The state of paid content: For free, for a fee, or somewhere in between

By Peter Marsh, NEWSCYCLE Solutions, Vice President of Marketing

November 10, 2014

Paid-Content-Blog-ImageThe great digital content debate wages on. Passionate “information wants to be free” apostles are pitted squarely against the pragmatic “we must charge for content in order to survive” proponents. Others straddle the fence with one leg on either side of the paywall, advocating that some digital content should be free while other types of content should be paid for.

This being an election month, we decided to go straight to the populace and listen to the voices in our community. What are newspapers doing today when it comes to charging for online content? We polled 45 global newspaper companies – ranging from local community publishers to metro dailies – and asked their opinions on the polarizing topic of paid versus free content.

Nearly three out of four newspapers surveyed (73%) are currently charging readers to access online content. Almost 40% of these newspapers have deployed a “hard” paywall model. Hard paywalls require readers to have a subscription to access most or all premium digital content. The remaining 60% are using a “soft” or metered paywall model, allowing online visitors to read a certain number of free articles each month before requiring a subscription.

For publishers that have adopted metered paywalls, the number of free articles range from three per day to as many as 12 per month. On average, newspapers in the survey using metered paywalls allow readers to access nine free articles online monthly.

Some publishers have introduced an extra level of granularity into their metered paywalls. One newspaper, for example, allows readers to access ten article pages each month, but permits unlimited views of section fronts and photo galleries. Another newspaper has created different paymeter rules for different digital channels – ten free article views on the website, 25 views on the mobile site, and 50 views on mobile apps each month.

It is generally agreed that paywall success is largely dependent on the value of the product to the audiences. “We have to provide content that is not available anywhere else in our community, and is valuable to our readers,” said one publisher. “Then we need to let them know we have it and it is worth paying for. We have to market to non-readers using both social and traditional media to achieve this.”

Retention rates appear to be significantly higher for newspapers that use metered pay models as opposed to hard paywalls. Again, the percentages vary, but most publishers with a hard paywall are reporting retention rates in the 15-20% range. Retention rates for newspapers using a metered paywall average 58.5%, with some reporting as much as 90% reader retention.

Clearly, not every customer is willing to trade increased subscription revenues for potential losses in the ad department. “We took down our paywall because it had a drastic effect on our online advertising revenues,” reported one mid-sized daily newspaper. “We traded every dollar in advertising we lost for a nickel in online subscription revenue. Since we took the paywall down (June 2013), our online impressions have doubled and our online revenue continues to increase by a significant percentage every year. Every market is different, and we are not saying this is the right approach for everyone, but it worked for us.”

Over 62% of the newspapers surveyed are using an outside vendor to implement their paywall solutions, while the remaining 38% have developed their paywalls in-house. When it comes to some of the newer paid content schemes, it is interesting to note that only 25% are currently offering day passes to online readers, and only 22% have implemented a rewards program. Many publishers reported, however, that such initiatives are in the planning stage at their respective newspapers or groups.

When asked for predictions on how paywalls will evolve in the future, one newspaper circulation director said, “I think we will need to move to better digital and interactive versions of our print product that would be subscriber based in addition to our website. Content specific apps (Local Sports Scores for example) may also be in the future.”

Another customer offered a similar viewpoint: “I think paid content is the only way for newspapers to survive unless the print edition is also free. Too many tried free digital while still charging for print with the idea that online ad revenue would be the only necessary revenue source, with mostly disastrous results. Local advertisers outside of the metro areas are reluctant to move to strictly online advertising because web ad sales are still focused almost exclusively on page views instead of click-throughs.”

Finally, although opinions and success rates differ widely on the paid versus free content debate, there is general agreement on the need for integration. One west coast newspaper group said it succinctly: “All channels need to be integrated with the ability to repackage content in ways that are most valuable to the end user and give us the ability to sell packages.” Pointing to the advantage of a single source approach in the future, this publisher echoed a common sentiment: “Our challenge is connecting all platforms to one solution that can also monetize content packages, versus just providing access to our entire news site.”

To learn more about the best practices for monetizing digital content through different paywall models, including the latest feedback from newspaper companies around the globe, please join the following webinar, which will be held on Thursday, November 20, 2014 at 11am ET: Register Now!

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