[Leonid Bershidsky] How media paywalls work in authoritarian countries

By Bloomberg
  • Published : May 17, 2018 - 17:35
  • Updated : May 17, 2018 - 17:35

There’s been a lot of talk recently about journalism and paywalls. Much of the general conversation has been focused on the economics of supporting quality reporting.

I’d like to widen the frame on both counts -- by sharing my experience in Russia. There, the record is more complicated. In Russia, paywalls have been essential for maintaining journalistic integrity. At the same time, they have shown that charging for journalism can reduce its impact. In authoritarian countries, this can in turn lead to an erosion of free speech and accountability.

Consider the case of Slon.ru, an opinion website I founded with a former banker in 2009.

At first, we didn’t charge: Russia still had a relatively vibrant media landscape and we had to compete for attention with free websites. We even bought traffic to reach the broadest possible audience, a few million people a month.

It worked. We carved out a niche, advertisers noticed us, and we won some prizes. By 2012, Slon.ru was breaking even, all funded by ads. That year, though, Vladimir Putin returned to the presidency after a four-year hiatus. Almost immediately, there was a chill in the air, and the ad market started shrinking, especially for publications critical of the Kremlin. Soon after the Crimea annexation in 2014, Maxim Kashulinsky, the site’s current editor, announced that Slon.ru was going behind a paywall. This was a rarity for Russia, where people are even more used to internet freebies than Americans.

Advertisers’ fear of running afoul of authorities wasn’t the only problem. Despite a new iteration of the Cold War, Facebook and Google (and their Russian clones) were taking over the advertising business. Political pressure, combined with the growth of social and search advertising, made the ad-based business model all but useless for media.

This deadly double whammy is not unique to Russia: In Hungary, people close to Prime Minister Viktor Orban’s government buy media outlets, which the government then supports with advertising. Those who remain independent find themselves shunned by commercial advertisers.

Four years after going paid, Slon.ru, renamed Republic.ru in 2016, is one of perhaps a half-dozen professional Russian publications whose owners and editors don’t look over their shoulder for Kremlin approval.

I caught up with Kashulinsky the other day to ask him how business was going.

He told me the site had 17 full-time journalists (I’d started out with more than 30), but that it was breaking even with 20 percent of its revenue from advertising and the rest from subscriptions. It’s lean and impervious to Kremlin pressure: All the government could do is block the site, and even then devoted subscribers would probably bypass the ban with proxies and virtual private networks.

These subscribers, Kashulinsky told me, are willing to pay not only for quality opinions and reporting but also to support one of the last outposts of independent journalism.

Thanks to the subscription base, Kashulinsky is less anxious than most Moscow editors. “We’ve stopped counting clicks,” he says. “We also don’t have to try to hack Facebook’s algorithm to make our stories drive traffic. We just use it to advertise subscriptions, and when you’re an advertiser, Facebook works fine for you.”

Before this starts to sound idyllic, consider Republic.ru’s reach. Kashulinsky told me he had 22,000 subscribers -- in a country with 87 million internet users. The annual rate of 4,800 rubles ($77) makes it just possible to survive, and pay writers and editors a living wage. The output includes columns by prominent Putin critics who are not welcome in other Russian media outlets and occasional investigations.

Kashulinsky’s approach to independence isn’t the only one. Meduza.io, a popular Russian-language news site, has a self-reported readership of 9.5 million a month -- and no paywall. But it’s based in Riga, Latvia, to avoid Kremlin pressure. Meanwhile, financial self-sufficiency has been elusive. Meduza’s data for 2017 aren’t available yet from the Latvian companies register, but in 2016, its second full year of operation, Meduza reported revenue of 1.3 million euros ($1.6 million) and production costs of 2.3 million euros.

The larger point is that the reach of paid independent news sites is dwarfed by Putin’s state-owned propaganda media and the websites owned by businesspeople who are loyal to the Kremlin.

So what lesson can we extract from all this? With a limited number of strong professional publications charging serious money for subscriptions, there is a risk that curious, active people won’t be able to budget enough for all of them. The journalists can survive and do quality work, but the reach of that work and therefore its influence will be limited. This is a balance that’s worth keeping in mind.

In the West, there are ways to address this. One approach would be to use regulatory levers to make social networks and services pay for news content the way they pay to license music. The internet companies can afford it, and this kind of solution could help media keep subscription prices low and perhaps enable them to aggregate subscriptions and sell them as a bundle.

Yes, we’re a long way from Russia. But concerns related to what happens when quality journalism has only one source of revenue to count on should never be too far in the distance.

Leonid Bershidsky
Leonid Bershidsky is a Bloomberg Opinion columnist covering European politics and business. -- Ed.