Benefits and challenges of registration walls
Readers First | 19 January 2020
Good morning! Happy new year! This is Readers First, a new weekly newsletter for INMA members on reader revenue innovation. I’m Researcher-In-Residence at INMA. E-mail me at: email@example.com or DM via Slack (sign up here).
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Will and should the success of The New York Times’ registration wall encourage others to follow?
The Times did not lose online traffic since last summer when it introduced a mandatory registration for visitors after their first free article, per SimilarWeb. It also kept adding new subscribers at the highest rate ever, crossing the five million mark by the end of 2019 (of which more than four million are digital only).
CEO Mark Thompson in his exclusive interview with INMA Wednesday confirmed he saw “no negative impact at all” and was “encouraged by early results.”
In recent months, INMA members contacted me repeatedly asking for data or cases that would help them build a case for registration walls.
How specific is the case of The Times?
Based on my estimates, less than 5% of its print and online users generate more than 95% of revenue from subscriptions and advertising. In theory, a registration wall risked putting off dozens of millions of online visitors, but the revenue at risk was actually low — less than 5%.
Sounds unbelievable? In my research, I usually find news media revenues follow the Pareto Principle: a tiny minority of highly engaged users leads to majority of revenues at The Boston Globe, Poland’s Gazeta Wyborcza, and others.
The risk of losing online visits has been likely mitigated by allowing one article to be read for free. The distribution of page views at news sites usually follows the Power Law: A majority of readers visit only once a month and view one page, and those “one-and-dones” are not blocked by The Times’ registration wall.
What are the benefits of registering and logging readers?
Insights: Logging users allows tracking their sessions across devices and browsers, creating more detailed user profiles and segments. “Truly understanding the fuller picture” was the main reason to create registration wall at The Times, per CEO Thompson. The company will no longer mistake its app subscriber as an anonymous user when it accesses the Web site on a laptop, for instance.
The data also helps to attribute the value to content and features. For example, Deep.BI presented the model to score articles by their influence on the decision to subscribe at the INMA Media Innovation Week in Hamburg.
Promotion: Collecting e-mails or phone numbers at the registration allows nurturing prospect and existing readers via e-mail, telemarketing, or by matching them with audiences addressable in social and advertising networks.
For example, Piano found the average conversion rate of registered users is 10 times that of anonymous visitors thanks to engagement tools such as e-mail newsletters.
User experience: Logged-in users may enjoy features such as adding comments, saving articles, or personalised feeds that improve experience with news and help create habits. Prior registration reduces friction in purchases or other sign-up flows.
For example, analysing subscription flows of 10 U.S. metropolitan news sites, Lenfest Institute saw only 14.8% of users reaching the payment capture page after being asked to set up an account or log in.
Business development: Logging users allows targeting users across the publisher’s platforms, unlocking potential for new advertising or marketing products.
For example, News Corp Australia unveiled new ad platform News Connect that lets clients to analyse, create, and target segments of users across national and local apps and sites.
Legal: Registration helps to store user permissions required by laws such as GDPR in the European Union or CCPA in California, and to avoid asking users for consent whenever they visit the site.
For example, in Germany, Finland, France, Portugal, and Switzerland, publishers teamed up to create log-in alliances to meet new regulations and use first-party data to compete with Google and Facebook that dominated digital ad markets.
Free-riding: Logging users allows to control access on the Web server side rather than on the Web client side. The latter is a hole in many paywalls.
For example, a UK academic study found up to 75% of paywalls can be bypassed by simple and widespread techniques. The last year’s privacy updates to Chrome made the issue even worse, as Google turned off the ability to detect users browsing in private mode.
Thinking of costs and risks, the fear of the loss of online traffic and associated programmatic ad revenue ranks the highest, according to the interviews of INMA members.
Publishers can estimate the revenue at risk by analysing the traffic patterns on its sites. Based on my research, the estimated risk is likely to be lower for publishers that enjoy:
- A high share of direct visits vs. search and social-referred visits.
- A high percentage of frequent visitors (e.g., visiting once a week).
- An already high proportion of logged in users (e.g., acquired many digital-only subscribers or activated many print subscribers over years).
