Paid subscription models have grown ever more attractive to digital media over recent years and this approach has offered numerous benefits to cash-strapped publications. With the decline of ad revenues and uncertainty in the market during the COVID-19 pandemic, user-generated revenues have gone from aspirational to essential for a lot more publishers. And along with subscriptions, of course, comes the need for a paywall. While this may seem like an inevitable conclusion, don’t forget that utilizing a paywall requires further investment into your digital strategy. Because only the right type of paywall model is going to be able to fuel your publication’s digital strategy; the wrong one will leave you stranded at the dock.
In its most basic form, a subscription model is intended to offer publishers an additional revenue stream. However, a subscription model and the implementation of a paywall involve far more than a simple pop-up window asking for payment. This is especially true in the current post-COVID landscape where the majority of publishers have either switched or are in the process of switching to a reader-driven business model and hence need to compete for the limited number of subscribers.
Technical issues will abound, of course, as in-house or external solutions are brought online. At the same time, editorial must also begin deciding which content - some, most, or all? - should be paywalled. And, perhaps most importantly, the publisher must devise a new strategy to continually supply the subscription funnel with a stream of paying customers.
Even from day one, a paywall strategy shouldn’t solely be about offering already existing fans a chance to begin paying for content. It must also focus on creating a growing and renewable influx of users. And data has shown that only highly engaged users successfully convert, so if you haven’t built a strategy to move less engaged users further down the subscription funnel, you are losing out on longer-term gains before you have even brought your strategy into play.
A successful digital subscription model has been difficult to achieve across the publishing industry, despite the success of a few outstanding luminaries. According to research by the Shorenstein Center and Lenfest Institute, a substantial portion of publishers continue to experience issues as they attempt to convert users into subscribers. The pool of engaged users isn’t endless either. A publication must be continually proving their value to customers, and even for engaged and addicted readers, their numbers will naturally drop as they move further along the funnel, leaving behind only a small percentage who finally subscribe. Is this diminished audience publishers’ only hope for building revenue?
Well, the picture is not that simple. Instead, the answer for long term success lies in developing an approach built on an engagement strategy that will keep more users in the subscription funnel long enough to convert - while also helping publishers plan to prevent churn.
To build engagement, a publisher will not only need to consider user habits when it comes to converting users. They also need to build strategies to transform new, and less loyal, users into increasingly engaged ones. And when the time comes to start restricting access to content, there must be a strategy for keeping less-loyal users and encouraging their consumption habits.
In the end, the decision to implement a paywall comes with two potential scenarios: users will enter the subscription funnel and begin a journey that may possibly result in subscription or they will consume any and all free content until they reach a wall - at which point they will go elsewhere. User behavior in these matters will depend largely on a reader’s loyalty to the site as well as their perception of the content’s value. That is why the publisher’s digital engagement strategy, which optimally should consist of a content strategy and the proper type of paywall, can have a significant impact on strengthening engagement and building a loyal readership.
In its most basic form, a paywall offers users the chance to pay either a fee for a single article purchase, a monthly purchase or an annual (or longer) subscription in exchange for accessing “premium content”. The types of paywall that are used by digital publishers today vary widely according to the kind of publication. More famous publications with a loyal, and large, audience, may be able to impose a simple subscription fee for access. Others - which includes most of the rest of the digital news industry - must work harder to win over subscribers. These types of publication will require a more nuanced paywall, one which takes into account user behavior and content consumption patterns.
Most digital publishers still struggle to find the right balance between the metaphorical carrot and the stick when it comes to their digital subscription strategy, however, it is worth the effort to develop the most effective approach for each publication. Because the benefits of the right solution are reflected right in your bottom line.
There are four main types of paywalls that are popular and quite commonly used currently: Hard, Freemium, Metered, Dynamic and Hybrid-Dynamic. Let’s take a look at how these paywall models function and how their particular interaction with readers might affect users’ perception and their propensity to subscribe.
A Hard Paywall is essentially a pop-up that will prevent a user from accessing any content on the site unless they purchase a subscription. As an absolute restriction on content, this type of paywall can cause users to abandon a reading habit if they are not highly engaged and no longer see value in their subscription. Another issue that is unique to hard paywalls is the acquisition of new readers. If a publisher implements a hard paywall and new readers can’t access content to evaluate if this is right for them, how can they decide if the publisher worth investing in?
