Flexible paywalls used as segmentation tools are key to acquisition, retention success

By Dawn McMullan


Dallas, Texas, USA


In his position as Google digital news initiative senior researcher at Oxford University, Grzegorz Piechota is studying the way people acquire and renew subscribers in 37 countries. Piechota is INMA’s researcher-in-residence, focusing on subscriber revenue in a series of newsletters, video meet-ups, reports, and presentations.

Piechota shared his findings on Thursday with more than 130 participants in the INMA Consumer Engagement Summit in Miami.

Paywalls are becoming increasingly acceptable as readers understand they offer access to premium content, research shows.
Paywalls are becoming increasingly acceptable as readers understand they offer access to premium content, research shows.

How are paywalls doing?

The availability of digital premium content is changing consumer behaviours. In areas of the world where Netflix and Spotify have significant penetration, people are more willing to pay for such content.

“Increasingly, people pay for news. And in some countries — like Norway or Sweden — a huge part of the population has already paid at least once in the past year for any kind of news,” Piechota said. “People are starting to appreciate the idea that if you want to get access to premium content, you pay for it.”

Throughout the 33 western news markets, 32% of national news outlets charge for online content. So why do people pay for content? According to Piechota’s research:

  • 32%: Convenience.
  • 23%: Good deal.
  • 17%: Exclusivity of content.
  • 16%: Paid-for content is better than free content.
  • 13%: Desire to fund journalism. 

The true job of the many paywall options — freemium/premium, metered, hard paywalls/membership models, hybrid/dynamic models — is as a segmentation tool. “They filter out certain people,” Piechota said.

  • Premium models (which 45% of news media companies use) filter out people who have a particular interest.
  • Metered models (11%) filter out heavy users, limiting content by the volume of articles. 
  • Hard paywalls (8%) appeal to people who have a strong and trusting attitude toward the brand. 
  • Hybrid (2%) and adaptive (1%) models mix it up, limiting access to free content by demographic, behaviour, interest, and other factors.
  • Other models, such as paid access to e-replica (32%) and the donation/membership model (1%), appeal to different types of readers.

News media companies go through phases of their subscription analytics: 

  • Passive reporting includes canned reports and generic dashboards.
  • Proactive reporting includes customised reports and dashboards, and business KPI tracking. 
  • Predictive analytics include dynamic future scenario modeling (scoring propensity to buy or churn) and future-oriented KPIs such as customer lifetime value (CLV).
  • Data-driven automation includes automated data-driven editorial and business decision-making (recommendations, channels, offers, price), next-best actions initiated automatically by machines based on set KPIs, and automated two-way communication (such as chat and voice bots). 

“If you think about the future of these paywalls, maybe they will get more predictive of their consumers. Then the automation system will choose the best option for these people,” Piechota said.

How do we keep growing paid subscribers? 

The biggest takeaway on how to keep digital subscribers is flexibility, Piechota said. “Once you get early adopters, growth stops. You need to appeal to more mainstream readers so you need to change your marketing mix, maybe your products.” 

Piechota pointed to two news media companies doing a strong job at this: Aftenposten in Norway and The New York Times in the United States. 

Aftenposten tweaked its paywall to target new subscribers in 2013, switched to a hybrid model in 2015, tightened its paywall and tweaked paywall articles in 2016, then enjoyed the “Trump bump” in 2017. Team members found when they set the paywall meter at 20 articles or more, 9% of visitors hit that limit. To grow, Aftenposten needed to do something about that segmentation. Piechota suggested two options: 

  1. Lower the meter: Stop appealing to heavy users and start appealing to medium users.
  2. Change the way you segment people: Introduce premium articles or look at demographics (such as young people or women, for example). 

Aftenposten used a hybrid model of segmentation criteria, changing from targeting heavy users to targeting those who have certain interests but are not necessarily heavy users. By lowering the meter, it started appealing to those medium users. 

The New York Times just reached 3 million digital subscribers. The news media company started its meter at 10 articles in 2010. Since then, it has lowered its meter, added new products, and lowered its meter again (it is now at five articles).  

“The ‘Trump bump’ is over,” Piechota said. Now the driver of subscriptions is new products, like a soon-to-be-launched parenting product.

“The niche of the readers who are interested in news is actually somewhat exhausted for them, so they need to go after lifestyle customers to keep growing. New York Times is perhaps going to disrupt magazines,” he said. 

How do we know who is going to subscribe next? 

Piechota partnered with Cxense on a study to understand the propensity to buy. The bottom line of that study: “People who are more likely to buy were viewing many more pages and staying much longer on the page. People who don’t actually see many articles are not likely to buy,” he said. 

He also noted another key observation: “Behavioural signals are more predictive than interest-based signals. Statistically speaking, it’s easier to predict somebody will become a subscriber by looking at how often they come to the site and how much they read rather than trying to guess what stories they are going to be interested in.” 

This is why personalisation is so important, Piechota said: “People who pay for your content, they look for different stories. Stories that might convert people might not be the right stories that actually keep people as subscribers. There is a growing need for different shades of experience. For people who haven’t yet become sbuscribers, they need a different selection of stories.” 

That’s where your data comes in. 

Working with Chartbeat, Piechota surveyed 500 people who had visited news media Web sites in the past eight days: 250 were users of news media companies with subscription models and 250 were users of companies that offered free content. 

“Web sites that enjoy more direct visits to the home page also enjoy more loyal patrons. Web sites that enjoy more traffic from social or search actually enjoy less loyal patrons,” Piechota said.  “If we know that the usage drives purchase, we need to understand it’s intentional use that drives purchase. People who come to your Web site, they have an intent, bookmark, remember the address, find your Web site with a search engine. People who use other means to get to your content — like social, aggregator apps, search engines [by topic] — are less likely to be loyal, and therefore, less likely to become subscribers.” 

How do we know who is going to cancel?

It’s actually easier to predict this than people think, if a company pays attention to its analytics. Piechota explained how he wasn’t using his academic subscription to Financial Times, so he got an e-mail from the company offering a free consultation. There are three best practices for nurturing customers: 

  1. Acquisition: This includes notifications, alerts, newsletters, apps, podcasts, encouraging comments, an option to save to read later, retargeting ads, and adblock alerts.
  2. Activation: This includes onboarding on site, in app, and in e-mails; pushing users to log in, get apps, follow newsletters, and participate social; and retargeting ads.
  3. Retention: This includes community features, advocacy rewards, upsell offers, win-back offers, and retargeted ads. Not many organisations are doing this, Piechota said. 

Helsingin Sanomat of Finland demonstrates and reinforces the value of its premium content with a diamond logo and different layout. Denník N rewards subscribers with the option to “gift” an article to a friend or colleague. 

“Growth will come from new silos,” Piechota said. “Usage drives purchase, and habitual loyalty and personal experience drives usage. There is a difference between user experience and engagement and customer experience and engagement. You need to demonstrate a value people are paying for, reasons they are subscribers, and secure success however they define it.”

About Dawn McMullan

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