Subscription Paywall Models: What Publishers Need to Know

By NativeAI / October 29, 2018

Over the past few years, publishing has undergone a profound shift as the initial digital business model of relying on advertising has increasingly given way to subscriptions and paywalls. The glut of news on social media, rise of conspiracies & fake rumors going mainstream, has helped convince readers of the value in paying for news that they can trust.

Organizations of all sizes, from large publications such as The New York Times to niche ones such as Ottawa's business-oriented Blacklock's Reporter, have already embraced paywalls, and many more are considering it.

While the overall mission of these efforts has been the same — to charge audiences directly rather than being dependent purely on ads — the implementations have varied widely.

For publishers considering putting a paywall in place, having a good sense of these various models is essential, as each comes with its own pros and cons.

In particular, it helps to understand how these three key types of paywalls operate:

Hard Paywall

What it is: A hard paywall was the first iteration of the idea, and it remains the simplest: audiences are restricted from accessing content unless they pay. Usually a visitor hits a prompt almost immediately asking for a subscriber login and/or for a one-off purchase.

In truth, even the hardest of paywalls are not completely "hard"; most publishers who use this model keep a small number of pieces and teasers for content outside the wall so that they can entice readers via social media, search, newsletters, and their homepages. Still, the concept is that is that if visitors want to access nearly all content, they will have to subscribe/pay.

The pros and cons: A major advantage of a hard paywall is that it is easy to implement and maintain. Once it is put in place, the publisher does not need to be constantly devoting resources to optimizing it (though price/offer adjustments may still need to be made).

The big con of hard paywalls is that they create a huge barrier to entry for audiences. By immediately requiring a subscription/payment to access nearly every piece, the publisher is likely to quickly lose casual visitors as well as visitors who are not already familiar with its brand.

Who it works for: Hard paywalls tend to work best for publishers who have devoted audiences that already see a clear value in their content. For example, well-respected industry and business publications tend to do well with hard paywalls, as do academic journals.

Some publishers who use this model:

Nature: The scientific journal provides abstracts of research for free, then in order to access full articles visitors are prompted to either subscribe or to buy individual pieces.

nature magazine paywall

Phocuswright: This organization catering to the travel and hospitality industry also has a two-track hard paywall: visitors can either purchase individual reports or subscribe for unlimited access to all content.

phocuswright hard paywall

Premium Membership

What it is: Premium membership is an approach where a publisher keeps some of its content free to access for all, and some always behind a subscription paywall.

The share of content that is and isn't paywalled varies among organizations, but typically the bulk of pieces are free and smaller segment are reserved only for those who subscribe to the premium service. Most organizations also offer additional perks, such as access to events and ad-free browsing, to premium subscribers.

The pros and cons: If executed correctly, premium subscriptions allow publishers to be free, easily-accessible, and advertising-driven for most casual visitors, while also deriving subscription revenue from the most passionate audiences.

The difficulty is in finding the right balance of what to put behind a paywall: if too many compelling pieces are charged for then the advertising model can collapse, and if too few compelling pieces are charged for then subscriptions will lag.

Who it works for: Premium memberships can work for publishers who want to keep most of their content free for philosophical reasons (i.e., open access is part of their philosophy/mandate) but who also want to build a secondary subscription revenue stream. The model can also work for publishers who have niche audience segments that are passionate enough about certain content to pay for it.

Some publishers who use this model:

The Atlantic: With its Masthead Membership The Atlantic offers its most devoted fans exclusive content, ad-free browsing, and access to gated discussion groups.

the atlantic paywall on nativeai analytics

ESPN: The ESPN+ service is an offering targeted at hard-core sports fans: subscribers get a wealth of content beyond what's offered for free, including live streams of a wide-range of games, original news/documentary features, and exclusive product features (alerts, etc.).

espn paywall subscription


Soft/Metered Paywall

What it is: The soft/metered paywall is the most common type of paywall being implemented. It has many varieties, but the basic idea is that the paywall prompt is flexible (hence soft vs. hard) and is only triggered under certain conditions.

The triggers can range from the simple (all cookied users are allowed to access a certain number of content pieces per month before hitting the paywall) to the highly complex (a series of past behaviors, present behaviors, and predicted future behaviors are taken into account).

The pros and cons: The soft/metered paywall model is the most popular for good reason: it enables a publisher to reach audiences with free content and garner ad revenue while also fostering deeper interest/engagement and building subscriptions. Essentially it is the best of all worlds: it maintains reach while allowing each reader to be treated like a sales lead, with targeted outreach, nurturing, and conversion tactics applied.

The major challenge with soft/metered paywalls is that they require sophistication and experimentation. To properly move audiences from free content to subscribing based on a nearly infinite number of potential triggers requires many internal groups — editorial, analytics, audience development, sales, business development, marketing, etc. — to work at a high-level both on their own and together.

Also, to develop soft/metered paywalls publishers need to have access to rich data and sophisticated systems, such as our NativeAI platform, that make it possible to easily and effectively understand audience behavior and to deliver the right content/messaging at the right time.

In the past, a third issue with soft/metered paywalls was that they were limited to triggers based on on-site behavior. However, thanks to recent changes made by companies such as Facebook and Google that is changing: it's becoming increasingly easier to incorporate offsite behavior.

Who it works for: The flexibility of soft/metered paywalls mean that if they are executed well they can meet the needs of most publishers. The limitations are often found within organizations — not having the right tools, data, or staff — rather than in the model itself.

Some publishers who use this model:

The Wall Street Journal: The WSJ has been a digital subscription pioneer and it currently has what is probably the most sophisticated approach: it has a flexible paywall that bends to the individual reader, delivering non-subscribers dynamic targeted messaging based on dozens of signals.

wsj paywall subscription

The New York Times: This venerable institution has had the most success implementing a paywall of any sort: it now has more than 2.8 million digital-only subscribers generating more than $250 million per quarter in revenue. It uses a metered system in which audiences get a certain number of articles for free and are then prompted to subscribe (the exact number is flexible based on behavior and source).

nytimes subscription paywall

What's interesting to note about The New York Times is that in addition to its soft/metered paywall it also has premium membership offerings catered towards fans of its Cooking and Crossword sections. This highlights that these models are not mutually exclusive nor are they set in stone: organizations can pick and choose elements from different approaches and develop strategies that fit their specific needs.

Dynamic paywalls, which deliver personalized experiences based on reading interaction & behavior and give you more access depend on the power of publisher analytics to understand readers' propensity to subscribe and use this data for conversion optimization & subscriptions. There is plenty of scope to treat the audience acquisition as a marketing funnel with email newsletters and push notifications acting as the gateways to paid subscriptions.

Ultimately, as sophistication grows the delineation between these models will likely break down further: publishers will take more and more hybrid approaches that focus on utilizing the right data to engage the right individuals with the right messaging/offers, rather than enforcing less focused barriers.

Written by NativeAI / October 29, 2018