3 Perspectives on Paywalls

English: A speech in The New York Times newsro...

Writers creating content worthy of a paywall.

The good news is that paywalls are actually working well for publications with considerable scale like the Wall Street Journal, The Economist and The New York Times (NYT).  At the NYT, digital subscriptions will generate $91 million for the paper in 2012 according to Douglas Arthur, an analyst with Evercore Partners. The paywall, by his estimate, will account for 12 percent of total subscription sales, which will top $768.3 million in 2013. Even more encouraging is that digital subscriptions generated $52.8 million more than advertising.

The growth in digital subscriptions represents a new version of the NYT’s business model that evolved from the traditional 80-20 ratio between ads and circulation.  Further, the business model is still growing; subscription sales are increasing faster than ad dollars are declining. During the 12 months after the paywall was implemented, the Times and the International Herald Tribune increased circulation dollars 7.1 percent compared with the previous 12-month period, while advertising fell 3.7 percent. Subscription sales more than compensated for the ad losses, surpassing them by $19.2 million in the first year they started charging readers online.

The Guardian is taking a more nuanced approach, according to Andrew Miller, CEO of the Guardian Media Group:

In some news organisations where growth in readership may not be so important and in particular where there is a strong existing print subscriber base to build on, a pure paywall may make excellent business sense. The Economist and perhaps the Times spring to mind here. It also makes sense in other publications which feature business-critical information – for example, the Financial Times and, in the Australian context, the AFR.

At the Guardian we will continue to look at, monitor and offer a blend of options, including paywalls, depending on the product we are offering. But at the same time we have to recognise that digital advertising is not yet able to fill the substantial gap between any paywall revenues and the cost of the operation — not least because advertising agencies have not yet fully aligned their spend with changing patterns in media consumption.

But how to get from where we are today to where we need to be?  The main thrust of our strategy is to invest in our digital audience and revenue growth, while optimising the newspaper’s contribution in terms of both format and pricing and, crucially, managing our cost base to a level that is sustainable in the long term

My guess is that the Guardian’s audience will pay a premium for clips from The Premier League, which could put the whole publication in the black.

While this is great for large, global publications with scale, the question remains how to apply paywalls to smaller niche publications like The New Republic.    The New Republic’s marketing combines an eager softsell with some sticky features: the website has a strong call to actions, with reminders in bright red and the option to signup versus subscribe.

After signing up, you get a charming note from EIC and Publisher Chris Hughes:

Dear friend of The New Republic,

At The New Republic we believe that our democracy needs thriving and serious journalism about politics, culture, and ideas to function well. Tailored for curious, socially aware people like you, The New Republic embodies these journalistic ideals by going deeper than the headlines in a timely, unbiased fashion.

The way we all read and consume content changes every day. In an age of unprecedented technological change, we look to find new ways to help our readers engage with our content in print, on the web, and on mobile. We place less emphasis on generating clicks or superficial page views and more on making it as easy and pleasurable to read, engage, and interact with our content and ideas, wherever you may be.

To get the most out of your New Republic experience please:
Sign up for The New Republic Daily
Follow us on Twitter
Become a fan on Facebook

Thank you again for being a part of this.

Sincerely,

Chris Hughes
Publisher and Editor-in-Chief

P.S. Subscribers get access to 20 print issues, unlimited digital access, and tablet versions of our magazine for only $34.97/year. Become a subscriber today.

Today, The New Republic boasts less than 75,000 subscribers, down from it’s peak of 102,392 in 1993 according to the Alliance for Audited Media.  The magazine stopped auditing circulation in 2005.  Unsurprisingly, the magazine’s social media presence is very compelling and should drive a fair amount of referral traffic to the site.  However, it’s unclear what type of conversion rates they’re seeing and if digital subscriptions will increase substantially.

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