Tuesday Newsday: Pay walls, Freemium, Business Class – What Works?

There’s backlash against pay walls, dropping ad rates, and a serious amount of competition for viewer eyeballs.  How should online publishers navigate the world of pay walls and premium content, whether we’re talking about tablet publications or web publications? Will people pay for content? Especially given that there is so much available for free?

To investigate the different business models, today I’m looking at a few sites and apps: the Boston Globe premium site, The New York Times’ new paywall, and the blended model of The Atlantic.



The Boston Globe

The Boston Globe made headlines last week with their beautiful new premium news site, http://www.bostonglobe.com.  The site is free until the end of September so that people can try it out for a few weeks and enjoy the new design and features.  Their previous site, http://www.boston.com, shown below, remains in place and is free.


Current version of www.boston.com

What’s so exciting about the new site?  The new site appears to have been a complete overhaul, starting from scratch with no legacy.  It’s automatically customized for any device, uses a responsive design, and looks great everywhere. The design is clean and fresh and easy to use. There is no need to pinch or zoom no matter how you’re viewing it.

BostonGlobe.com on iPad   BostonGlobe.com on iPad

Additional nice touches include the ability to save stories for offline reading, additional video and photography, access to archives and back issues and a loyalty program for subscribers to get access to special events.

As a bonus, since the new Boston Globe site is in HTML5 and works in Mobile Safari, they can presumably ignore the App Store if they want and hang on to their subscriber information as well as the 30% apple cut.

  BostonGlobe.com on iPhone  BostonGlobe.com on iPhone  BostonGlobe.com on iPhone

Will this model work?  The Boston Globe already had over 6 million uniques each month on its previous site.  This is a very new site so we will have to wait and see what the numbers look like after the pay wall goes up in October.  I notice a lot of people online claiming they would be happy to pay small subscriptions for better content, fewer ads, access anywhere and other perks, so hopefully this works out and makes the extra effort of running two distinct sites worth it.



NYTimes.com Front Page

In March of this year, the New York Times site http://nytimes.com launched a new pay wall with a structure designed to draw a line between casual readers and avid readers of The New York Times.  Casual readers, those reading less than 20 articles per month, have free access to the articles.  Once a reader has crossed the threshold of 20 articles, he or she is asked to pay between $15 & $35 per month depending on the access requested (browser only, iPad app, etc.) as shown in the table below.

Digital Subscription Pricing for nytimes.com

Large business papers like The Financial Times and The Wall Street Journal have been charging for their content for a while now, but The New York Times has been offering free content, with occasional experiments in access restriction like requiring users to log in.  In January of this year, http://www.nytimes.com reported over 48 million unique visitors.  Once the pay wall went up in March, visits to http://www.nytimes.com were said to have dropped as much as 15 per cent almost immediately.

              NY Times on iPad

Many print+online newspapers are getting to the point where they realize they need to do something to monetize their online presence, especially given that print subscriptions are dropping.  But people get scared when they hear about reader drop-off from pay walls. 

“Oh no!” they shriek. “If everyone leaves, our advertisers will see the numbers and leave or demand lower ad rates!”

It seems like a big problem.

The New York Times thought about this a lot. They give all print subscribers free all access subscriptions.  Here are people who already like your content; if they’re not already reading it online why not let them for free, as it may add more regular website visitors.  For new digital subscribers, they have three different plans to suit various use cases, with a very heavily discounted starting rate of 99 cents.

NY Times in Mobile Safari on iPhone    NY Times in iPhone App

Right, right, back to the reader drop off.  If you were never making any money from any visitors (only advertisers), certainly any subscriber paying you should increase your revenue, provided the numbers don’t drop so severely that you lose all the advertisers.  This is why the casual free access is critical, it keeps the visitor number relatively high.  There’s a balance to how much drop-off the site can sustain while gaining revenues from paying customers.  In May, a Citi analyst predicted that if the NY Times lost 20% of its visitors, it would need around 107k subscribers to break even.

107k subscribers is definitely a large number.  But is it unreasonable? In April they reported over 100,000 new digital subscribers and by August over 400,000.  Without exact visitor and advertiser revenue numbers it’s hard to say whether that equals success or not, but it sounds promising. 

It reminds me a lot of a blog post Marco Arment wrote earlier this year (and also discussed on his excellent podcast with Dan Benjamin, Build and Analyze) where he discussed the economics of removing the free version of Instapaper.  He mentions bad conversion rates, low demand, undesirable customers, and other pieces that contribute to why free apps might not make sense, both economically and psychologically in terms of dealing with people who take free things for granted.

