A Look at the Wall Street Journal, New York Times, and The Sun
Managing paywall rules is a delicate balancing act. It’s like walking a tightrope.
If your rules are too loose, you undermine the value of your content. If your rules are too tight, you fail to nurture leads.
Let’s take a look at some recent actions by The Wall Street Journal, The New York Times, and The Sun to understand what works and does not work with respect to paywall rules.
‘Bendier’ Paywall Rules: Wall Street Journal
The WSJ is known for having the most rigid rules – there’s no way you can penetrate that thing unless you pay. This summer, the WSJ decided to try “bendier” paywall rules. They made two substantive changes
- Paying subscribers could share links to stories, and non-paying customers could read the articles from the links
- Non-subscribers could sign up for a free 24-hour guest pass
As a result, now more than half of their new digital subscription sales come from people who read free articles. This is much higher than the 20-30% of sales one normally would expect from this channel. The Journal also found that those who register for a guest pass convert at six times the rate of a normal visitor.
Additionally, they have effectively used A/B split testing to optimize the sales funnel. Chief Customer Officer Katie Vanneck-Smith said, “Our previous one-size-fits-all experience is now quite different, depending on what content you’re coming in from, depending on what we know about you as a reader from previous behavior, whether you’re coming in from social.”
She continues, “you might get a different experience if you’ve read five or more stories, versus someone who hasn’t. There’s a different experience if you’re converting with a video, versus if you’re coming from search. There’s a lot of optimization happening.”
The WSJ has now crossed the coveted 1-million-member threshold. This growth in digital revenue is sorely needed as the Journal’s advertising revenue fell 21 percent last quarter. Vanneck-Smith is optimistic about the future adding, “on an industry level, I’m pretty confident that… if you have a very clear proposition, and you have a very strong relationship with your customer base, [you] will survive.”
In the end, I believe the WSJ has been successful with digital memberships for the following reasons:
- Tough but not impossible paywall rules. They only give away content when they are getting something in return. By allowing paying subscribers to share articles with non-subscribers, they’re basically getting free “social proof” and advertising (why buy facebook ads when you customers can post for you). By giving away guest passes, they are collecting emails from qualified prospects
- They follow best practices with A/B testing to answer questions on their marketing learning agenda (e.g., how can we best nurture certain types of leads)
- They have a clear value proposition, quality content, and a strong brand
Strengthening the Paywall: New York Times
The NYT has always been the leader of the pack with respect to the paywall. They have recently surged to 1.5 million paid, digital-only members. The Times is riding a post-election high. They have had several days in the past month with over 10,000 new digital member conversions – that’s almost twenty times the daily rate of 2015!
What was the driver of this rapid acceleration? It wasn’t just the election, although that certainly helped. They expanded awareness of their product by temporarily lifting the pay meter for a few days around the election.
More impact came from the New York Times strengthening its paywall. They closed off the social media loophole, through which readers could avoid the pay meter by clicking on links posted on Facebook. Now, if you read an article posted on Facebook, it counts toward your limit of 10 free articles per month.
Furthermore, the NYT used advanced analytics to develop appropriate marketing messages for those who do hit the paywall (after 10 free articles).
This month, the Times is driving further growth through gift memberships and promotional holiday pricing. Since the variable cost of selling a digital membership is almost zero, there is a lot of margin to play with to drive subscriber growth. They’re relying on a traditional print strategy – buy one, give one. Buy a digital membership this holiday season, and gift one to a friend or family member for free. The goal would be to convert those free gifts into paying memberships next year.
The Times is having success because they are appropriately focused on driving consumer revenue. Traditionally, 75% of revenue came from advertising, now only 37% does. They of course have a huge advantage given the strength of their brand.
Subscription Model Superior to Advertising: The Sun
Now let’s learn from some mistakes.
At the end of 2015, Rupert Murdoch ordered The Sun’s paywall be taken down. His hope was the loss in subscription fees would be more than made up for through advertising.
The good news: readership went up. Way up. From 13 million to 24 million readers.
The bad news: the money did not follow – for The Sun at least. It was reported that 90% of the increased ad revenue associated with the traffic spike landed in the coffers of Facebook and Google – not the paper itself. In the end, The Sun lost economically – the lost subscription revenues were not offset by the gains in advertising. The hope for the long run should be that they can bring back a subscription model, implement a more balanced paywall approach, and monetize some of the new 11 million readers.
The specific numbers were not released, so let’s conduct an illustrative experiment so you can see what went wrong.
Say just 5% of the initial 13 million were paying subscribers – that’s 650,000 paying subscribers. And let’s say the average subscription was $75/year (60 GBP). That’s $48.8 million in revenue.
With an increase in traffic of 11 million people, that would mean you’d need to see an average advertising rate of $4.43 CPM to break even. According to a research study by Monetize Pros, the current average CPM on display ads is just $2.80. Therefore, for the math to have worked out, The Sun would have needed to see 17.5 million new visitors (instead of 11) or have been able to charge 160% the industry average rate for this strategy to make sense. And that assumes you’re keeping 100% of the ad revenue and not sharing it with distribution channels like Facebook.
A better approach, from my experience, would have been to have kept the paywall in place, and drive traffic through free trials – either free days (like the New York Times) or free guest passes (like the Wall Street Journal).
There is no silver bullet solution for paywall strategies – but the principles that tend to work are
- Constantly re-evaluate the balance between free content (to attract users and demonstrate the value of your content) with the paywall (to protect your business model)
- Test, test, test
- Vary your marketing messages and digital user experience to appeal to each of your consumer segments.
What else have you seen work well?
Thinking About Your Paywall Strategy?
At The Sterling Woods Group, we grow digital revenues by leveraging existing content, brand equity, and audience.
We all know the digital world is messy and confusing with many competing technologies, integration headaches, and the recognition that today’s solution might not work tomorrow.
The Sterling Woods Group provides clarity. Our TrailBlazer™ platform is like a smooth path through the woods. It allows you to seamlessly build a digital membership program around your content. Our job is to transform what is chaotic, complicated, and expensive into something that is smooth, easy, and attainable. We get your digital revenues growing faster, cheaper, and with less risk.
We understand technology without a strategy doesn’t get you anywhere. That’s why we guide you through our proprietary process that includes:
- developing a compelling strategy for digital success,
- creating a consistent marketing plan using strategies and tactics that are proven to work,
- leveraging our world-class TrailBlazer™ technology so we can launch fast and see how real customers behave, and
- optimizing the program going forward.