I remember well the first time I seriously faced the topic of paywalls: it was in 2012 at a large regional newspaper prospect. Sitting in a conference room with about 12 people, a small group of 3 were standing apart from the rest of the group – they appeared to be the digital team – and started to question me about my thoughts on paywalls, my preference or not for metered ones, and the way this would work in Advantage. The rest of the group – all print-oriented – didn’t say a word, and I must honestly say that my knowledge was low, and I realized I had never paused to consider this emerging topic more deeply. I did not forget the lesson and began following the growth of the New York Times digital portfolio, the emergence of the first "out of the box" paywall solutions, conversed with one of them in 2017 and began attending the INMA subscription summits, where the topic has been discussed thoroughly. We must admit: paywalls are deeply embedded in the publishing industry landscape. It is time to pause again and see where this is headed.
What Does a Paywall Look Like?
Behind the concept of "paywall," there is a simple definition you can find on Wikipedia. It is a method of restricting access to (digital) content, which usually ends with a purchase or a paid subscription. It is the opposite of models that would allow full free access and fund their business through other means (such as advertising, donations, taxes, etc.). The term "paywall" itself is probably not ideal, but it was used early on and quickly adopted. Some would have preferred calling it a “pay-gate,” the concept of “wall” being too restrictive.
To build this "wall," one usually will find a set of components making up a large ecosystem:
- A subscription platform that manages paid access
- An authentication layer that manages registration, passwords, and enables visitors to sign in and have their subscription rights granted. In some cases, this is a Single Sign-On solution.
- An identification layer that enables visitors to be identified before signing in so that their navigation is tracked and stored historically. Many techniques have been used to do this, such as fingerprints and cookies. It has become more difficult to do over time, with browser and GDPR changes, so registration, even for free access, is often used for this.
- A data platform that is not only able to collect navigation data (visits, content visited) but also to process the data (through IA or any modeling technique) so segments grouping visitors with a similar behavior pattern to subscribe can be created and each visitor associated with one of those segments. This has been historically accomplished by solutions such as DMPs (Data Management Platforms) and then CMPs (Customer Management Platforms), some of which are home-built.
- A marketing interface, where journeys may be defined and paywall page popups designed. Some "out of the box" solutions offer this, such as Piano, Poool or Qiota, but many publishers have built their own. Those settings are used with the data platform to display what is needed at the right time, for each visitor.
- A reporting tool that enables analysis and understanding of both visitor behavior and subscription conversion.
- A checkout funnel that is often part of the eCommerce solution, and that enables the user to enter orders and payment which then go into the subscription platform and grant access.
- A regulation method, that will determine if access to a piece of content is free or not. It can be a tag on each piece of content, or a meter on each visitor, or a mix of both. This method often gives the names to the type of paywall: a metered paywall when a limit is reached after several free articles are read, or a freemium (or hybrid) paywall when the decision about free access or not is done at the article level. Other criteria can be used, such as geographic location or recency. Freemium and metered paywalls can be mixed. And when all content access is restricted, this is referred to as a hard paywall. When the model and its setting (meter number, content accessible) vary, we call this a dynamic paywall.
As this list shows, building a paywall involves a large tech ecosystem and not just a small tool that regulates access. But this is not enough. You also need to master the art of getting visitors to pay.
The Art of Paywalls
Building a successful paywall has become an art, one that marketers fine-tune through numerous tests and takeaways of successful examples. It is based on several factors, among which three are key:
The first factor is data and one's capacity to build segments reflecting different propensities and ways to subscribe. This is, of course, first built on top of identifying the visitor. Getting them to register is probably the best way to keep the information logged across all channels. It is also about the modeling technique used, which nowadays often employs artificial intelligence. When selecting a solution, this data piece is often the most hidden, as a simple interface doesn't prove the power and efficiency of a solution, but is crucial for success.
