There\u2019s a third model that\u2019s used by a much smaller group of publishers: the hard paywall. The upside to this approach is it requires every user to be logged in, so readers can\u2019t use various browser tricks to get around a meter. And when done well, the hard paywall can squeeze out more revenue per reader, which means you don\u2019t need to reach massive audience scale before you start generating real revenue.<\/p>\n\n\n\n
Of course, there\u2019s a reason why most publishers don\u2019t pursue the hard paywall model. Without allowing readers to sample content for free, it\u2019s much more difficult to convince them to open up their wallets and hand over their credit card information. This also limits word-of-mouth marketing, given that the publisher\u2019s content can\u2019t be as easily spread over social media and other distribution channels.<\/p>\n\n\n\n
That\u2019s what makes The Information\u2019s<\/a> paywall success so impressive. Most other news organizations that utilize hard paywalls — like The Wall Street Journal and Financial Times — have existed for decades and therefore could leverage their longstanding brands to drive digital subscriptions. But The Information was only founded in 2013 and was virtually unknown at the moment it started asking readers to pay for its content.<\/p>\n\n\n\n Despite these barriers, the site achieved profitability<\/a> in three years and has driven up to 20,000 subscribers who are paying $399 a year for access to its content. Its coverage is widely discussed within Silicon Valley and it regularly scoops its biggest competitors on some of the important stories in tech. <\/p>\n\n\n\n So what are the secrets to its success? There are five components to The Information\u2019s strategy that I want to call attention to.<\/p>\n\n\n\n With only two dozen reporters and editors at its disposal, The Information has to maximize the editorial impact of every journalist in its employ, which is why it relies on hiring some of the most experienced writers in the industry. That includes its founder, Jessica Lessen, who started working at The Wall Street Journal in 2005 and, by the time she left, was considered a one-woman scoop factory who was able to greet some of the most powerful tech CEOs on a first name basis.<\/p>\n\n\n\n Lessen lured many of the people on her staff — including her former boss at the WSJ — away from top tier outlets by offering them as much as $180,000 a year. Peruse the bylines on the site\u2019s homepages and you\u2019ll find alums from Bloomberg, The Wall Street Journal, and TechCrunch, among other venerable outlets.<\/p>\n\n\n\n Having A-list journalists on staff is vital to The Information\u2019s paywall success. Veteran reporters are better sourced and have a higher likelihood of landing pay worthy scoops. And established journalists boast already-existing social media followings that they can leverage to promote their content. That following plays an important role in spreading word of mouth for content that isn\u2019t shared easily outside of the site\u2019s paywall. <\/p>\n\n\n\n Listen to or read any interview with Lessen, and at some point during the conversation she\u2019ll boast that The Information only publishes a handful of articles per day. On the day that I\u2019m writing this, The Information has only published four new stories to its homepage. Compare that to TechCrunch, which published 43 articles today and counting. <\/p>\n\n\n\n Because The Information doesn\u2019t monetize with ads and charges so much for a subscription (more on both of those points in a moment), it can\u2019t get away with churning out commodity news that can be found on every other website. \u201cYou can\u2019t put a paywall on a pig,\u201d Lessen explained<\/a> at a media bootcamp. If a story isn\u2019t truly original, The Information doesn\u2019t consider it worth publishing.<\/p>\n\n\n\n And it isn\u2019t merely settling for small scoops. It aims for impact, the kind that results in executive firings or moves a company\u2019s stock price. Its extensive reporting on sexual harassment allegations at a prominent venture capital firm, for instance, led to a partner\u2019s resignation. It broke the news that eBay would spin Paypal off into its separate company. <\/p>\n\n\n\n Stories with that kind of impact directly drive subscriptions. According to a recent New York Times profile of the company<\/a>, a 2014 article about the mistakes made by an executive at Google\u2019s Nest division \u201cconverted over 600 new subscribers in the first day.\u201d \u201cWe don\u2019t have a sales person. The subscription business sells itself if you create a great product,\u201d Lessen told Digiday<\/a>. In another interview<\/a> she expanded on this point. \u201cI always say, you really need to go for the 10x and focus on the things that are 10 times better or different than what other people are doing.\u201d<\/p>\n\n\n\n Many articles about The Information fixate on its price point, and for good reason. At $399, it\u2019s priced higher than most general interest publishers like The New York Times and Washington Post.