The reader revenue (or paid model) based on subscriptions is often perceived as the latest saviour of online journalism. 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. But, with a growing number of media outlets making a shift away from an advertising model, many questions are emerging along the way.

It’s not a simple case of electing to switch to a paywall and waiting for the happy ending. There are different kinds of paywalls to choose from, and while this may be complex on the technical side of things, the big question really is what type of content should be put behind the paywall. And maybe most importantly: how do you even know if your audience is ready and willing to pay for the news on your website?

That’s something we will try to explain here. From the different types of paywalls and things to consider when deciding what articles to lock up, to helpful data and overall strategy. But first, let’s see why online publishers are turning to paywalls in the first place.

Why paywalls?

If you're not yet convinced that it's time to search for an alternative to advertising, take a look at the following numbers:

  • Ad-blockers have become huge. In the United States alone, the number of adblocker users has grown from 15% in 2014 to almost 27% in 2020.
  • 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.

Now let's list the additional benefits of adopting a subscriptions model:

  • steady income
  • increase in revenue
  • increase in audience loyalty (very important thing in the attention-deficit era)

convinced? Let's take a look at those paywalls

What kinds of paywall exist?

Deciding to introduce a paywall after years of publishing free news is a huge one, and it's only the first step. There are four main types of paywalls media use today, and organisations should choose the one that suits their content and audience best.

  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, everything else is locked. This is considered the riskiest type of paywall, since it’s estimated that media can lose up to 90 percent of their audience. In most cases, a hard paywall is only suitable for prestigious and specialised publications that have a very strong connection with their respective communities. One of the most well-known hard paywalls were the ones used by The Wall Street Journal and Financial Times. They installed their paywall as early as 2002, though both have since tweaked their approaches.
  2. A metered paywall is the most popular one. Many of the leading media outlets have adopted this version. This includes The New York Times, though that has since evolved further into a dynamic paywall. 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 organisations 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 the ‘reverse paywall’, is popular for media outlets with a smaller audience. Freemium paywall separates 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.

Things to consider when introducing 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 than behind), or what type of content will turn a curious reader into a paying subscriber.

what triggers the subscription anyway?

Is it a single article or a group of articles that readers have been consuming over a longer period of time? And what is the right time, or way, to tell a reader they've had their dose of free content and offer them a subscription plan instead?

You can't install a paywall and expect to carry on like you always did. There are changes to be made, both in the way you produce the content and evaluate its performance. You need a loyal audience if you wish to introduce any kind of paywall that will actually work.

If you want loyal readers, say goodbye to clickbait

Quality journalism is one of the keywords for a successful subscription model. If you want to introduce a paywall, keep one thing 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, he told us that what 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 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, but this may be challenging for media who were previously aiming for volume and eyeballs. They may have been resorting to clickbait to get those clicks, with the quality of their written word not placed in very high regard. Shifting to quality for them won’t be an easy task, and it may affect the website's traffic, but it's worth it to get that reader loyalty.

Use data to find out what your audience cares about

Use data to hone your editorial decision-making. And by that we don't mean throw all the data in the world at it and hope for the best - we'll explain in a bit.

There's a lot to learn from other media. Let’s look at available data, based on experience and research. The people from INMA presented the key global trends in news media subscriptions. According to them, acquisition triggers for international and national newspapers are the topics investigative journalism, opinion, national politics, long-form articles, healthcare, and highly shareable articles.

Another reason that triggers subscription to a certain publication was found by the Media Insight Project – an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research. Their study found that 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 and discounts often helps to attract more people. For instance, 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.

But you can learn the most from looking at your own data and studying the behaviour of your own audience.

Choose the right metrics for the job

Not all data will help you make the right decisions. You have to choose the right tools: the ones that provide the right insights. Again, this is something Pål emphasised: “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 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?

relying on the wrong tools and metrics can lead to an unsuccessful transformation

You may lose a huge chunk of the audience that you've been trying to nurture and grow for years. Paywalls and subscriptions 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). Those metrics can be deceiving because they are easily manipulated. More importantly, they often don’t correlate with what matters most when introducing a paywall (and running a subscription model): audience loyalty to the media brand.

You should be looking at data that reveals your audience behaviour, not browser activity. We asked Roy Wassink, Insights Manager for the De Persgroep Netherlands, what he discovered in terms of subscriptions by looking at behavioural metrics in our tool. “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. Deciding to subscribe to a publication isn’t a browser event, it’s the consequence of a series of human interactions. Single metrics are not enough to make any informed decisions about subscriptions; it's more valuable to look at patterns of behaviour, and identify how loyal readers are reading.

Loyalty and engagement are vital indicators for evaluating content that is capable of both attracting new subscribers and retaining the old ones.

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 noticed that a large number of articles with high Loyalty scores frequently correlates with a strong week in subscriptions.

“Loyalty is the indicator that is most valuable for managing our membership model.”

Therefore, readers’ loyalty can be perceived as the subscription trigger. Media organisations should use data to unveil what kind of content encourages loyal behaviour. With that information, they can work on a steady stream of content that is 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, CEO of INMA 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 all activities within the organisation should be geared towards the introduction of the paywall and nurturing that business model. From choosing the right analytics to forgetting about vanity metrics and click bait, every department of the company should be aimed towards the same goal. No more aiming at pageviews and producing clickbait!

Recap

To summarise, these are the most important things to keep in mind 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 your subscription model is. Remember the difference between a hard and metered paywall. A hard paywall can mean 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 offer insights about when and where it should happen. This is where behavioural metrics play an important role and vanity metrics become just a number.
  • 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 the smartocto analytics approach can support your transition.

Like our content? Stay up to date with our newsletter!