As Paywalls Evolve, So Does the Perception of Paywalls

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For a very long time I really wasn’t a fan of paywalls. I felt that people expected content on the Internet to be free, and if hyperlocal and regional news sites began charging, the audience would go somewhere else. There’s still some truth to that concept, but it’s time to acknowledge that, overall, people are starting to get used to paying for content online — especially on smartphones and tablets.

Yesterday the Chicago Tribune put up their long awaited paywall. But they didn’t do it in the typical way. Instead they focused on some key areas that can perhaps help to inform other publications that are looking to put up a paywall of their own. (Disclosure: I worked in the past as a product manager for Tribune Interactive. The relationship between Tribune Interactive and Chicago Tribune can’t be explained in one sentence but suffice it to say there was a relationship and I was involved.)

Provide a Good Reason to Start Charging
No one likes suddenly being charged money for something that they were used to getting for free. If you look at some of the splash screens for newspaper paywalls that pop up when you view the site, they’re essentially a smack in the face — there is no explanation for why they are asking you to pay, nor is it clear what you are actually paying for other than “access.”

Indiana University researchers showed that readers could be convinced to pony up if they were given the explanation that the a paper like the New York Times would be at risk of bankruptcy without reader revenue. But that’s really a bit extreme.

Blocking access after a viewer reaches a certain number of articles per month, the metered approach, is becoming the most common implementation of the paywall. In theory, this inures the reader to the system, and over time the paper can gradually decrease the number of articles per month that readers are allowed to see for free. This tactic is also often a solution to convince avid readers to subscribe to the print product because the newspapers know that the type of user who reads more than say 12 articles per month is likely to be willing to pay a little more (or in some cases the same amount) to get digital access and the Sunday paper.

While this seems like a safe bet because not many people will cry foul when the meter moves from 12 articles per month to 10, I think it can miss the point of a paywall which isn’t just about incremental revenue but about showing that newspaper content has value.

The strategy I prefer is the one that the Chicago Tribune has taken. Their messaging is around a “plus” concept. The site is still free and you are only paying for the additional, unique content.

Provide Compelling and Unique Content
For the longest time our newsrooms were focused on building up their monthly pageviews at all costs. This led to tactics that hurt the brands for many newspaper websites — or at the very least caused readers to change their perceptions about what type of content the sites provided.

Local news sites began posting photo galleries that had nothing to do with local coverage but instead were about getting people to flip through them. They also started to focus more on breaking news — and, while this is useful because it’s local content, it is commodity content that a reader can get on any TV station website. This commodity content isn’t something that people are going to want to start paying for, nor are the photo galleries (especially when the ones on Buzzfeed are much more amusing).

The Chicago Tribune began their effort to ease users into paying for content by putting their unique and premium content behind a registration wall. This effort helped people to understand that there was unique content being offered by the Tribune. It also forced the Tribune’s web editors to place more of an emphasis on this premium content. As of yesterday the Tribune will begin charging people who want to view more than five premium articles while still providing breaking news and other commodity content for free. I really like the idea that if you can get it somewhere else (e.g. the local TV station) you can still get it on for free.

It’s a Membership Not a Paywall
The idea of turning newspaper subscriptions into more of a membership (a la NPR) isn’t new, but I haven’t really seen many local papers do a great job or provide true value. The Chicago Tribune looks to be on the right track, they have a great listings of events for free to their members and a pretty full list of eBooks and they are even offering subscriptions to their mobile apps (not just the Chicago Tribune app) for free to their subscribers.

Cooperative Pricing
I feel like we are being asked by way too many publications to pay for content. It would behoove publications to put a strategy in place that allows us to subscribe to many publications at one price.

We’re starting to see magazines experiment with this on their tablet editions. I was also thrilled to see that the Chicago Tribune is offering some syndicated content such as Forbes and The Economist. I think it would be even interesting to see if there is a model for the various hyperlocal and niche news websites in a given area to work together on a subscription or membership model. Maybe even anchor it with the local daily newspaper.

Overall these relationships can be a tricky one because you have to figure out a subscription price that works for everyone and divide the revenues out in a fair way.

Pricing Models
The pricing models for local newspaper digital subscriptions are across the board. I’m not quite sure what the right answer is but that doesn’t mean we need to just make up pricing. I’ve heard that many publishers are coming up with their pricing based on where they need their revenues to be. This cost-based pricing isn’t going to cut it.

Newspapers should spend the time and money to find out exactly what the most efficient price is to meet their goals. This will most likely mean hiring pricing experts to help determine this. One place publishers might want to look is at the Reynolds Journalism Institute’s Pricing Optimizer tool, which puts some scientific research behind pricing for paywalls and content bundling.

Every other industry spends a lot of time and energy in coming up with their pricing models, newspapers should do the same.

It will be interesting to see how the various paywall models play out over time, but I have become more confident that paywalls (in some form or fashion) are a piece of the puzzle to running a profitable hyperlocal or regional news website.

Matt Sokoloff is a 2012-2013 Reynolds Journalism Institute Fellow working on a project to help local independent websites and bloggers gain additional revenue opportunities. Matt’s background is in building digital products for media organizations. Read more about Matt’s current work here and respond in the comments or at [email protected] and @MattSokoloff on Twitter.

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