Monday 16 December, 2013

Paywalls – Are They Effective?

The Wall Street Journal has one, the New York Times has one and now the Japan Times has one. The paywall is a growing trend for online magazines and newspapers. But is it a good idea to install a paywall when there’s so much free content out there for your audience to enjoy?

Why We Use Paywalls

A paywall is just what it sounds like – a wall that you have to pay to get over. The website gives you some free content and then you have to pay for more. Newspapers and magazines face a huge problem when they go online. We’re accustomed to paying for the physical version and they rely on that. This is a way for magazines to monetize on the internet. Plus, there’s the problem that ad income online is dismally low compared to print.

Actually, paywalls encourage reader loyalty. If you pay for the content, you feel the need to get your money’s worth and read it. You’re more likely to enjoy the content which means you’re more likely to come back for more. When content is free, it’s easy to click away.

The Problems with Paywalls

The major downside is, of course, the fact that people are reluctant to pay for digital content. Part of the reason is that we expect free stuff online and many newspapers have offered their content for free while the print edition comes at a price. But people are increasingly warming up to the idea of paying for online content, as evidenced by the rise in sales of e-books and other digital content. Amazon’s Kindle and other reading devices have contributed to this trend.

A paywall makes it hard to get new readers. Although a paywall increases reader loyalty, you have to market harder to get them to make that initial payment. That’s the real challenge for magazine and newspapers that use a paywall.

Paywall Options

There are a number of ways to get over these stumbling blocks. The Telegraph gets around these difficulties by offering a metered paywall. You get twenty free articles, which is pretty generous, and then you have to pay if you want more. The free articles give you a taste of the quality and this makes it more likely you’ll buy.

Another idea is to offer different packages. For a very low monthly price, readers can enjoy a small number of articles. This is good for your casual readers. For readers who want the whole thing, you can charge more.

Trends for the Future

More media outlets than ever are using paywalls and it’s a trend that’s on the rise. Around a third of US dailies use one as of the end of 2013. This means that most readers don’t mind paying.

If you’re considering using a paywall, here are a few things to think about. First, studies point to the fact that bigger circulars find it easier to charge and maintain paying customers. For small unknown magazines it’s tougher. Paywalls also work especially well for local small media outlets, like your town’s paper.

The key is to offer real value and communicate this to the reader. Offer at taste of your quality, give them options, and keep your prices low.

Bob Steele

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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