NY Times in Mobile Safari on iPad

Will this model work?  The New York Times has done its homework in designing and implementing this pay wall.  It’s not overly restrictive, yet it’s already working in growing subscriptions.  Perhaps this model works best here as The New York Times already had a huge audience, but smaller, local US newspapers like The Augusta Chronicle are also trying this out.  A report from the Reynolds Journalism Institute at the University of Missouri revealed earlier this summer that 46% of newspapers with circulation of under 25,000 said they are already charging for at least some online content.  Of the newspapers that currently don’t charge, only 15% said they have no plans for a pay model.  Get ready.



                    The Atlantic app on iPad

I have blogged previously about the nice job The Atlantic did with their combination free-and-paid content app. Their free, universal iOS app includes their great website content from both http://theatlantic.com and http://www.theatlanticwire.com. But it also includes a magazine section which allows print magazine subscribers to access the same content for free and non-print subscribers to either purchase a digital subscription or buy individual issues via in-app purchase.

This is a nice blend as it allows the casual reader of The Atlantic to purchase occasional issues, such as the annual Fiction issue, while also giving free access to existing readers.  The annual digital subscription is slightly discounted at $21.99 (print subscriptions cost $24.95 or more for outside the US) and looking at their page in the App Store shows that the annual subscription is their top-selling in-app purchase, which is a good sign that people are paying for it.

Atlantic Magazine article on iPad    Atlantic web article in iPad app

Will this model work?  I mentioned in my previous blog post that while I think their magazine reading experience is decent, I think they may suffer a bit from people reluctant to spend money just to try out the magazine.  Offering one free magazine download to app users might increase the number of people willing to purchase occasional issues or full subscriptions.  While The Atlantic already has a large subscriber base, this model would also work for publications with smaller audiences who need to build their subscribers.  It works because it allows easy access to content in a well-designed manner, and then also has something to offer the individual who is enjoying the content & still wants more.



Perhaps one of the above models will work for your publication. Perhaps not. If you’re scared of reader dropout with a pay wall, remember that even high traffic sites like http://theonion.com are conscious of this and testing it out as an experiment.  Now is the time for trying disruptive and experimental models because no one has found the one right way to ensure publishers make their content available in the best manner for their audience.  Not everyone can fund their site based on advertising alone, so it’s time to be creative.

Here are some other random ideas:
– What about not charging your top influentials? People that share X articles per month get free access.  Or people who comment on >X articles per month get free access.
– Instead of charging for “subscriptions”, charge a “membership fee” like some top reporting sites do.
– Give away whatever the current content (this week’s paper, this month’s magazine) is but charge for access to archives.
– Give away content for free on the site but charge for the convenience of the mobile app.
Coupon codes: Let your contributors give away coupon codes to their family and friends for free access forever or for a limited time.  Do the same with influential users so they can share more easily.
Give away summary content for free on Facebook & Google Plus (what will happen with the new Wall Street Journal idea?), charge for it on your site
– Give away content for free for a limited time to show off new design or features, ala Boston Globe’s relaunch: “Free for September, after that we lock it down.”
– Give away every new feature for free for a limited time, then put it into the members-only access pile.
– Team up with partner sites and non-competitors to offer access to several sites together, or offer discounts on partner products/sites like the Slovakian newspapers.
– Take an exclusive advertiser to sponsor the development of a new mobile app.
– Offer free trials during partner/media events. You’re the media partner for the food festival? All attendees get a free month of access.

There are loads of other ideas that no one else has come up with yet. Lots of publishers are starting to build their own, creative labs like the NY Times’ Beta620 project, the Globe Lab responsible for BostonGlobe.com, and The Guardian’s Open Platform and Data Store projects.  These range from well-funded projects to crowd-sourced experiments, but they’re all coming up with new ideas that are creating conversation.

beta620 from the New York Times    GlobeLab on Twitter



The following articles are also good sources of inspiration for new models and thinking differently about this space:
What newsrooms can learn from tech start-ups
Innovation in turbulent times
NYT Labs: Can a newspaper think like a start-up?

One Comment

  1. A good coverage. However, the paywall model is outdated (some say it was created to save print and belongs to the mostly print era). Online users want choice and freedom to pay as they surf the net, one article at a time, from many different publishers.

    Check Znak it! if you want a better content monetization system.

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