Just remember: This type of subscription has been proven successful for well-known media publishers who have a highly loyal and developed audience. It comes with the caveat that this paywall also requires a publisher to continually produce high-value content across the board.
A Freemium Paywall offers readers a mix of free and paid content. This free content is unlimited in this case and might consist of news written by the publication, as well as such things as newswire articles. The publication will also offer premium content for highly popular topics or in-demand articles, however, in order to access this premium content, the user must subscribe.
Just remember: By keeping such a large amount of free content open, you may be losing out on slightly less engaged users who may be ready to move to a higher level of engagement or who may not be aware of the value of the subscription you offer. Also, constantly blocking access to content may lead to paywall fatigue. In this case, a user becomes so used to seeing a paywall, that they simply click away to other content when necessary, and stop considering making a purchase.
A metered paywall allows users to access a set amount of content within a specific period. For example, a publisher may allow users to read six articles every thirty days. When the sixth article is read, the reader will be presented with a paywall, and all other content will remain locked until the time period ends. This option often comes with a requirement to register, which should essentially guarantee a paywall offer no matter the device - but it doesn’t always work like this in practice.
Users who are new to the site and might be consuming large amounts of content within a small time frame - even a single session, should not be treated the same as a user who’s been active for months and consuming their limit of metered articles as this first user who’s new will more than likely not return for the coming month (or more) or resort to using other strategies to bypass the meter. This is where a dynamic approach rather than a static one would fit best for publishers moving to a more data-driven approach.
Just remember: Because it builds some flexibility into the system, this can be an attractive option for some and might even build engagement. However, it is susceptible to exploitation by readers who will resort to “Incognito” modes when they start to become more engaged in the content. Some paywall limits are either too aggressive or too lax as well, make sure to understand how your readers are interacting with the paywall to understand if, when, and how the meter should be adjusted.
As another form of the metered paywall, the dynamic paywall operates on similar principles, except that each user’s behavior will determine the timing of the paywall trigger. Until a reader reaches a level at which the publisher’s data determines them to be highly engaged for that publication and have a high enough propensity to subscribe, they are allowed to consume whichever content they choose. Think of it as creating a tailored payment offer according to the user’s consumption.
Just remember: Driven by artificial intelligence and highly individualized, this kind of paywall can increase the percentage of engaged users who convert. However, the proper level at which the paywall is triggered is critical. If it is too high or too low, potential subscribers will be lost.
For example, we recently published research with Grzegorz Piechota from INMA on the effect of COVID-19 on the traffic and subscription bump, and the results show that users who were the most engaged were the most likely to stay engaged and eventually subscribe. We noticed that from the new users who came in March during the peak of the COVID bump, the majority never visited again in April.
Download the COVID-19 Publishing Industry User Engagement Report
Also, you will need to consider utilizing user scoring and content attribution here, as it helps sharpen your insights about your users and what content is on their path to subscription.
This is a form of paywall built upon the essential benefits of both the dynamic and freemium models. So, while premium content remains locked, free content remains available; however, these free articles will also become dynamically locked when a user reaches a certain level of engagement - allowing the publisher to monetize their free content on top of their premium offering by targeting a highly specific segment of users.
Just remember: Exploiting the benefits of two successful paywall types, this type of combined paywall can, according to our recent case study, yield a 50% greater purchase completion rate in users who viewed the Hybrid-Dynamic Paywall over the standard paywall model.
Check out the Hybrid-Dynamic Paywall in action
The Shorenstein Center and Lenfest Institute report cited above stressed the importance of converting high-value users. According to their analysis, publications that can convert somewhere around 6% of their users can be counted as having a successful subscription strategy.
Maintaining even this seemingly low percentage relies on encouraging readers to ascend to higher and higher levels of engagement. And depending on the type of publisher - it also rests on choosing a paywall that will not push them to subscribe before they are ready. If the subscription offer is launched too soon - the chances are that they will not convert.
A subscription strategy will not bring value if a publisher does not also have a plan for user engagement. Publishers must incentivize user loyalty with such things as high-value content and an optimized offer that can build habits.
Choosing the right paywall for your business is just the first step in a multi-step and long term process but its importance cannot be undersold.
