Are you developing your paywall strategy for acquisition or retention?

13 March 2019
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We know that more and more publishers are focusing on reader revenue strategies this year (52% of news executives state subscriptions will be their main revenue focus in 2019). That means paywall strategies are often being rethought, from The New York Times ending the incognito loophole with its paywall or Neue Zürcher Zeitung tweaking its strategy and increasing its paywall conversion rate 5x.

While clearly your paywall strategy is key for acquisition, the model you use can have a large impact on your retention efforts as well. That’s why this week we are diving deep into the most common models, including freemium, metered, hybrid and dynamic.

In a future article, we will cover more in-depth the “paywall blocking” phenomenon and how you can overcome it.

Freemium Paywall: Highlight your valuable content for conversion

A freemium paywall works best for brands with unique content, helping to highlight the valuable content you produce. A great example of this is the ‘diamond articles‘ strategy that Helsingin Sanomat uses. This model is perhaps the best for conversion, however it does have a higher churn rate later on. Initial research shows a six month churn rate of 31.3% versus 26.3% with the metered model. It proves again that publishers have more success when they invest more in their engagement strategy over their acquisition strategy.

This model can also go wrong if the content chosen to be put behind the paywall is decided by gut feeling and not backed up by data. It’s important to analyse which stories actually trigger subscription acquisitions and put those behind the paywall. Research shows that readers who view local news stories are 5-10 times more likely to subscribe than those who read national stories. In a fantastic report from Matt Skibinski, he identifies the types of content that highly engaged readers are most likely to read before subscribing:

  • Coverage of public transit, traffic, utilities, and other local resources
  • Information about new businesses, construction, and developments, and economic changes (especially relating to job availability)
  • Information about local politics, especially issues that affect education, neighbourhood development, and public safety
  • Local college & high school sports coverage (beyond scores)
  • Local culture and arts news, especially shows and exhibits readers can visit

MittMedia learned the lesson of putting their most valuable content behind the paywall the hard way. When they first launched their digital subscription initiative in 2014, they had the goal of putting 50% of their published articles behind the paywall. But the team wasn’t really committed in the beginning, it was more of a strategy to protect the print revenue, as they had just raised their subscription prices and were afraid to lose print customers to the digital content. The articles they put behind the paywall ended up being the least read articles. Robin Govik, Chief Digital Officer, explains:

The content that we put behind the paywall was our worst content. Content no one wanted to read. Not even the customers that had access to it. They preferred our free content. And that content was made with a data-driven focus to get pageviews. The content behind the paywall was the content that originated from the printed newspaper.

Robin Govik, CDO at Mittmedia

Metered Paywall: The start to your engagement strategy

A metered paywall works best for brands with a strong identity and high volume of content. It is the best model for retention, as readers who do subscribe are inherently more familiar with the brand after having read copious articles. However, it converts at a lower rate as it takes longer for readers to hit the paywall (a benchmark from Piano shows it takes 11.65 days to convert, with a conversion rate of 0.36%) and there are many workarounds for dedicated readers.

Often publishers struggle with the metered model because they simple set the meter too high. We can look back at The New York Times as a prime example; originally they had 20 stories for free per month, which they have progressively lowered until finally landing at 5 stories today. Experts believe publishers should aim to reach 5-10% of their readers to be successful with a metered paywall model. The exact number of free stories then will depend on the reading behaviour of each publisher’s audience, but we can see that today the average number is 5 stories free (which is a steep drop from 2012 when it was 13 free stories).

Moving beyond the interface of the paywall, metered sharing is something important in your strategy as well. There’s been no single perfect answer for the sampling behaviour of print (being able to browse through a newspaper in the newsstand before deciding to subscribe), but metered sharing can come close. In this model, publishers allow access to paid edition content only for a specific number of pages. This is something we have developed at Twipe, you can see its implementation in DuMont’s Berliner Kurier, where their metered sharing threshold is currently set at one article.

Hybrid Paywall: The paywall model for the best of both worlds?

Publishers can try to get the best of both worlds with a hybrid paywall that mixes the freemium and metered models. With some content only available behind a paywall, non-subscribers understand better the value in subscribing, while the other metered stories still help give a sample of the content.

However, this experience can be confusing for readers. There are not too many examples that standout, but one good example of this model in an unexpected medium would be Le Monde’s digital-only edition La Matinale du Monde. Non-subscribers can see the headlines of the chosen stories of the day, and read the full article for a set number of non-premium content, while the rest of the stories are only available after subscribing.

While most discussions on paywalls focus solely on the newsflow or website strategy, there is value in understanding the different needs for your edition paywall. This is also something we plan to cover more in-depth in a future article, subscribe to be sent our conclusions early.

The future of paywall is dynamic

We expect to see more publishers advancing even further in their paywall strategies as the dynamic paywall model ultimately becomes the dominant model. With a dynamic paywall, the approach for each individual reader is personalised, based on factors such as reading behaviour and likelihood to pay. This model will surely become more popular, as more leading publishers share the success they have had with this model and other publishers continue to evolve their paywall strategies to more mature models.

Neue Zürcher Zeitung is one such leader in the dynamic paywall field, with their flexible paywall that uses machine learning to personalise to the individual based on hundreds of criteria. Since they launched this paywall model, they’ve increased their conversion rate by fivefold, with 2.5% of people who view the payment message becoming subscribers. The system looks at data including reading history, device and time of day to alter the paywall message. Other variables publishers can use to personalise the paywall include:

  • Geography: reader’s location, either in-market or out-of-market
  • Referral: how the reader arrived on your site, such as via search or social
  • Ad-blockers: you can have a tighter paywall for readers using an ad-blocker, encouraging them to support your journalism by subscribing
  • Subscription propensity: developing a statistical analysis of readers’ individual likelihood of subscribing

This last point, targeting readers based on their likelihood to subscribe will require the time and budget for a thorough analysis of your audience, but will pay off when you are able to better convert subscribers. Some aspects will be specific to your audience, but there are some industry-wide metrics that can be used as well. For example, many newspapers have found that newsletter subscribers are twice as likely to pay for a subscription later on and are more loyal than readers who come to the website via social or search. You can also personalise the paywall based on your history with the reader, for example News Corp’s The Australian offers ex-subscribers a bit more access to content than other non-subscribers with no previous relationship have.

Slide from Matt Skibinski

Dynamic paywalls offer more than just a boost to the bottom line, they provide a better user experience for readers. When the paywall message and targeting is personalised to the individual reader’s distinct preferences, they report less feelings of frustration.

It’s also a model that allows publishers to grow their reader revenues while keeping their advertising revenues intact. By personalising the paywall based on likelihood to subscribe, those readers who will never subscribe are still valuable for ad impressions.

This article was written by Mary-Katharine Phillips, Media Innovation Analyst at Twipe from 2017 – 2021.

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