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For online publishers and media organizations, successfully introducing the paid subscription model is easier said than done. Recent research showed 80% of publishers experience difficulties in converting anonymous traffic to subscriber traffic. Another report by Viafoura explains why just having a paywall is not enough and underlines that, even though around 76% of publishers have some type of paywall, only 10% have established a thriving digital revenue model. Subscriptions might not work for everyone since there are a lot of moving parts. Renowned brands such as The New York Times, Wall Street Journal, The Washington Post, and The New Yorker report notable success with subscriptions. It is debatable whether their strategies could be applicable to smaller media that do not have such established reputations. To help you understand everything there is about paywalls and the importance of reader engagement in this context, we gathered the industry know-how and created this ultimate guide. What is a paywall? If you're wondering what is a paywall, it's a method of restricting free access to content. A paywall blocks access to what is frequently referred to as 'premium content'. Readers can access it after they: Purchase that particular article (single article purchase) Sign up and pay for a subscription When readers pay only for a single article they are interested in reading, they are making micropayments. Micropayments are typically a unit of currency less than one dollar. Some believe they might be the future of content monetization since they require a lot less commitment than deciding for a continuous subscription. However, the industry still hasn't seen notable success with micropayments. Subscriptions, on the other hand, imply readers have to pay a recurring price at agreed intervals for access to content. Subscriptions are usually formed on the weekly, monthly or annual level. When readers are logged into their digital accounts, the paywalls do not appear and they can enjoy reading premium articles. Which paywall models exist? Paywall models have evolved throughout time and they all have their pros and cons. The type of paywall a publisher chooses has to respond well to their audience's needs, habits, and the level of their loyalty. It's very important to choose the type of paywall that won't cause reader churn. There are four types of paywalls publishers use. Hard paywall Hard paywalls require readers to pay for a subscription before content can be viewed. A hard paywall can be placed in front of a specific section or an entire website. Many think implementing a hard paywall is quite risky if the publication in question doesn't already dominate in their market. Hard paywalls can work for renowned media that have a well-developed niche audience. In these cases, a hard paywall is not likely to negatively influence revenue rates, on the contrary. In order to implement a hard paywall successfully, media professionals who create digital content need to ensure they are continuously producing valuable articles that live up to the expectations of their audience, whilst competing with the sphere of free content. They have to continue introducing fresh ideas and novelties in order to avoid monotony and subscription fatigue. Take Financial Times for example. In 2010, the famous publication decided to introduce a hard paywall which made all but the homepage invisible to those refusing to pay £1 a day. Danny Finkelstein, comment editor of the Times, explained this business move as an attempt to make people pay for journalism and expert’ take on the news. Nine years later they’ve reached 1 million paying readers and further shifted away from ad revenue. This publication’s value proposition relies on the work of its columnists, news, and analysis. In some cases, publishers might change their paywall strategy and try a more balanced approach by introducing both free digital content and premium digital content, which leads us to the next type of paywall. Freemium paywalls Freemium paywalls combine free and premium content (i.e. articles which stay locked for users who are not paying readers). In the case of online newsrooms, breaking news is typically free for all users because of journalistic ethics and maintaining an informed public. However, their paywall and revenue strategy might lock down exclusive articles such as in-depth analyses and investigative stories. The greatest advantage of this type of paywall lies in the fact readers can sample your content before deciding whether or not they want to subscribe. By measuring article performance and the level of engagement of their readers, how they react, which topics they are interested in the most - publishers can determine what type of content can be safely put behind a paywall. A gated content plan, while having a direct impact on revenue, can help with a deeper analysis of the audience, too. Take The Telegraph for example. It was one of the first adopters of paywall among British general interest newspapers but decided to switch for a premium model and leave pieces like opinion columns and exclusive interviews behind a hard paywall. The change started with roughly 15% gated content, based on information provided by analytics on what types of stories are more likely to encourage readers to subscribe. Their previous paying audience from the metered model was turned into premium subscribers. The metered scheme didn’t work for this publication’s goals since it did not differentiate between visitors who were reading a