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“You need more than one string to your bow to survive”: How paywalls can boost publishers’ revenue

This article is an excerpt from our special insight report, Paywalls for Publishers. This free-to-download report aims to help you formulate an effective paywall strategy via insights and examples that have worked well for other publishers. The guide also examines how you can leverage your first-party data and build a supportive organizational culture to boost your paywall strategy.

The future of publishing depends upon a diversified revenue portfolio with direct reader revenue playing an increasingly vital role.

“If the coronavirus pandemic has taught us anything it’s that you need more than one string to your bow to survive as a publisher.” 

Peter Houston, Author, 6 Publishing Technologies That Will Make A Difference To Your Business

The last couple of years have also clearly shown that people are willing to pay for credible, useful and unique content that they can’t find elsewhere. The pandemic drove up traffic and subscriptions hugely despite many publishers removing paywalls from their coronavirus coverage

Overall, the subscription economy has grown nearly 6x (more than 435%) in the last 9 years. Subscription-based publishing companies grew revenue by 16% in 2020 (globally). 

Source: The Subscription Economy Index (SEI), Zuora

While the bump has since flattened, retention levels of new subscribers are encouraging. More publishers are now considering paywalling their content, but the promises of paywalls are tempered by the fear of shutting out readers and ad revenues. 

Smaller publishers also worry about competing for readers’ wallets with global brands like the Times. However, research shows that readers are willing to pay for local news and niche content—areas which most publishers can improve upon. 

Publishers also have deep questions about the different kinds of paywalls being used across the industry.

Paywalls for publishers, a WNiP report, aims to help publishers with their paywall strategies. We delve into the different types of paywalls being used successfully by various publishers all over the world, how they work, and the next stage in their evolution. It shares examples and insights from innovative publishers and experts across the world.

The different types of paywalls

While there are a variety of paywalls in use they can be broadly classified into hard and soft paywalls.

Hard paywalls do not allow visitors to access content without subscribing. They can be a risky strategy and so are used by very few publishers. “Success with a hard paywall may be an uphill climb,” says Nalini Edwin, VP, Chartbeat, “as the majority of prospective subscribers tend to bounce offsite when encountering an inflexible gate — and you’ll have to plan to cushion against possible financial repercussions, e.g. decreased ad revenue.”

Subscription is an act of loyalty and readers need some way of developing that loyalty and affinity for a publication before they’re likely to pay.

Josh Schwartz, CTO, Chartbeat

“Softer solutions that allow some access to content are easier to contemplate than the firm doorslam of the ‘pay-up or push-off’ approach,” adds Houston. “But hard paywalls can work, and not just for giants like The Wall Street Journal or The Financial Times.” 

Hard paywalls have worked for publishers who serve a niche and dominate their market in that area or have a highly differentiated product. The Economist, The Wall Street Journal, and Financial Times are some publishers that have used hard paywalls successfully. 

While these are some of the world’s most reputed organizations, The Information, a niche tech and business news site founded in 2013, achieved profitability in three years with a hard paywall despite a high subscription cost ($399). Its success serves to underline how a mix of niche and unique, high-quality content are the foundations of a successful hard paywall strategy.

You become a successful subscription business not when you put a paywall up; you become a successful subscription business when you have content that’s worth paying for.

Jessica E. Lessin, Founder & Editor-in-Chief, The Information

“The upside to this approach is it requires every user to be logged in,” says tech and media journalist Simon Owens, “so readers can’t 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’t need to reach massive audience scale before you start generating real revenue.”

Key Takeaway: Hard paywalls can work if you have valuable content not available elsewhere. These include niche topics, local news, and deep investigative and opinion pieces.

Soft Paywalls: Soft paywalls allow users to access some digital content based on conditions set by the publisher. Most of the commonly used paywalls fall under this category.

Metered paywalls are the most popular form of soft paywalls. They let readers access a set number of articles for free before requiring them to pay. Wired allows readers to consume four articles a month for free before asking them to subscribe for unlimited access. 

Using this strategy allows readers to experience the quality of your content and may over time inspire them to sign up for a paid subscription. Research done by American Press Institute’s Media Insights Project found that 47% of new subscribers signup after running out of free articles on a site they like and respect. 

Other variations of the metered paywalls include Freemium, Hybrid, Leaky or Porous, Timewall and Dynamic. They are covered in the report, Paywalls for publishers along with practical insights and suggestions to help publishers put together a paywalls strategy that works for them.

Originally published in What’s New in Publishing earlier. While some of the data points may have evolved, the analysis and conclusion remain highly relevant.