The New Zealand Herald wants a whole lot of people who currently consume its journalism for nothing to start paying it $199 a year for the privilege.

Not for the mass market news that first greets readers of the website. That will remain free.

Instead the new charge is for its best of the best, a Premium section including politics, business, investigations, international stories from four big-name news brands and a selection of material from sport and entertainment. 

Readers have been getting all that – apart from a selection of content about to be added from The New York Times, Financial Times, The Times and the Harvard Business Review – for free on the Herald website for the past nine months or so. The new charge won’t give Herald readers access to those publications’ full websites.

The Herald needs to convince between 70,000 and 100,000 souls within three years to pay up a total of between $13 and $19 million a year if it is to meet the targets it has adopted from the experience with online paywalls in Australia.

To put those numbers in perspective, the Herald, Herald on Sunday and their five sister regional newspapers pull in a total of $80 million a year in subscriber revenue for the print editions delivered to letterboxes and dairies across the North Island.

The new charge for its Premium website content will be over and above that $80m; all current print subscribers, the most loyal, will continue to get the Premium content online for free.

This new sell is to the 4 to 6 percent of the online audience of around 1.78 million people each month who financial forecasters believe will also want to pay. The Herald site had 520,000 registered users in February, so expect an email soon if you have signed up for news alerts.

It is a big ask. The paywall is almost certain to work defensively – by giving print subscribers the online access free, the Herald is less likely to lose them and that precious $80m. But can it work positively? Can it rake in the extra amount a year to overwhelm years of compounding annual reductions of many millions of dollars (it was minus another $7m last year) it is suffering from loss of advertising in the newspapers.

Will readers who are unused to paying for news content simply move across to where the investigative journalism, columnists, political, business and other content will still be free, funded solely by advertisers wanting all those Stuff eyeballs?

NZME, the Herald‘s owner, has set its weekly fee at $5, the price of an Auckland flat white coffee. It is higher than you’d pay for The New York Times or Netflix but lower than for The Australian or a couple of hours on an Auckland parking meter.

On the face of it, $5 a week or the lower, annual fee of $199 is not expensive. It could have been set higher and NZME did market research on a weekly charge of up to $7, but at that level the cost might have been excluding for those with limited disposable income.

There is also a concern, where media paywalls have been implemented overseas, that those who can afford the fee can access quality news and those without means get served clickbait and dross, compounding social inequality.

Having set an initial introductory offer of $2.50 a week for two months and then $5, there is nothing other than demand to stop the Herald increasing that fee once it has sufficient readers on board. What is $5 today could end up at, say, $6 or $7 once a culture of paying has been achieved.

The Herald is the first major mainstream news organisation to put up a paywall. The troubled National Business Review was an early leader in the field, charging for some or all of its content since 2009, but it has had a year of technological, staff and management turmoil and may be vulnerable to the Herald‘s Premium product, focused as it will be on financial and business news. The NBR yesterday announced a two-month free trial for its site, claiming it was all readers would need. 

For NZME’s main competitor, Stuff Ltd, the paywall launch comes at an inconvenient time. Stuff has long indicated it would not impose a paywall, preferring to appeal freely to a bigger audience than the Herald and bet on higher advertising revenue as a result. But Stuff Ltd is in the middle of being sold, unwanted by its new Australian parent. Its ability to invest and respond to the Herald initiative is limited for now as potential buyers circle and Stuff’s ultimate shape and future is in doubt.

Newsroom asked Stuff for its response to the Herald announcement and whether some kind of charging could be considered for the site. Editorial director Mark Stevens said: “We’re not currently actively pursuing a paywall for Stuff. The media industry faces challenging conditions, and we’ll watch this space with interest.”  

More immediately, while the Herald has given the broad details of its new paywall, many questions remain unanswered:

When will freeloaders be barred from reading Premium content?

Will those who subscribe to Premium go straight to the Premium section and its content on their phones and desktops thus avoiding the mass market news at the top of the Herald homepage?

Will any of the work from journalists in the Herald‘s investigative team or Parliamentary press gallery be made available for free outside the paywall?

How many articles each day or week will be available to readers from The New York Times, The Times, the Financial Times and Harvard Business Review?

Who among the Herald‘s current stable of commentators will be behind the paywall and who will continue to greet readers on the open site?

What guarantee is there the $199 a year will go to supporting quality journalism, and not instead be used to pay off debt or dividends for owner NZME and its investment fund shareholders?

How will the total website monthly unique readerships of around 1.87m for Stuff and 1.78m for be affected by the advent of a dollar sign and a padlock icon on the Herald site?

The Premium paywall is a bold and necessary step by NZME. It will have cost millions already for the high-end platform and payments technology bought from the Washington Post company, project consultants, the top staff who have joined the Herald newsroom over the past year, for those four international news feeds and for marketing and communications over the change. This year the company expects to spend $1.2m on the paywall and has predicted it will be earnings positive by year 2.

NZME chief executive Michael Boggs told analysts in Februaru that other multi-million dollar digital investments NZME had committed to, including its Yudu jobs site and Driven motoring site, would have to produce results to ensure continued investment. Just one of its new classified efforts, OneRoof, is reported to be doing well.

The Premium Paywall is the highest profile play. In the early 2000s the Herald implemented a part paywall for its columnists and premium content but abandoned it after a lukewarm reader response and the disappearance of its high-profile columnists from much public debate. 

Current executives know this time they have to go hard or go home. The Herald can’t afford for this paywall to fall.

Tim Murphy is co-editor of Newsroom. He writes about politics, Auckland, and media. Twitter: @tmurphynz

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