The second factor is the conversion funnel design. This includes several pieces, such as 1) the different journeys before hitting the wall, which ends by actually determining the right moment to suggest to pay, 2) the wall pop-up display that should have the right offer, a clear display of price and benefits, and already the first pieces of check-out such as email, address or payment, 3) the check-out process which should be short and efficient per eCommerce best practices; finally, 4) matching the journey with the segments is both part of this work and of the data piece. Notice that this is often the most visible part of the game, and therefore what marketers see first. This is where the out-of-the-box solutions shine, as a graphical interface sells the best.
The third factor is what the publisher creates. First is the offer, which is mainly driven by the pricing plan. Building the appropriate offer for the right segment and deciding on the price will have a significant impact on converting your visitors. The other piece is the journalism itself, especially with the freemium model. Some articles drive conversions, while others will attract existing subscribers more. Having the knowledge of journalism’s contribution to acquisition and using this in adjusting the free/paid content will significantly leverage the results.
This art has emerged during the last 10 years as the following short paywall history tells us.
Paywalls: A Short History
1997 - 2011: Marginal Attempts
The first paywall appeared in 1999 on The Wall Street Journal website. It was a "hard" paywall, limiting any access to the content. The WSJ was able to reach 200,000 active subscribers during the first year. Ten years later, it achieved 1 million. But the WSJ was an exception, as nearly all newspapers still provided open access, based on an advertising revenue model. In 2010, only 6 of the 98 largest newspapers had adopted a paywall. The publishing world was convinced that the internet is a free-access world where paid models wouldn't work.
2011 - 2016: Take Off
A switch occurred after the recession of 2009. Print circulation and classic advertising dropped, and digital ad revenue fell into the hands of Google and Facebook. Publishers realized that an ad revenue-based model wouldn't last long. Some major publishers decided to pivot to digital reader revenue. The New York Times quickly became the index of this attempt. Many experts predicted the experience to fail. Journalists also showed resistance against a wall that would hide their journalism. Nothing guaranteed success and it seemed a jump into an unknown world.
Meanwhile, in less than 4 years, the metered paywall created by the NYT enabled the fast growth of its digital subscriber portfolio. At the same time, other dailies, such as the Washington Post or the Boston Globe, followed a similar route, investing in more tech and shifting to digital first. In total, 50 paywalls were created in 2012 alone. It was a period of learning and testing, where the metered model was seen as the most innovative, and the number of free articles was one of the key points of discussion. During the same period, the first "out of the box" paywall solution – Piano – appeared.
2016 - 2021: Growing Success
A tipping point in paywall adoption was around 2016.
During that year (and even the previous year), one heard in many conferences the end of publisher fascination with Facebook and Google. Participants in these conversations admitted that free access to their content had just enriched the duopoly and that their main asset – content – needed to get back under their control. The good news was that the paywall approach was showing promising numbers. A list of newspapers revealed awesome digital subscription volume with many reaching +100,000, and several being more than 1,000,000. And not only in the US but in nearly all western countries.
All newspaper publishers that adopted a paywall approach were experiencing rapid growth, even if a few (The Guardian in the UK, La Presse in Montreal) chose other options. It was looking as if a digital subscription model could be viable, at least in volume. During this period, more and more events were organized around the paywall topic, the INMA Subscription Summit being probably one of the most popular. Testimonials and experience sharing of the most advanced publishers gathered numerous marketing and circulation attendees, some spending probably more time at these events than in their office!
This new period also initiated a fine-tuning phase of the different models. The metered model got its number of free articles drastically reduced without stopping growth, while the freemium one became the most used among publishers (around 50% of paywalls). Recency Frequency Volume was the main metric of engagement that led to conversion. Journalism content got rated on its contribution to converting visitor traffic to subscriptions. New "out of the box" paywall solutions appeared besides Piano, such as Poool in France, Celera One in Germany and Zephr in the UK, while most of the big publishers still built their own.
This success also affected Facebook and Google with increasing fear of losing control. Both got more aggressive with the publishing world and in order to maintain them in their ecosystem, multiplied their initiatives with new formats (e.g. AMP), subscription options (e.g. Google Subscribe), redesigns (e.g. Facebook News), and others.
