Publisher Business Models: What You Need to Know Before Putting up the Paywall
Subscription revenue is hardly a new aim for digital publishers. The last several years have seen publishers put up paywalls left and right, many benefiting from a renewed audience appetite for quality content and a relatively uncrowded market. But 2019 is where things get interesting.
According to the Reuters Institute for the Study of Journalism’s latest report, publisher interest in subscription revenue is at an all-time high. From Journalism, Media, and Technology Trends and Predictions 2019:
“…In our survey the extent of this pivot [to paid content] has become clear. For the majority of our publishers, subscription (52%) is now the main priority for the year ahead, followed by display advertising (27%), native advertising (8%), and donations/crowdsourcing from individuals (7%).
Once an experiment by a select few, subscription revenue is now the priority for a majority of the world’s digital news publishers.
That said, it’s easier said than done. As the report notes, moving to subscription models “will require different skills, new metrics, and an emphasis on higher quality content that is worth paying for."
If your digital publication is evolving to pursue this new publisher business model, here’s what you need to know before you put up the paywall.
Paid business models require content worth paying for.
Paid business models may be able to support your content, but can your content support a paid business model?
In some cases, paywalls have been used to supplement declining ad revenue without addressing the bigger, underlying problem. Ad-driven business models have caused some publishers to blindly chase scale on platforms, creating content for virality while losing sight of quality in the process.
“Thus far paywalls have acted as a tourniquet, slowing the bleeding of revenue away from the newspaper’s core print business. That does not mean they are, on balance, a bad idea — after all, sometimes a tourniquet is a medical necessity. But the costs of paywalls are large, even if they are paid on the installment plan.”
In other words, it’s not enough to just put up a paywall. The pivot to reader revenue is, the American Press Institute notes, ultimately a “pivot to trust.” To stop the bleed completely, publishers must focus on creating quality content that audiences can trust is worth paying for.
Not all audiences will pay.
In 2017, the American Press Institute found that roughly half of adults pay for news in some form. Of the half who didn’t pay for news, many respondents reported that they don’t pay because they can can get similar content elsewhere for free.
This raises another problem. It’s not enough to create good content. That content must be differentiated enough from other publishers that it can’t be found for free. From there, you have to connect the right audiences with that content, then nurture them into subscribers.
About 1 in 5 non-payers from the API survey indicated that they might be willing to pay in the future. To maximize paid subscriptions, you must form relationships with these readers with them to ensure you’re top-of-mind when they decide they do want to pay for content.
Different paywall models fit different kinds of audiences.
Broadly speaking, there are several types of paywalls. Selecting the right kind of paywall requires careful consideration of your content and its audience.
Publishers with highly-differentiated or niche content, such as the Financial Times or Stratechery, can leverage their reputation for quality into a hard paywall. Other publishers need a paywall model that allows audiences to sample content first, like a metered paywall or “freemium” model. It might even be the case that your audience is suited for a different reader revenue model entirely:
“…the subscription model works well at a national scale or for specialist content…but I’ve seen firsthand that it doesn’t necessarily scale down to local general interest journalism. I actually think that membership might be a better model for local media.”
You might even try both paid subscriptions and membership products. Publishers like The Atlantic allow unfettered access to content with a paid subscription, then offer a membership tier (The Masthead) for “power users” who want behind-the-scenes information or other exclusive content.
To drive reader revenue, you need to drive deeper reader engagement.
Whatever reader revenue model you settle on, engaging your audience is paramount. Getting millions of people to view one article once might generate ad revenue, but it won’t generate the relationships required by reader revenue models. For paywalls to succeed, publishers must work towards deeper engagement for each user.
Engagement doesn’t just get your readers to hit the paywall meter and subscribe. It also builds trust in your content. Each article a reader views gives them another glance at the quality of your content, perhaps making it more likely they see the value in paying for that content. That’s probably why newsletter subscribers are more likely to turn into paying subscribers: email is a critical channel for driving consistent engagement.
Among other things, you may be able to drive more engagement with improved content recommendation. When a visitor engages with certain types of content on your site, you get valuable first-party data about their interests. You can put this data to use by tailoring their recommended articles accordingly, or even use it to enrich your email data and send the content they’re most interested in.
Subscriber retention matters.
Publishers use a number of tactics to grow subscriptions, including lower introductory rates, free trial periods, and gift subscriptions. But earning that initial subscription is one thing. From there, how do publishers get subscribers to renew?
It costs less to retain an existing subscriber than to convert a new one, which means subscription retention should be a priority. Again, it comes back to audience engagement: engaged subscribers tend to stick around. In fact, a decline in engagement can be a signal that a subscriber is about to cancel.
As newsletter subscribers tend to be among a publisher’s most engaged audiences, it follows that paying subscribers who receive a newsletter are more likely to renew their subscription.
Dynamic paywalls allow you to balance ad revenue and subscription revenue.
One of the biggest paywall hesitations is lost ad revenue. After all, if readers can’t load the content, they can’t load the ads either.
On the whole, it’s more profitable to convert avid readers into subscribers than it is to monetize them purely through ads. It would take an awful lot of pageviews to match the, say, $9.99 per month paying subscribers generate. Plus, paid subscribers will also provide significant ad revenue. Wanting to get value for their money, subscribers view more pages, and therefore, more ads.
Driving subscription revenue without sacrificing ad revenue can hinge on your paywall meter settings. Set the meter too high, and readers will get their fill of content before the wall comes up. But set it too low, and you cut off ad revenue from passing readers who will never convert.
You can experiment with different meters, but to maximize revenue from both sources, you need a paywall that caters to each type of audience. Publishers like the Wall Street Journal use dynamic paywalls to predict visitors’ likelihood of conversion based on traffic source or content consumed. With this data, the paywall adapts accordingly.
First-party data will play a critical role in subscription conversion.
It’s important to consult the data when finding the optimal meter settings for your paywall, but you can also use it to nurture visitors towards conversion. With first-party data about individuals in your audience, you can personalize the paywall and other onsite calls-to-action with relevant messaging.
Even better, readers don’t have to be on your site for you to put this data to use. Enriching your email data with onsite content consumption data enables you to send tailored marketing emails that cater to reader interests. For example, if a reader consumes more of your sports content than lifestyle content, marketing messaging that emphasizes this sports content will likely be more effective.
Paywall technology is more than just the paywall.
Putting up that paywall is just the first step. Each part of your technology stack must be oriented towards driving and retaining paid subscriptions—your payment processing solutions, identity management, CMS, marketing automation tools. Everything.
This may require you to re-evaluate your current solutions. For instance, with an increased need for engagement and retention, email is an invaluable part of a premium publisher’s toolkit. Likewise, paywall models require an email solution that maximizes efficiency without sacrificing the editorial control necessary to create conversion-driving newsletter products.
To further eliminate efficiencies, it’s also important to make sure this technology integrates with each other. The challenge to align technology is not unlike the broader challenge publishers face on the human side of things: aligning different departments in pursuit of a new publisher business model. It’s not an easy path forward, but for the publishers with the right approach, it’s one that will pay off.
Editor, PostUp PlayBook