story as a subscriber and those who were reading it for free. Other technical issues influenced the decision, such as the failure to run on mobile web or through third-party platforms like social media. Soft paywall Soft paywalls allow users to access some digital content based on criteria set up by the online publisher. The most common form of soft paywall is the metered paywall. The metered paywall allows users to read a limited amount of articles, in a defined period of time. After they reach this limit, users hit a paywall and they need to purchase access in order to continue consuming content. Many publishers that try testing the hard paywall eventually replace it with a metered system. For instance, The Boston Globe has been polishing its gated strategy for years. At the end of April 2017, they cut back from five to two on the number of free articles available for visitors every 45 days. Boston Globe Six years earlier, they had a hard paywall that targeted their most regular web readers and offered a subscription for their print edition some exclusive extras and kept the free, ad-supported Boston.com for a more casual audience. Harvard Business Review is another great example. It is one of the most reputable online publications that use a soft paywall, allowing users to consume up to three articles for free. They are also a good example of price diversification. Given the fact they are a thought leader in the field of business management, they offer three different price packages: for digital, digital+print, and a premium paid subscription which allows users to access additional, exclusive articles. Dynamic paywalls Dynamic paywalls are basically a type of metered paywall. These paywalls use reader data to tailor digital subscription offers based on their interests, online behavior, and price sensitivity. Publishers use dynamic paywalls to leverage their most valuable articles and drive subscriptions. The Wall Street Journal uses this innovative type of paywall, which is also called a flexible or intelligent paywall. They rely on artificial intelligence: advanced algorithms are capable of understanding the individual reader’s behavior and then delivering personalized subscription pitches, which increases the chances of converting readers into paying subscribers. In layman's terms, the paywall will 'loosen or tighten' by taking in mind dozens of signals that indicate whether the non-subscribed visitor is 'hot, warm or cold' in the context of engagement and readiness to convert to a paying reader. The Wall Street Journal How can publishers use data to create a solid paywall strategy? Publishers are essentially content providers. Their greatest challenge is to convince the readers paying to access premium articles is worth it. In addition, they need to solve the so-called 'Goldilocks pricing issue' and set the subscription fees just right – not too low, because this could negatively impact their ROI, but not too high either, because this could turn their readers away. Publishers also struggle with finding an answer to the following question: How are you supposed to make money on stories and information, and compete with an outstanding amount of free, easily accessible content online? A recent INMA study showed that only 10% of online readers drive more than 74% of revenue. This means that, in order to create a solid paywall strategy, publishers need to focus on their 'super users', identify what makes their readers loyal and what turns them into subscribers. They can do so by analyzing the data, reverse-engineering their success, and testing different hypotheses in practice. First-party data is becoming especially important now because cookie tracking is even more limited due to browser restrictions and privacy regulations. Different paywall, engagement, and audience insight tools can help publishers collect valuable data and gain a better understanding of what their readers want. Data can help you reach new subscribers and retain existing ones. Since the success of your subscriptions depends on the relationships you develop with your readers, having access to the right type of data is essential. How can publishers nurture reader loyalty to turn content viewers into subscribers? Nurturing reader loyalty and engagement should be the main focus of publishers looking to make the most of their paywall strategy. Figuring out what makes people subscribe is not easy. The universal solution for publishers of all sizes and profiles doesn't seem to exist. However, various industry studies have proven there is a strong link between the high level of engagement, frequency and recency of visits, established reading habits, and the probability of one reader converting to a subscriber. Metrics that indicate engagement can be attention time, engagement velocity (aggregate number of engagement actions per minute), the number of comments, the number of active users, etc. There is a general consensus among publishers that increasing levels of engagement can help with increasing subscriptions. Subscription strategy must stand shoulder to shoulder with a user-participation strategy: a group of researchers discovered there is a more concrete relationship between user engagement and website profitability, and that publishers need to take a more active approach to engage and interact with their readers, guiding them up the so-called 'ladder of participation'. Here’s what publishers need to do in order to strengthen the relationship with their readers and create a solid paywall strategy: What should publishers do? Why? Provide premium