Meanwhile, just before the COVID crisis occurred, some concerns appeared: were there signals of subscription fatigue starting with subscriptions reaching a plateau? And what about magazines that didn't have any success stories around paywalls? And what about advertising that remained a necessary revenue stream but could be killed by the switch to less traffic? Was the balance viable between subscription revenue increase and advertising? The ARPU (annual revenue per unit) metric became trendy once again.
2020 - 2021: The COVID Bump
The COVID-19 crisis has been a major game-changer. With the global lockdown, advertising dramatically dropped, and print could no longer be distributed. People were also looking for reliable news. Immediately, news websites experienced a peak in traffic. Questions were asked about opening the gate for emergency information, which many publishers did. But publishers that were facing a drop in income from their other sources at the time switched their paywall back on after a couple of weeks. Many saw an opportunity for increasing their subscriber portfolio and offered trial or low-rate subscriptions for a limited period. The result was a large bump in their portfolio and a large readership swing to their digital content.
During this period, many publishers that hadn't built their paywalls joined the trend. Paywall solution providers did great business during that period, and every week I could see Poool in France quote the latest new clients that adopted their solution.
The period following the COVID lockdown saw a drop in traffic as was expected, but it remained at a higher level than before the lockdown. And the other good news was about attrition: while some expected an increase in subscription cancels – especially with the trials obtained during the lockdown – this did not really happen and the growth trend continues.
2022: Signs of Fatigue?
Despite paywall success, questions have arisen. One major question is directly related to financial health: is subscriber revenue (especially through the paywall approach) the industry savior? If we look at the current financial state of publishers, it appears not. What is clear is that this revenue stream alone is not capable of compensating for the drop in print and advertising revenue. More is needed.
Looking deeper into the numbers, the current portfolio growth is driven by low prices, which appears to be even more responsible for success than the marketing strategy deployed around dynamic data approaches. It may also help to explain the major issue of churn on digital products, which many studies reveal to be a major challenge.
INMA specialist Greg Piechota also points at the potential end of "low hanging fruit", with core visitors that have been easy to convert. There is now a need to find new approaches (offers, paywall settings) for growth through converting a group of visitors – he calls them the light readers – that do read content but do not really follow the patterns of metrics and interests of the general public.
With slowdowns for players such as Netflix, and the unknown impact of rising inflation, are we reaching the end of the paywall success cycle, necessitating a review of strategy for publishers?
So, what is the future going to look like for paywalls? With more than 10 years of history, I would predict some directions:
- A paywall strategy (making content paid) can be a significant revenue stream, but it won't be enough on its own. Other revenue streams are needed such as advertising and/or eCommerce. Therefore, combining advertising with a paywall is important, needing the right balance between traffic and the wall. It should leverage increased registration to provide a better alternative to third-party cookies and all the other opportunities that valuable content can provide.
- Among the components of a paywall strategy, the role of data and dynamic strategy will steadily increase. This is not only because additional growth will go through fine-tuned strategies and differentiated offers, but also because the data will be needed to forecast churn after conversion. Considering how the visitor will behave after subscribing is a key element for further growth. Retention and acquisition, as they have always been in subscription marketing, are two faces of the same topic.
- Paywall doesn't work for everyone. Magazines don't seem to fit with digital subscriptions on a large scale, at least in their current format. And regional newspapers still have an issue with building digital portfolios at a size that will be able to compensate for the decline in print. Therefore, other revenue models are key. Some are already known, such as memberships or donations. Some models didn't work previously, especially the micropayment/pay per view approach. When it is used, it is more as a step on the path to subscriptions than a real revenue stream. And there are others.
- Reconsidering the role of print is probably also key. For magazines, print can bring a brand on which additional services can be built. For newspapers, it is still a big driver of digital subscriptions, especially when digital access is built into the print subscription. Developing strategies to leverage digital inside a print + digital bundle remains an open topic that isn't getting a lot of attention yet in conferences.
So, the story hasn't ended, and we are not at the end of the digital transition. There is more to come, and the current maturity of paywall-based acquisition strategies will continue to adjust until a viable model emerges.