The reader revenue (or paid model) based on subscriptions is often perceived as the latest savior of online journalism. But, with a growing number of media outlets making a shift away from an advertising model, many questions are emerging along the way.
Even with these potential road bumps, the subscription model is very much alive, and the media are reporting that it’s working well. A few weeks ago, big news broke that The New York Times has hit four million subscribers, with three million of them registered as digital subscribers.
However, it’s not a simple case of electing to switch to a paywall and waiting for the happy ending. First, with so many types of paywalls to choose from. Even adopting a paywall system might be complex from the technical side of things, and the big question content-wise is what type of content should be put behind a paywall. Also, how do you even know if your audience is ready to pay for the news on your website?
That’s something we will try to explain here. We will also take a look at indicators that can help to decide what kind of articles should be locked up. But first, let’s see why online publishers are turning to paywalls in the first place.
If you want to convince someone to install a paywall and garner profit from readers instead of relying solely on advertising, presenting them with the following facts would make a good case:
- Ad-blockers have become huge. The number of active ad-blocker users have grown from 21 million users in 2010 to 236 million in 2016. Take the United States as an example. In 2014, 15.1 percent of internet users in the USA blocked ads. The projected percentage of people with ad-blockers in 2018 is doubled compared to 2014, at a bit more than 30 percent.
- We have to face it: people hate ads. A recent survey showed that as many as 45 percent of Americans said they were annoyed by ads on social media. Even though this number is smaller on news websites, there is still a not-insignificant third of readers who feel this way.
- Revenue from advertising is falling. Pew Research Center reported last year that American newspaper profits from advertising declined by eight percent in 2015, while in 2016 the drop in ad revenue reached a two-figure number for the first time, with the profit from advertising decreasing by 10 percent.
As for the additional benefits of adopting a subscriptions model? Well, to name a few: an increase in revenue, steady income, and – a very important thing in the attention-deficit era – an increase in audience loyalty.
What kinds of paywall exist?
Introducing a paywall after years of publishing free news is a huge decision. Truth is, the decision to put up a paywall is only the first step: not all the paywalls are the same, and organizations have to choose the one that suits them best.
There are four main types of paywalls that media use today. In case you need a quick reminder, here they are, along with the main differences between them.
1. The hard paywall will not allow readers to see anything unless they are subscribed. Usually, this paywall displays only the article’s headline with a couple of paragraphs, with everything else is locked down. This is considered the riskiest type of paywall since it’s estimated that media can lose up to 90 percent of their audience after they start charging for news in this manner. In most cases, a hard paywall is only suitable for prestigious and specialized publications, that have a very strong connection with their respective communities. One of the most well-known hard paywalls were the ones used one by The Wall Street Journal and Financial Times who had a paywall since 2002, though both have since tweaked their approaches.
2. A metered paywall is the most popular one and the version that many of the leading media outlets have adopted. The most famous example of news organization using a metered paywall is The New York Times, though, given the fast-moving nature of these things, that has since evolved further into a dynamic paywall. The dynamic paywall is distinct from a metered one and is more personalized, but the basis remains the same. A metered paywall model lets users read a certain amount of articles per month for free. When the quota is reached, the paywall locks the content and offers a subscription plan to its reader. The number of free articles varies from publication to publication, but it’s almost always in the single digits. With the dynamic paywall, different readers will hit a paywall at different times. This type of paywall is considered to help retain traffic from light users. It allows organizations to maintain their flow of users, but at the same time, gain income from their more loyal and engaged readers.
3. Freemium, also known as ‘reverse paywall’, this is an approach which is often in the scope of media outlets with a smaller audience. Freemium paywall separates out free and premium content. Some content (for example, breaking news) might be free for all users, but in-depth analyses and investigative stories remain locked down. This model comes with the greatest challenge: what kind of content should be put behind the paywall?
4. The hybrid model is basically a combination of the Freemium and Metered models. It means that a person can read a certain number of articles per month, but can’t choose from the whole website’s offerings. In practice, it would look something like this: you get to read five articles per month, but 30 percent of the content chosen by the administrators remains behind a paywall. As with the freemium model, besides the question of how many free articles you should give away, there’s also the conundrum of what kind of content should be behind a paywall.