readers access to knowledge they truly want and need Publishers should treat their publication as the ‘information as a service’ and ensure readers are aware of the content value. Only then will they become willing to pay for content. Set their own parameters to distinguish different reader types (e.g. occasional readers, regular readers, loyal readers, and subscribers) Each reader segment has different wants, needs, expectations, and habits. Publishers need to invest an effort in personalization and create a specific strategy for each segment to increase loyalty. Monitor stop rates (the percentage of all digital users who are “stopped” by a subscription prompt, a meter limit, or any type of paywall) and conversion drops Gated content strategy has to be continuously fine-tuned. Publishers need to understand what causes friction in reader experience Analyze acquisition channels Publishers need to optimize channels that bring them the most value. For instance, they can determine the value of social media networks such as Facebook in terms of bringing qualified traffic to their website, do A/B testing to try out different newsletter strategies, etc. Encourage readers to stay longer and read more By using content recommendation widgets, ensuring great UX, investing in content diversification and quality articles, publishers can increase dwell time and strengthen the bond they have with readers. This helps with both converting occasional readers to subscribers and retaining existing paying readers. Offer other, accompanying incentives and special deals Offering additional value can push readers toward paying for premium content. For instance, The New Yorker has a metered paywall and it offers readers a chance to subscribe now 50% off and get a free tote bag. Build a clear vision of what their publication has to offer and what's unique about it By identifying USPs and communicating brand value the right way, publishers can learn how to treat their content operations with a sharper business sense and market their offers to increase reader revenue. Deploy the right types of technologies and analytics solutions To drive results, publishers need to act on data, not on their gut feeling. The right type of data can help them create a more effective content strategy and feel the pulse of their audience.. How do updates in terms of user privacy affect publishers that rely on paywalls? A 'pro-privacy' revolution has its effects on the online publishing industry. In May 2018, the General Data Protection Regulation came into effect and it is seen as the most important data privacy change in the last two decades. At the time, security and data experts said that the GDPR will set a new global standard for data security. They were right: in January 2020, the California Consumer Protection Act followed. Recently, Google announced blocking third-party cookies in its Chrome web browser, which is the most popular web browser used by almost 65% of people surfing the web. This change might open up new opportunities for publishers in terms of directly collaborating with advertisers through exclusive contracts, but it definitely signals the end of programmatic ads. Given the fact most of the publishers don't rely on a single source of revenue, but they combine ads and subscriptions - it’s yet to be seen what kind of effect will this have on the industry. With new privacy regulations and browser technology changes, third-party cookie tracking is slowly becoming a thing of the past. Publishers can still use first-party data to understand users' interaction and reading behaviors, and then use these insights to serve them better. The recent update (Chrome 76) Google enrolled on the 30th July, 2019, had a negative impact for many online publishers. This update closed a privacy loophole, but it also enabled users to bypass metered paywalls. Google made it clear the company values user privacy and prioritizes it over publishers' income. Can a paywall hurt your SEO? Like all search engines, Google relies on crawlers that map out websites and index them. This is how it retrieves and displays the most relevant results to each search query. Its main goal is to provide the best possible search experience for users, which means it somewhat acts as a filter of value and relevance. Bearing that in mind, Google doesn’t see the point in sending users to a website where the content that matches the query is unreachable, i.e. hidden behind the paywall. This is why some newsrooms initially struggled with mixed SEO results. As Google explained on their official blog: “Our evaluations have shown that users who are not familiar with the high-quality content behind a paywall often turn to other sites offering free content. It is difficult to justify a subscription if one doesn’t already know how valuable the content is, and in fact, our experiments have shown that a portion of users shies away from subscription sites.” Eventually, Google withdrew its First Click Free policy and published technical guidelines and best practices so that publishers that rely on subscriptions can make sure their website is visible in search. For more information on SEO and paywalls, see here. If you want to create a successful paywall strategy, you need to commit to trial and error, experiment with digital content to see what truly resonates with your readers, and treat your content operation as a business. You may not be globally recognized like The New York Times, but you must have something unique to offer to your readers. 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