The Great Digital Content Pricing Experiment
With the prevalence of free online content, many readers have become reluctant customers, leaving publishers puzzling over how to monetize their greatest asset. Yet the same technologies (the web, tablet and mobile apps) that have dissolved previous revenue models are opening up new possibilities for publishers to experiment with monetization strategies from soft paywalls to freemium apps. We spoke with a number of such forward-thinking industry players to learn what strategies have worked and what they see as the future of paid digital content.
THE PAYWALL EXPERIMENT
We start by discussing various approaches to online paywalls, seeking insight from a variety of perspectives, including a magazine editor, a paywall developer, a digital magazine founder and a video advertising service provider. Here's what they're trying out.
Tyler Cabot, Esquire
As the articles editor of Esquire, Tyler Cabot has led a number of the paid content initiatives at the magazine. His team's latest effort is "The Prophet," a long-form article that is available to readers for $1.99.
What led to the creation of "The Prophet" paywall experiment?
I came across TinyPass, who did the paywalls for the "How to Be a Man" stories that Esquire and [publishing nonprofit] Narrative 4 collaborated on. Because I was enjoying what was happening at Narrative 4, I said to [editor-in-chief] David Granger that this would be a pretty interesting way to see if we can put up a paywall at Esquire.
It was a total experiment. We knew that "The Prophet" made sense to sell that way-it took a lot of reporting and money and was a great story-but we had never done anything like this, so we had to ask: how would the paywall function? Would readers question the paywall? How would the story look?
The biggest focus initially was the design. I think you will notice that the story online is a lot cleaner. There are ads at the top but beyond that there are no ads in the story. The idea being, that if you pay for a story on Esquire, it needs to be easy to read, and it had to be that way on iPad, iPhone or online.
Was the experiment a success?
I think it was a loss in terms of revenue from having a paywall versus no paywall, but it was never truly about making a ton of money. It was more about making this experiment to see if it would work and then learn from it so that we could use that information going forward.
What were some lessons you learned?
We learned that when you have a paywall it is harder for people to write about a piece because they have to buy it first. Maybe there needed to be other ways to get a story out there before putting the paywall up so you get more chatter on it.
Also, readers like to see reviews of the story before they buy, like they would buying an ebook. With a paywall there is no natural way to do that. We couldn't do that on the fly-it would have taken a lot of coding-but it may be something we try in the future.
Mark Yackanich, Genesis Media
Mark Yackanich is CEO of Genesis Media, which provides a data-driven paywall service that unlocks content for non-subscribers after they have watched a targeted video ad.
How does your paywall service turn non-subscribers into valuable readers?
If someone is coming to your site through search, they are not coming to you necessarily because you are Smithsonian or Women's Day. They are coming to you because they searched for a term and found an answer on your site. In the case of those individuals, the first time you see them, make them pay for the content by viewing an ad. If they visit a second time, maybe they watch 15 seconds of ads to access five articles. The next time maybe they only receive one article, and maybe on the fourth visit they get a 20% off deal to subscribe to the publication.
What do you think publishers overlook when implementing a paywall?
I think many publishers lose sight of the fact that once you've implemented it you have a completely different set of challenges. We're seeing this with The New York Times. The Times has a group of people dedicated to managing the analytics and audience, managing the paywall and maximizing value, and they're doing it better than anyone else. They've gained new subscribers but it's not simple.
If you are dedicated to implementing a paywall, you will drive subscriptions in the first two months and then plateau. Six months to a year later you will be adding as you lose subscribers. You need to look at customer [engagement] and pricing strategy. Run the analytics and provide customer service while still providing great content. It seems easy but the answer is it is really difficult.
Glenn Fleishman, The Magazine
Glenn Fleishman is the owner and editor-in-chief of The Magazine, a bi-weekly web- and iOS app-based magazine that covers a wide swath of subjects from submarines to the New Deal. It recently softened its paywall to share one free article each issue.
How have you developed your pricing strategy?
We focused entirely on the iOS app to begin with, and that had a single offer: 7-day free trial via the App Store, with a monthly $1.99 subscription price. We later added full access to the web through a single subscription: subscribe in the App Store or via the web and have access to both. More recently, we added a yearly rate ($19.99 per year) after many subscribers asked to not have a monthly charge and wanted to be rewarded for committing that long. We have about a 20:1 ratio of monthly to yearly subscribers now.
How has your paywall changed?
The website originally featured only article previews. Then we switched to a leaky paywall for a few months in which visitors could read one free article a month, and we used a variety of cookies and other tracking to enforce that. However, reports from contributors and others indicated that we would have to do a lot more work to make the leaky portion function. Some people would simply switch browsers or machines, which circumvented the paid subscription.
In July, we swapped over to making a single article of the five or six we run each week free at a fixed URL forever, taking the guesswork out. We also added a list of free articles so those wondering about subscribing could read a number of articles and then see if they wanted more.
Matt Minoff, Selectable Media
Selectable Media provides video advertising services to monetize content and recently worked with Sports Illustrated to grant non-subscribers access to cover stories after choosing a branded experience.
What are the results so far from the SI experiment?
Overall we've seen a very positive trend. These types of things tend to take a little time to habituate the audience. Whenever you introduce a new model, it takes the consumer a few weeks to grasp what's going on and what they're being offered.
How do you think the paywall will evolve in the future?
