Different types of subscription paywalls and their pros and cons

Now, over 76% of digital news companies in the United States are working using some kind of pay model, or in other words “paywall”. Back in 2011, the publishing behemoth The New York Times introduced readers to a metered paywall. Needless to say, that changed the entire digital news market for years to come. As we covered in one of our latest blog posts, the subscription-based business model gains more and more popularity with each passing year, and rightfully so. Paid subscriptions help publishing companies to grow bigger, hire new writers, thus providing readers with the best content possible. In Meredith Kopit Levien’s, the executive vice president and COO of The New York Times Co.’s words, “We think it’s as good conditions as any to demonstrate to people that high-quality journalism is something to be paid for”.

Three main types of paywalls

1) A metered (soft) paywall.

This subscription method is used by the aforementioned publishing company, The New York Times. Metered paywalls provide readers with limited access to the content. There are two types of limitations:

• A limit on the amount of content a user can view (e.g., a certain number of articles or videos);
• A limit on the time a reader can spend using the digital news service (e.g., a free trial).

Pros and Cons

Pros: This paywall type is highly versatile and has proved to be a solid decision to bring the conversion rates up. For example, after the implementation of a metered paywall system, The New York Times has gained 3.8 million members since 2011, with total subscription income exceeding $1 billion last year. The key to success with this method is to set the limits accordingly to the readers’ interest without spoiling their overall experience with the service. A metered paywall works wonders if a publishing company manages to find out the users’ needs. After that, the only thing left to do is to capitalize on it and give the readers a reason to buy a paid subscription.

Cons: While a metered paywall can increase the conversion rate, it can also kill the company’s momentum if done incorrectly. Once again, this method is highly adaptive, which also means that there is no exact way to use it effectively. However, there is a thing any business that uses metered paywalls should avoid. Installing a metered barrier at a random place may wind up damaging efficiency by deterring users with frustrating limitations. A service should know the reader’s demand and when it is the right time to hit the “STOP” button.

2) A hard paywall.

Contrary to the metered paywall, this method allows the users as little free access as possible or none at all. Usually, the services that use a hard paywall give readers an opportunity to view one or two content pieces at maximum before prohibiting access. Some services don’t give any free content whatsoever. This paywall is a radical solution that works if the service provides unique one-of-a-kind content. However, it also proved to be a risky method that needs to be executed carefully. For example, The Times works using a hard paywall where a user must sign up for a paid subscription to view any content. The statistics show that the issue lost up to 90% of their visitors in 2010. On the other hand, the 10% of customers that stayed made more income than the issue had ever made before.

Pros and Cons

Pros: If the business provides unique content that a visitor can’t find using any alternatives, then a hard paywall may work big time. The number of users will be significantly lower, but the revenue generated by paid customers will make up for the difference. Also, a “pay or leave” system eliminates different workarounds to get access to the content, thus filtering the free riders.

Cons: The difficult part with a hard paywall is to create a unique offer for a client. The business should be 100% sure that they have one-of-a-kind content, so their users will have a reason to pay for the service. Such a radical approach deters a mass customer, so the service must have a clear strategy before implementing a hard paywall.

3) A freemium paywall.

This method uses some of the practices of the two other paywall types mentioned above. A freemium model gives a visitor access to a pre-determined set of content, although it does limit users if they try to view a paid article, video, etc. Another difference is that a freemium paywall shows visitors advertisements while providing customers special subscription packages to turn the ads off or get different bonuses. For example, The Guardian employs a three-tiered subscription monetization model, with freemium serving as the primary one. Readers have access to articles, but they must navigate through a slew of advertisements. After signing up for a paid subscription, advertisements disappear while the higher tier plan offers users bonuses such as ebooks, tickets to themed events, and so on.

Pros and Cons

Pros: A freemium paywall allows businesses to get revenue from both subscribers and non-subscribers without spoiling the users’ experience. This method encourages the engaged visitors to invest while giving the “passers-by” a chance to get familiar with the content, so they can convert later.

Cons: Like other types of paywalls, a freemium model requires an understanding of visitors’ needs, so this method can be implemented in the most effective way possible. Putting too many ads can deter potential paid subscribers, while putting not enough may result in conversion wastage. The balance between the two is the key while using a freemium paywall.

The conclusion

Simply speaking, any subscription-based model is a win-win for both customers and publishers. Different types of paywalls are not an exception. After all, almost every major digital news issue runs one of these paywall types. The New York Times has changed the modern publishing market and subscription-based run issues are here to stay.