It’s certainly not easy to decide which pieces of content are good enough to be locked up (if that’s even your view – some people believe that great content should be an enticement to explore further behind the paywall, and perform better in front of it that behind), or what type of content will turn a curious reader into a paying subscriber. There’s even a dilemma about what triggers the subscription anyway – whether it is a single article or a group of articles that readers have been consuming over a longer period of time.
It’s even harder to determine when’s the right time to offer a subscription plan to someone or tell a reader they just had their dose of free content and that it’s time to pay for the news. But, don’t worry, there are things and tools in place that help publishers make intelligent decisions and here they are:
Use a data-informed approach
Use data to hone your editorial decision-making. With all the tools out there designed to help make the right decisions, this has become a complex thing to do, but there is a better way to do this than by throwing all the data in the world at it and hoping for the best, and we’ll get into that in a moment.
First, let’s look at different sets of data available now, specifically at the ones based on experience and research, because tools are not exclusive providers of data. Smart people from the industry often come up with useful data since online subscriptions have been intriguing the digital publishing world for quite a while now. These things certainly come in handy, when organizations think of shifting away from the ad revenue model.
Let’s take a look at what the people from INMA discovered in the course of their research. Earlier this year at the Media Subscription Summit, they presented the best practices from 25 media organizations. According to them, these are the top five acquisition triggers for international and national newspapers sorted by topic: investigative journalism, opinion, national politics, long-form articles, healthcare, highly shareable articles.
Earl J. Wilkinson, CEO of INMA and author of the above report said that a common problem was that while the data uncovered through audience research was sound, sometimes it can take too long for decision-makers to act on that data and those insights. He pointed to the example of The New York Times. That organization took six years to adopt their current version metered model, despite the data pointing to this very version more than six years ago. As the BBC’s Dmitry Shishkin wryly notes: “without data, you’re just another person with an opinion”.
Would The Times have been able to report their recent success even earlier had they trusted their data several years prior? Possibly. Are there lessons to be learned from their experience? Absolutely.
The reason that leads someone to subscribe to a certain publication is not to be forgotten. A study conducted earlier this year by the Media Insight Project – an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research – questioned why recent subscribers had chosen to pay for the news. And guess what: as many as 45 percent of people who took part in the research ultimately subscribed because of a promotion or a free trial.
Offering free content from time to time is something to have in mind. Offering a discount is also a big thing since a lot of media lower the prices of subscription plan in order to attract more people. This way you can subscribe to WSJ for three months for as little as one euro, or to The New York Times, which only charges a dollar per week for one year.
Of course, there’s a massive caveat here.
Quality journalism is one of the keywords used to explain a successful media outlet based on the subscription model. If anyone wants to introduce a paywall, one thing is to be kept in mind, don’t try to fool your readers.
The industry can learn a lot from Norwegian Amedia and their EVP, Pål Nedregotten. When we interviewed Pål last year he told us the question that publishers need to consider is not if digital subscriptions work, but rather how they work.
As Pål said, when it comes to subscriptions, it’s not about fluff stuff and vanity metrics, it’s about good journalism.
“You can’t switch a paywall on and just think you’re done. In our case, it was far more about the quality of our editorial products, and how we needed to change and adapt those products, than the technological side of things. After all, we aren’t selling the technology, we’re selling good value: solid journalism produced for people living in local communities.”
Circulating quality content is one important guideline to be followed, and this may be surprisingly difficult for a number of media outlets. If you’re asking why – look no further than what media had been publishing in order to fulfill their goals before introducing paywalls.
Where publishers were only after volume (number of clicks) and were choosing an easier way to get there by resorting to clickbait, the quality of their written word wasn’t placed in such high regard. Shifting to quality for them won’t be an easy task.
This, of course, means that transformation might affect the website’s traffic considerably, but remember, that is expected.
Choose the right metrics for the job
Equally important as a shift in reporting strategy is choosing the right tools. The ones that provide the right insights. Again, this is something Pål emphasized:
“The quantity of the data is not the most important thing. It’s about having the right kind of data; generating the right kind of insight”.