Value proposition: Registration might be free, but readers still expect a trade for their effort and data. Based on my survey of the world’s top 50 news sites by digital subscriptions, popular benefits include:
- Access to content (e.g., free articles, newsletters, podcasts, videos).
- Access to features and user experiences (e.g., comments, save articles, personalised feeds, alerts).
- Gifts (e.g., discounts, special offers, digital goods such as e-books).
- Competitions with prizes.
- Events and others.
The ultimate objective of the registration is to log users in and not just to sign them up. Some publishers such as Norwegian Schibsted enjoy up to 50% of user sessions logged in, with local news sites over performing the national ones. This is a high proportion in my experience.
When I interviewed Schibsted’s Bard Skaar Viken, he explained the main reasons:
- Long-term systemic effort: Across editorial, product, marketing and optimised to increase the number of daily active subscribers.
- Successful paywalls: Over years, the installment base compounded to a high percentage of population. High proportion of content is locked.
- Onboarding of print readers: 60%-70% of full week print subscribers activated their online access.
- Eco-system: Schibsted news sites share log-in technology with very popular sister classified and e-commerce sites.
Five reads I found worthwhile the past week
1. Readers first! From Nic Newman, Journalism, Media, and Technology Trends and Predictions 2020, Reuters Institute, January 9, 2020.
Publishers bet strongly on reader revenue, found the Reuters Institute’s survey of 233 news executives from 32 countries:
- 50% of the executives said reader revenue will be their main income stream going forward.
- 35% said both advertising and reader revenue will be equally important.
- Only 14% pinned their hopes on advertising alone.
2. What’s puzzling CEOs? From Ian Tucker, Reducing churn in the first 100 days at Wall Street Journal, INMA.org, January 12, 2020.
The feature best lifting the retention rates at The Wall Street Journal is … a puzzle. This finding of The Journal’s reader habit forming project should not be such a surprise. According to research on media users’ motivations, they are not limited to cognitive needs such as information or knowledge. Diverting attention from work, escaping and feeling satisfaction from completing a puzzle might be key to retain some readers, even The Wall Street executives subscribing to the Journal.
3. Ethics of the 13th month. From Shelley Seale, What research, case studies indicate about raising digital subscription prices, INMA.org, January 9, 2020.
Preparing for the INMA online meet-up on pricing, I reviewed price lists of the world’s top 50 largest news subscription sites. I noticed that every fifth or 20% bill subscribers every four weeks instead of monthly. The benefit is that one charges 13 times a year instead of 12 times when billing monthly. This creates the potential for 9% higher revenue each year if your rate stays the same per period. The question though is: Is it really OK to charge your customers for “the 13th month”?
4. Beyond reader revenue. From Jonah Peretti, BuzzFeed in 2020, BuzzFeed.com, January 3, 2020.
Online marketplaces provided the infinite choice to consumers. If you know what you want, it’s easy – you Google, you ask Alexa. What if you don’t know? Inspiration and product discovery are the areas where media can make a difference. If the future of reader revenue is e-commerce, BuzzFeed wishes to lead the way: Last year, it helped sell consumer products for more than US$425 million. E-commerce generated 21% of BuzzFeed’s 2019 revenue and it’s growing the fastest.
5. Toss a coin to your Witcher! From Matthew Ball, 7 reasons why video gaming will take over, Personal blog, January 4.
Enjoying The Witcher on Netflix, The Mandalorian on Disney Plus, or The Boys on Amazon Prime? A former head of strategy of Amazon Studios believes we should not lose our sleep over the video streaming wars. It’s “absurd,” he claims, that media have been spending billions to increase their exposure to a segment of the media industry with declining value (video), even as another (video games) has been growing 15%-25% per year. If you wish to toss a coin to your Witcher, be it a video game!
About this newsletter
Today’s newsletter is written by Grzegorz (Greg) Piechota, Researcher-in-Residence at INMA, based in Oxford, England. Every month, I share here results of my original research, notes from visits to digital subscription leaders, reflections on talks at conferences, and my favourite readings. Previous editions are archived online.
This newsletter is a public face of a year-long reader revenue and media subscriptions initiative by INMA, outlined here. E-mail me at firstname.lastname@example.org with thoughts, suggestions, and questions. Sign up to our Slack channel.