How to avert cancellations and increase sales with paywall models

Gundel Henke

Times are challenging. Most publishers are struggling with rising costs. Now it is even more important for publishers to attract new readers and not lose existing users.

Times are challenging. Most publishers are struggling with rising costs. It is now all the more important for publishers to attract new readers and not lose existing users. The question is no longer whether a publisher offers digital products, but how it makes content available to its readers digitally. More and more publishers are turning to paywall models on their websites and apps. In the following, we explain which paywall models are available and what advantages they offer.

It is safe to say that publishers faced many challenges in 2022. Above all, the global economy has presented publishers in Europe with major challenges. Persistently high inflation and the weakening economy have had a direct impact on publishers' bottom lines. Publishers have had to deal with everything from rising paper prices to rising labor costs.

Simply put, times are difficult. At the same time, publishers have had to proactively adapt to the digital transformation in the publishing industry. The disruptive nature of digital news is not going away anytime soon, so publishers across the continent need to reshape their thinking about how they get their stories to their audiences.

What should publishers do in light of all this? Publishers should definitely review their operating costs and do what is necessary to reduce costs. At the same time, publishers should pay attention to their profit margin. After all, one way to deal with rising operating costs is to increase revenue by the same amount (but ideally by a higher amount). While the macroeconomic challenges are great, there are also ways to increase revenue and turn these challenges into opportunities.

In this article, we'll take a look at some effective strategies you can use to prevent churn and increase revenue. In particular, we'll analyze paywall models and how these models can help increase your publication's revenue and subscribers. Whether you work for a small publisher or a much larger publication, you can use these models to achieve your revenue goals.

Paywall models: An overview

Paywall models are not exactly new. However, to understand why they are so important in driving revenue to your publication, it's important to examine some of the key features of paywall models.

So what is a paywall model? Essentially, a paywall model is a digital barrier that allows readers or viewers to access content only after paying a certain fee. Although we call it a "paywall model," there are different types of paywalls.

First, there is a hard pay barrier. Hard pay barriers mean that readers can only access content if they subscribe to the publication. There are few (if any) exceptions to this rule.

One of the best-known types of paywalls is the so-called freemium model. Here, the content of a publication is divided into two sections: a free section and a paid section. Often, the publication offers more free content than paid content. Consumers can read, watch or listen to as much of the free content as they want. Of course, if they want to consume the paid content, they must pay a fee. One publication that has successfully implemented the freemium model is Helsingin Sanomat. The Finnish newspaper has gained promising traction by introducing so-called "diamond articles" that are not free. The rest of the content on the website is free. This has enabled the newspaper to increase digital-only subscriptions by around 37%.

A special form of the freemium model is the time-wall, where time decides the difference between free and paid content. The Swedish company MittMedia, for example, offers its content free of charge for the first hour after publication. Once this first hour has elapsed, the content becomes premium content.

Then there is the metered paywall. With a metered paywall, readers can read a certain number of articles free of charge during a specified period. Once the free quota is exhausted, the reader is prompted to register for free. After registering, the reader has access to a further quota of free articles. If this is also exhausted, the reader is prompted to take out a subscription. The New York Times is a good example of a publication with a fee-based paywall.

Finally, there is what is known as a dynamic paywall. Here, the publisher uses additional "intelligence" to adjust the thresholds for the paywall based on user behavior. For example, if the software detects that one reader is more likely to subscribe than another, it will direct the reader into the paywall relatively quickly. Canada's Globe and Mail is pioneering this model. It uses an artificial intelligence system called Sophi that decides when (if ever) to display a paywall for a particular visitor.

These are just some of thepaywall models that publishers can use. The good thing about these models is that they are constantly evolving. For example, increasingly sophisticated artificial intelligence can make dynamic paywalls even more effective. Time will tell which paywall model will be the most popular in the future. In any case, there are already many interesting models that can help you find subscribers, retain them and achieve your revenue targets.

The benefit

With this in mind, let's briefly discuss some of the different ways paywall models can benefit publishers.

First of all, paywalls can help you find new readers. The free articles on your site (whether they are part of a freemium plan or a paid plan) can be an immediate example of the valuable content you offer your subscribers. You can also run ads alongside the free content to make sure you're monetizing the customer from the start.

Paywalls also allow you to build a closer relationship with your audience. By using a paywall model, you basically have no choice but to build trust with the consumer. After all, if the consumer doesn't trust your company and the content you provide, they won't pull out their wallet and become a subscriber. On the other hand, if you create great content that your audience loves, you'll find loyal subscribers who can't wait to consume your content.

Finally, paywalls help diversify your revenue streams. This is especially important now, as advertisers are cutting back on spending in light of the global economic slowdown. By implementing one of the above paywall types, your business will also benefit from monthly recurring revenue. This type of recurring revenue makes it easier to forecast cash flow and invest in new projects and initiatives.

How to increase revenue through paywall models

A paywall model can be a fantastic way to increase revenue for your publication. However, before you introduce a paywall model, there are a few important things you should consider.

First, make sure you're delivering valuable content. This is true across publishing, but it's especially true when delivering content through a paywall model. While paywall models offer seamless opportunities to generate recurring revenue, they are also easy to cancel. A study of subscribers to the German newspaper Die Welt found that half of subscribers cancelled in the first three months. After that, the cancellation rate dropped to 1-2% per month. Ultimately, great, compelling content goes a long way toward lowering churn rates and retaining subscribers.

As you've seen above, there are many different options you can apply here. For example, if your company creates a large amount of content every day, you should opt for a Metered Paywall. On the other hand, if your publication contains fewer but more extensive articles, you should opt for a Hard Paywall. In any case, you should choose the paywall model that makes the most sense for you. A mistake in choosing the paywall model could lead to subscription losses and/or churn.

Finally, you should be data-driven. One of the great benefits of a paywall model is that you can see how your visitors and subscribers are behaving. You can then use this data to change the model, create more content that's relevant to your subscribers, and more. Even if your audience is smaller than you'd like, you can use the data you have to strengthen your paywall model and attract even more subscribers. Regardless of which paywall model you use, we strongly recommend that you collect data, analyze that data, and then optimize your model and content to your liking.

Taking advantage of the paywall

Paywall is a fantastic way to showcase your content to your audience and generate revenue. Whether you work for a small or large publisher, we recommend you think about implementing a paywall. The results might surprise you.

If you want to take your paywall model to the next level, you should get in touch with us. At Purple, we offer an AI-powered publishing platform for publishers large and small. With our tools, publishers like you can implement paywall systems and reduce churn. To find out more about our platform and how it can help you, please visit our website or contact us.

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Kevin Kallenbach
Head of Sales