Cantillon: Paywalls prove a trial for INM

The last-but-one update from Independent News & Media on the topic of digital paywalls came last month when it said its digital strategy was “evolving” to capitalise on a “dramatic upsurge” in the number of visitors and page impressions on Independent.ie over the course of the previous 12 months. The web paywall seemed off the agenda for the moment.

But in its most recent corporate communication – last week's prospectus aimed at share-offer participants – INM states that it is "planning to introduce initial trials of new pay products for accessing news content online" by the end of 2013. Whether this refers to a trial of a web paywall or, in keeping with its earlier comments, the introduction of upgraded app products with subscription charges, is unclear and probably undecided.

In the prospectus document, the company highlights the crossroads it faces, along with its competitors.

“The appetite for paid subscriptions for INM news content has not yet been established,” it notes. “It is also possible that online paid access will result in a decline in print readership and/or in print circulation volumes and revenue, which may in turn impact on the group’s ability to attract advertising revenue.”

At the same time, it is cognisant of the likelihood that internet advertising “may” replace advertising revenue from traditional media. Websites, apps, news aggregators and social media sites are listed among the sources that represent “substantial competition” .

"In the event that customers choose to advertise over the internet rather than in newspapers such as those operated by INM, this could result in lower
than expected revenues, which could have a
material adverse effect on INM's business."

The prospectus goes on to use upbeat phrases about itself such as “ready-made audience” and “trusted brand”, but it is still a slightly miserable snapshot of the digital dilemma – we’re not sure if people will pay for our digital products, but even if they do, the revenue may not compensate for loss of print business.

INM is investing €10 million of working capital in its digital strategy over the next two years, by the end of which time both the group, and the industry at large, will hope to have some answers.