<\/p>\n\n\n\n That\u2019s because it\u2019s a niche product that has a potential audience that only numbers in the hundreds of thousands. If it cut its price in half, it wouldn\u2019t necessarily be able to double its subscription numbers, and given that it targets its content to tech executives and Wall Street, its user base is relatively price insensitive. I wouldn\u2019t be surprised if a substantial portion of its readers also pay north of $20,000 for an annual Bloomberg terminal subscription. \u201cThe lifetime value of our subscribers is way north of $1,000,\u201d Lessen said<\/a>. \u201c \u2026 Churn isn\u2019t an issue for us. More than half our subscribers pay us annually, and the churn is negligible.\u201d<\/p>\n\n\n\n And by setting your price so high, it gives you the freedom to offer discounts and also introduce lower-priced products. In 2019, it launched a $30-a-year app that offers a more consumer-focused version of its content without the inside-baseball minutiae that\u2019s important to the tech elite. Not only does this allow The Information to generate additional revenue, but the app serves as a lead generator that can convert the app\u2019s readers into subscribers for the more robust, $399-a-year product.<\/p>\n\n\n\n I\u2019ve written in the past<\/a> about how publishers that closed down their website comments sections made a big mistake by doing so, but subscriber comments are especially important to The Information\u2019s success.<\/p>\n\n\n\n Getting to comment on Information articles means you can essentially have a conversation with some of the most important and influential people in tech. Because the price of admission is set so high, fewer trolls can slip through, and the general quality of the discussion is higher than what you\u2019ll find on a free news site. \u201cIt\u2019s become one of the most powerful parts of the site,\u201d Lessen told Digiday<\/a>.<\/p>\n\n\n\n Information subscribers aren\u2019t just limited to commenting on articles. They have access to a private Slack channel where they can engage on an unlimited number of topics. They also can attend a number of live, in-person events The Information puts on each year. Rather than trying to squeeze additional money out of subscribers, the publisher grants them free admission as part of their subscription. <\/p>\n\n\n\n This one might raise hackles for some. I have nothing against companies that diversify their revenue by monetizing with both ads and subscriptions, but going ad-free like The Information did can strengthen a publisher\u2019s value proposition in four ways.<\/p>\n\n\n\n First is the psychological appeal. A lot of news consumers justify using Chrome\u2019s incognito mode to skirt around a metered paywall by telling themselves that the publisher is able to monetize their visit through advertising. Going ad-free removes this justification. <\/p>\n\n\n\n Then there\u2019s the better user experience. While the rate of ad blocker installations has leveled off, there\u2019s still widespread consumer disdain for website ad tech, both from a privacy standpoint and also for its ability to slow the browser to a crawl. The Information is just one of many news outlets that offers an ad-free version as a subscriber perk.<\/p>\n\n\n\n Going ad-free gives your publication a legitimate claim to independence. While most media companies tout the Chinese firewall between editorial and ad sales, there\u2019s always a tension between the two departments, especially when you\u2019re operating a smaller publication that can be hurt by the departure of a single large sponsor. Given the insularity of Silicon Valley, Lessen can plausibly claim that she isn\u2019t subjected to pressure from The Information\u2019s sponsors.<\/p>\n\n\n\n Finally, forgoing ads removes any remaining incentives to engage in clickbait journalism. The moment you introduce advertising into the mix, then there\u2019s monetary pressure to expose the ad to the widest audience possible. An outlet without ads can devote the entirety of its focus to one goal: keeping subscribers happy.<\/p>\n\n\n\n Of course, Lessen would probably point to several other strategies that are vital to The Information\u2019s growth, including extreme discounts for new enrollees, free trials for those willing to give up their email addresses, and promoted tweets targeted to those who work in the tech industry.<\/p>\n\n\n\n While all these certainly play an important role in The Information\u2019s success, I think Lessen would agree that without the outlet\u2019s unwavering focus on providing its subscribers with the best possible content, The Information wouldn\u2019t be regularly hailed as one of the few bright spots in a struggling industry. As Lessen put it in a podcast interview<\/a> back in 2018, \u201cYou become a successful subscription business not when you put a paywall up; you become a successful subscription business when you have content that\u2019s worth paying for.\u201d<\/p>\n\n\n\n\n\n Simon Owens is a journalist living in Washington, DC. His weekly newsletter provides deep analysis on the media industry. You can find it<\/em> over here<\/em><\/a>. <\/em><\/p>\n\n\n\n\nHire experienced reporters<\/strong><\/h4>\n\n\n\n
Steer clear of commodity news<\/strong><\/h4>\n\n\n\n
Price appropriately <\/strong><\/h4>\n\n\n\n
Leverage your community<\/strong><\/h4>\n\n\n\n
Make your product ad-free<\/strong><\/h4>\n\n\n\n
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