vice president of the Grupo RBS, Brazilian newspapers today have the largest audience in history. "When we add digital and print circulation, the mobile and desktop audience, we had never had so many (people reading) newspapers in Brazil," Rech told the Knight Center.

Folha's website, for example, has been breaking audience records since it implemented the paywall. "March was the pinnacle of history, with news related to the impeachment (of president Dilma Rousseff). But even in quieter times, like now, the audience accumulated between January and October 2016 is the highest in the historical series," Bussab said.

Porous model

The paywall model adopted by most Brazilian newspapers is known as "porous" or "flexible," as it allows the non-subscriber to read a restricted number of articles per month for free. If you want to read more texts, the user must pay for the subscription.

It is considered to be a smart model, in order to not to completely alienate readers (such as a hard wall) and thus ensures a significant audience for ads.

"There have been a number of experiments with hard walls that have failed. It was a disaster because it did not allow interaction with the content. The New York Times first implemented the porous paywall, which makes it possible to generate the habit of reading and gradually convert the subscribers as they hit the wall,” said Rech, of ANJ.

For Bussab, the paywall was "a watershed" of Brazilian industry. "The paywall has a very good history. When we installed it at Folha, everything would lead one to believe that we would lose audience because, however flexible it may be, the paywall is a limiting factor. One may think: 'If I have to pay, I'll stop reading.' But when we put up the paywall, something absurd happened, the audience grew,” he said.

According to him, it is not the barrier of the paywall itself that caused the audience to grow, but the change of mentality that the new model caused in newsrooms. Before the paywall, when the site was totally free, certain content was not put online, but kept for the print product. Columns and editorials, for example, were available only on paper as a way to value subscriber investment.

"Five years ago, a scoop was saved for the next day's print edition, we had no doubt about that. Now we do not worry about putting 100 percent of Folha's content on the internet. And this made the audience grow, even with the paywall,” he explained.

However, the increase in digital subscriptions is not only explained by the implementation of the paywall. Expanding internet access and better viewing of news on mobile devices also contributed to increased paid digital circulation.

"The bandwidth has grown a lot in the last five years. It's faster and more widespread. This makes the consumption of the digital edition much more pleasant," said Silva, of the IVC.

He also points out that the experience of reading newspapers on mobile devices is much richer today than it was five years ago. According to Silva, the sites are more "responsive," adapting automatically to the size of the screens, without the need to "zoom in" on the image.

Decentralization of the reader

With more and more digital subscribers, to the detriment of print, the profile of the Brazilian newspaper subscriber also changes. According to experts, in addition to younger readers, these readers are more scattered throughout the country, and not concentrated in the cities of the original newspapers, as was the case with print.

Traditionally, in countries of continental dimensions such as Brazil and the United States, the distribution of a printed newspaper was more restricted to the publishing city, as is the case of O Globo in Rio de Janeiro or Folha in São Paulo.

According to Silva, on average 90 percent of the circulation of these newspapers was in the city of the headquarters, while about 5 percent or 7 percent was in the interior of the state. Only 3 percent was spread throughout the rest of Brazil. In countries with a smaller territory or with a very large economic and population concentration, there is a greater possibility of having a printed newspaper with more national characteristics.

This occurs in Chile, Argentina and even México. In these three countries, the metropolitan region of the capital accounts for more than 50 percent of GDP and the population of the entire country. In Brazil, São Paulo, which is the largest city and largest economic center, accounts for less than 15 percent of GDP and population."

Such characteristics make it difficult for a printed newspaper to have a national character in Brazil, because the product arrives late in the consumer's home. "Time is of the essence, and in more distant places, there is no way to get there early. It is the most perishable product in the world, more than lettuce," Rech said.

In addition to arriving cold, the cost of delivery is very high, making the product inaccessible to many readers far from the newsroom.

"You need to be rich to subscribe to Folha far from São Paulo, like in Rio Branco, in Acre, for example. It costs about Reais $300 or Reais $400 a month. You have to use a plane and this is expensive. And the paper arrives there at two in the afternoon," Bussab explained.

"Of course, the governor and the president of a multinational in Manaus will want to read the paper and they will pay dearly. But for our reader, who is of an enlightened middle class, they do not. The digital edition allows us to be more accessible and further spread our profile, because the subscription is Reais $30 no matter where you are.”

In Folha, according to Bussab, 75 percent of the paper’s print circulation is in the state of São Paulo. In digital, this slice is less than 50 percent. For Silva, this decentralization means that the newspapers will have a distribution closer to the magazines, reaching the whole territory.

The pulverization of subscribers also impacts the editorial line of these newspapers. In the case of Folha, Bussab says that the focus is on politics, economics and culture, with the aim of being a national newspaper and even of "regional inspiration for the Americas".

In Bussab's opinion, the reduction or closure of newspaper branches in the states does not prevent this expansion.

"The content that we produce is not local. It's no use having a branch in the North, in Manaus, we do not even have the capacity to do so. There is local media for that. What we want, with digital, is to bring to these people the content of Brazil that they want to receive.”

He says, for example, that the newspaper does not intend to have strong coverage in sports and mentions the recent cuts in that area. "We're not going to cover sports well, we've even reduced that area a little, even more outside São Paulo. The Northeast Cup is a success. But we're not going to get involved in it, unfortunately we do not have the structure for that."

* The Knight Center contacted Valor Econômico, Correio Braziliense, O Tempo and O Globo, but received no response.

Note from the editor: This story was originally published by the Knight Center’s blog Journalism in the Americas, the predecessor of LatAm Journalism Review.