The age of paywalls

The current situation is accelerating what has been apparent for a long time: the pure advertising financing of media has had its day.

The situation in many media companies seems absurd: the demand for information is reaching an unprecedented level, production continues almost undiminished in home offices. Nevertheless, US media in particular are already having to make drastic cuts. One of the main pillars of modern media operations is currently out of action, namely advertising. Although advertising banners are very present in online media in particular, revenues have fallen considerably, as many companies have cut back their marketing budgets in view of the loss of revenues in the current situation.

Advertising on our own behalf

However, what is now proving to be an acute threat to the existence of many companies is not only due to the current crisis. The question has long been raised as to how sustainable the business model that financed the past 20 to 30 years of online journalism is. The fact that online advertising could not pay for the entire media budget became apparent when more and more publishers set up paywalls on their websites. Although a good deal of reporting is still available free of charge, more and more links are being created: Only for paying readers there is full content.

The fact that many German publishers are not quite as serious as US providers is also due to the fact that they are becoming their best advertising customers. Many publishers such as Gruner+Jahr are advertising for their readers with free trial subscriptions, local newspapers are setting up new newsletters. In this way, the editorial offices, which report daily on the situation on site, attract new readership groups. Or even the old ones who are currently not going to the kiosk.

Discomfort with Silicon Valley

There has been a malaise with the advertising business for a long time. On the one hand, data-based online advertising threatens the credibility of publishers, who often do not have complete control over what content appears on their websites and how their readers’ data is processed. On the other hand, those who completely elude the business have to accept severe competitive disadvantages. And no matter how the situation develops, which new laws are passed, the perceived duopoly between Google and Facebook always appears as the winner.

Only with the basic data protection regulation and the legislative procedures in California has the debate gained momentum as to whether the rampant system really serves a purpose other than to finance the adtech industry itself. Gilead Edelman argues in Wired magazine for the complete abolition of microtargeting: The system destroys the economic basis of the media without providing tangible benefits to users.