One of the things we're working on, and publishers are working on this as well, is doing a better job of segmenting consumers and using the data to create a different experience for the user based on who they are and where they are coming from. I think the stage publishers are in right now is a kind of a "dumb" paywall. Everyone sees the same thing. Over time you will be able to use data to better drive conversion rates and better understand who this user is.
THE APP EXPERIMENT
The magazine app has drawn conflicting opinions from those in the publishing and tech industries. Some believe magazine apps live in a space overcrowded by other apps and, cut off from the open social stream of the web, suffer from poor discoverability and shareability. Others argue that, when targeted to the correct audience and combined with a greater content strategy, apps can generate healthy revenue for publishers.
We interviewed several industry leaders who are testing out different approaches to the magazine app to find out what works in this ongoing era of experimentation.
Test, Rinse, Repeat
Until recently, The Awl was a web-only publication, featuring free content on politics, news and culture through a New York City lens, and driving revenue through advertisements. Now it is experimenting with a new platform: a weekly subscription-based tablet magazine, The Awl: Weekend Companion, featuring content curated from TheAwl.com.
Co-founder Choire Sicha is comfortable with the ups and downs that come with this kind of experimentation. “We really just dipped our toe into the market early this year,” says Sicha, “The revenue in no way competes with our advertising income yet, but it’s a nice experiment. It seems like a healthy start and we’re interested to see what happens with that subscriber base: if they stick around, if it grows, if we’re giving them what they want.” Sicha plans to review results of this experiment early next year.
The Weekend Companion is an ideal model for monetizing content, says Sicha “I think a great future model in general is to do a ton of niche publications on the subscription model and see what sticks and what gains a following.” For The Awl, at this stage failure is an opportunity to gain data and insight for building a better product.
Apps Can Be Freemium Too
A common criticism of early-era apps is that digital content is needlessly beholden to print-based constraints. Geoff Love, publishing director for the UK-based car magazine evo had this same realization after creating the magazine’s first app two years ago. The first iteration catered to evo’s traditional readers with what was essentially a digital replica with minimal interactivity and which delivered a finite amount of content in each issue. However, evo’s new app, launched this fall, follows a drastically different strategy.
“At first, we focused on our traditional audience,” says Love, “which wanted the same conveniently packaged content delivered once a month with a few elements of interactivity. But when we started to ask people with an interest in performance cars who didn’t read evo, they were looking for a different experience.”
The experience the magazine sought was one more akin to a freemium subscription website than a digital magazine. Access to the entirety of evo’s content was a must, which new subscribers proved willing to pay for when the app launched this fall, says Love. “It is too early to say whether we have been successful -- paid subscriptions started in late October -- but with over 25,000 new users of the evo app in the first 2 weeks we are confident this is the way forward.”
Apps Are Too Segregated
Although Sicha and Love are finding success with magazine apps, Jon Lund, COO of memit, argues that apps are not sustainable revenue generators. On an app, a magazine is isolated from the powerful sharing mechanisms of the web and is undiscoverable to new readers. What’s more, tablet and smartphone users only have the time or interest to regularly engage with a handful of apps.
“For most magazines this will be a dead-end strategy,” says Lund, “Even readers who do open your magazine will find the app magazine doesn’t give them the relaxing experience the printed versions have. Because the tablet is an internet platform…the reader is tempted by the river of news, beautiful pictures, funny videos, etc.”
Lund suggests magazines utilize a web platform so content is more shareable and discoverable, and rely on a combination of ad and freemium revenue streams. “I don’t have the perfect formula for creating revenue on the web” says Lund, “But here’s my best advice: Advertisement is best for engaged and clearly defined audiences. This goes for print as well as online, for display advertising and for content advertising. Use website analytics to better target these ads to your readers. For the more dedicated readers, offer them access to new material before others, photos in a better quality, and a special engagement with you, your staff and brand. This is what keeps your loyal fans paying.”
Many Platforms, One Price
“I think the best model out there is ESPN,” says David Renard, founder of mediaIDEAS, a publishing consulting firm. “I think they have 2 million subscribers on ESPN.com, all paying the monthly fee. That subscription gives them access to all the online content, more in-depth content on the apps and the ability to be a part of that community.”
Renard emphasizes the multi-platform approach because it caters to readers who don’t always read in the same ways, which publishers will find is the majority of their audience. At times, a subscriber may want to read articles quickly on their phone en route to work, while at other times, deep reading is preferred on a tablet or computer. “Those things should not be priced separately,” says Renard, “Because if you price each of my interactions on a different medium, then you make me decide again if it is worthwhile to use you. And at some point, I may say no, this is too much.”
Different Platforms Require Different Approaches
One price may make multi-platform users happy, but if publishers take the same approach with content they can expect subscriptions to drop, says David Jacobs, CEO and founder of app developer 29th Street Publishing.
From the developer’s standpoint, Jacobs thinks each publishing platform should serve a distinct purpose for the user, and that content should reflect that purpose. “If you come from the print world and you want to make a web and tablet offering, then you’re going to want it as close to the print product as possible,” says Jacobs, “But if you come into this with no philosophical debt or investment to the way these things work, then it is very obvious that there should be one content strategy for the web, a different one for tablet, and a different one for print, and they all should be complimentary to each other.”
What publishers need, says Jacobs, is to be flexible. “The point is to meet your audience, wherever they are—and a big part of that is making sure that the right content is at the right place.” PE