Paywalls: Are they effective?

Paywall ensures readers can’t get full access to a website’s content without paying a subscription.

Digital magazines and newspapers often use paywalls to monetize their websites. This system ensures readers can’t get full access to a website’s content without paying a subscription.

There are several kinds of paywalls:

1. A ‘hard’ paywall

It lets visitors read one or two articles for free, and after clicking on the next one, visitors see a window stating they need a paid subscription.

According to Bookwitty, this type of paywall can be risky as 90% of your audience will leave the site without any actions. This monetization model is suitable for niche resources, as each visitor has to really want your articles.

Example: The Times

The Times hard paywall example

This newspaper was one of the first to launch a hard paywall and they lost more than 90% of their visitors in 2010. However, the small percentage of users who paid for their subscription generated more revenue for this digital media than before.

Six years later, the Times announced that they have 413,600 users across their print and digital platforms.

Financial Times

The case of using the hard paywall by Financial Times

If you want to read articles on the Financial Times you have to pay for a subscription. John Ridding, the CEO of Financial Times, states that more than two-thirds of their 900.000 audience are paying clients, making advertising a minor part of their revenue.

2. A ‘metered’ paywall

It allows visitors to see a certain number of articles (5, 10, 20, etc) prior to a paywall appearing. This personalizes the experience and lets readers know what kind of content they can find and whether it is valuable to them.

Example: The New York Times

This newspaper allows visitors to read 10 articles per month for free. Recently, they allowed visitors to read 20 free articles per month.

The New York Times metered paywall screenshot

Things changed at the end of 2017, when they decided to reduce the number of free articles after rapid growth in the number of The New York Times’ subscribers.

Meredith Kopit Levien, the executive vice president and COO of New York Times Co, stated: "It’s a very hot news cycle. We think it’s as good conditions as any to demonstrate to people that high-quality journalism is something to be paid for".

3. A ‘freemium’ paywall

It means visitors can read some articles while seeing advertisements, but premium content is hidden behind a paywall.

Example: The Guardian

The Guardian uses a three-level subscription monetization model with freemium as their main one. Visitors have access to articles but they have to see a plenty of ads. After receiving access to the daily edition, ads vanish and readers can concentrate on premium quality news. Other subscription plans provide users with bonuses: ebooks, tickets to thematic events, and so on.

The Guardian Digital pack as an example of the freemium paywall

Why do people subscribe?

Continuing the topic of paywalls and subscriptions, we should mention the research of The American Press Institute. Their research found that 53% of Americans pay for news (digital or printed) and read articles on topics they individually prefer.

The American Press Institute research of why people subscribe

According to the Institute, subscribers have various motivations. Access to local news is the main motivation, but not the only one.

Motivations of subscribers, why do they pay for articles

Use this data while exploring your target audience, their needs and preferences, and remember the main points:

  • Pay attention to the ‘news seekers’ category, as they are the biggest audience.
  • Stay professional, as readers need high-quality articles. People are ready to pay for premium quality.
  • For the reason listed above, news potential is not utilized, so you can experiment with different plans for your content.
  • Try to reach not just adults, but also a younger audience, as 37% of young adults from 18 to 34 years old pay for information.

So, are paywalls effective for digital media?

Paywalls and subscriptions have benefits both for publishers and subscribers. For publishers, it means that they can generate income from their customer base without using ads. You have loyal visitors who pay you money. What’s more, annual subscriptions can bring more revenue than monthly advertising campaigns.

The main concern with this monetization model is that you lose benefits of the advertising channel and have to think about how to attract visitors and turn them into customers. Companies usually choose freemium and metered paywalls to achieve this goal, while more established ones are free to use hard paywalls.

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by IO Technologies