The evolution of the paywall: From blunt instruments to sophisticated, creative solutions
What’s the backstory on paywalls and where are they going today?
Looking back to 2012 to 2014, paywalls were traditionally “one-size-fits-all” blunt instruments. They were like a toll road: You’re driving down the road, you get stopped by a toll booth, you pay and keep going. Newspaper publishers were the first to deploy paid content and the industry was divided on which business model was better: the metered model or the premium model. The biggest barrier to paywall uptake was the fear of page view loss. That is why the magazine sector was hesitant to restrict access to content on their websites as they were focused on growing reach.
Many publishers felt that since their audiences were spoiled by the avalanche of free content on the web, their users would not pay for content. Many felt there was a trade-off between display ad revenue and subscription revenue rather than considering them as two separate and complimentary revenue streams.
Last year many publishers started focusing on their anonymous traffic, recognising that their audience was comprised of many different segments for whom a “one-size-fits-all” subscription approach wasn’t necessarily relevant. Relevance and behavioural tracking rose in importance to publishers as they wanted to personalise offers for a particular segment, whether that be direct traffic, referral traffic, mobile traffic, international traffic, etc.
If you look at the media industry today, it’s all about personalisation, whether that be for ads or subscription offers. Engagement and quality of traffic is becoming more important than volume of traffic.
To increase engagement and offer a better customer experience, what needs to be factored in?
There are three major trends that are shifting the industry’s focus to quality versus quantity of traffic. These trends are causing publishers to consider new business models in addition to their ad-driven revenue model.
The first is falling CPMs (cost per thousand impressions). After 2008, prices of online advertising fell and thus publishers suffered flattening or reduced online revenues. The second is the shift to mobile. Last year, many publishers measured more than 50 percent of their page views on mobile rather than the desktop. As mobile has less real estate for ads, this is putting downward pressure on ad revenues. The third trend is the rise of ad blocking. While the numbers vary significantly from country to country, the rising use of ad blocking is negatively impacting digital revenues.
Adding to this, publishers are struggling to get more than 1 to 2 percent of their audience to buy a paid subscription. All of these trends are pushing publishers to investigate other forms of engagement and content monetisation.
Publishers are recognising that their content has value that can be traded in exchange for something. Currently users have to pay to access locked content, but in a value exchange it’s also possible to collect data from users, get users to turn off ad blockers or to sign up for a newsletter to access locked content. Improved engagement starts with getting anonymous users to register because knowing who your customers are allows for better ad targeting.
How do you capture the other 98 per cent who are reluctant to pay for content?
The issue the industry is facing today is how to show value to the consumer. If a reader isn’t willing to pay for content, they can provide something publishers do want: data. Therefore, publishers need to get into a value exchange with their customers. Access to content can be traded for an email address, for signing up to an email newsletter or for watching a video. All of these actions provide monetary value to publishers in the form of better ad targeting, increased traffic from high newsletters CTRs, etc.
Publishers begin learning about their audience while training users that content has a value, it’s not free and while at some point you expect them to pay for a subscription, certain audience segments can pay via actions. Thus we’re seeing a rise of data walls.
Another approach that is steadily evolving is membership packages. In essence, you are creating a VIP room for your customer. If you are reluctant to launch paid subscriptions, and want to continue focusing on reach, this is a great alternative to the paywall model. While in many cases it’s just semantics, memberships do incentivise payment from the additional benefits the user gets in addition to access to content, in effect bundling products and services with content.
What do those products and services look like? It could be discounts on dive gear for a diving magazine or it could be an invitation to a high-caliber lecture series or podcasts. With membership packages, publishers are still in the early days of developing models. Memberships are forcing publishers to really understand their users and their needs. Is it the content, or is it the benefits that incentivize membership? Publishers are testing to find out the best mix that maximises conversions, Some publishers are even conducting focus groups to identify audience needs to determine the membership package that’s most compelling for their audience segments.
What other trends are moving publishers toward better engagement?
We are seeing a rise in the use of the email newsletter. Larger players with successful paywalls are finding that email newsletters are a definitive step toward a full, paid subscription. Newsletter subscribers are reading more, are getting closer to the brand and have a higher propensity to pay.
In short, it’s one tool to start expanding revenue streams, and it’s a smart step for publishers to take now. Every month you don’t do something, you are losing the opportunity to learn about your audience. Requiring registration or newsletter sign up gives you valuable data, which can drive action and monetisation.
We all acknowledge that there is no silver bullet for the dramatic changes in the digital publishing era and each is brand and readership is different. Content consumption and audience behaviour is different. However, magazine publishers began taking new action last summer and you’ll see more movement in 2017. There are interesting new opportunities on the horizon and the value exchange is an approach that is becoming increasingly popular.
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