With that thing in mind, let’s jump to the million dollar question: what data should you look at when deciding if and how to install a paywall?
Choosing the right tools when you’re in the process of deciding whether a certain publication is ready to start charging for its content is critical. Relying on the wrong tools and metrics can lead to an unsuccessful transformation. That can have devastating consequences and can lead to losing a huge chunk of their audiences that they’ve been trying to nurture and grow for years.
Paywalls and subscriptions simply don’t benefit from reliance on vanity metrics such as page views, bounce rate, session time, etc. (often perceived as being the Holy Grail by advertisers).
These metrics can often be deceiving because they can easily be manipulated. Even more importantly, they often don’t correlate with things that matter when introducing a paywall (and running a subscription model) such as audience loyalty to a certain media brand.
But what kind of metrics and insights can tell the right time and place for offering a reader subscription plan?
The answer is simple, those insights have to reveal your audience behavior, not browser activity. We asked Roy Wassink, Insights Manager for the De Persgroep Netherlands, what has he discovered by looking at behavioral metrics via our tool, in terms of subscriptions.
“Loyal users of our products don’t make the decision to register or subscribe based on one article. Rather, it’s the package over a longer period of time, culminating in the one moment in which they decide to take that next step.”
This point really can’t be overstated. The problem in using single metrics to inform any decisions about subscriptions is that deciding to subscribe to a publication isn’t a browser event, it’s the consequence of a series of human interactions. What is more valuable to the publisher is to look at patterns of behavior, and identify how loyal readers are reading.
We’ve also spoken to Paul O’Mahony, managing editor of The Local, a group of English language media outlets that report on local matters in nine countries. Five of their websites have paywalls. Paul confirmed that Loyalty is the metric that correlates with subscriptions most.
He sees that frequently, a large number of articles with high Loyalty scores correlate with a strong week in subscriptions.
“Loyalty is the indicator that is most valuable for us and managing our membership model.”
You need a loyal audience if you wish to introduce any kind of paywall that will actually work.
Readers’ loyalty can be perceived as the subscription trigger, and what media organizations should do is use the data to unveil what kind of content encourages loyal behavior.
Afterward, they can produce more of that type of content, which is in the end, more likely to convert readers into paying subscribers.
All hands on deck
One thing is for sure if you’re contemplating a paywall, this goal has to be on the radar – and business plan – across all departments.
Earl J. Wilkinson said it well when he stated that if digital subscriptions aren’t part of a bigger growth mission, they aren’t going to work at the level you want.
“This really works best with a total company approach.”
In practice, this would mean that everything an organization is doing has to be geared towards introducing a paywall and nurturing that business model. From choosing the right analytics to forgetting about vanity metrics and click bait, every department of the company has to reconcile towards the same goal.
For example, you can’t expect a successful transformation if four out of seven Section Editors use click bait to gain more traffic towards their sections. Similarly, you can’t rate your reporters by how much traffic their recent articles brought because, paywalls, as we’ve seen, can operate on as little as 10 percent of the audience media outlet had before making the transformation.
Let’s see once again what the most important things to keep in mind are when deciding to shift to a reader revenue model:
- Choose the right type of paywall in accordance with the media outlet size. Bear in mind what the ultimate aim of introducing paywall is. Remember the difference between a hard and metered paywall, where with a hard paywall comes a significant drop in traffic, while a metered paywall retains light users.
- Change the reporting strategy if necessary. It’s time to say goodbye to clickbait and sacrifice some traffic in order to get more loyal readers, who will be way more engaged with the quality pieces media outlets distribute in the long run.
- Adopt a data-informed approach. Remember: the right set of data can give you information on how your audience behaves and whether it’s ready to be offered a subscription plan, but also give your insights about when and where it should happen. This is where behavioral metrics play an important role and vanity metrics become just a number on the paper.
- Make the subscription model the very core of your business plan. Integrate the new strategy across the whole platform, because – in order to succeed – every part of your team has to be following the same strategy and goal.
If your publication is making the switch to subscriptions or membership, get in touch to find out how Content Insights’ analytics approach can help you.