Answering The 7 Paywall Questions That Worry CTOs

1 Introduction

On Paywalls

The 2021 expectation for paywall ROI is high, especially for those considering it for the first time. News organisations are counting on paid content for an additional, reliable source of recurring revenue and higher audience engagement among subscribers. This comes at a turning point for the media industry as a whole, amongst a mass migration of readers from physical to digital sources.

2 Introduction

There are significant challenges that every newsroom faces For those already earning through online revenue streams, when they launch paid content. Marcela Kunova, Editor of the recent outlawing of third-party cookies, expected the British Journalism Journalism.co.uk said that, to come into effect next year, has created an impetus “Many newsrooms still struggle with the concept of paid- to move away from reliance on advertising as soon as for digital content. Poor knowledge of their audience [is an possible. The industry as a whole has begun seeing paid issue], having no idea whether their readers will actually subscriptions as not just a lifeline, but a catalyst that has 76% pay for online content.” Further, there are exhaustive, the potential to define publishing for the next decade. of publishers have a paywall but only micro-decisions that must be taken every step of the way that can complicate the decision making and slow down But as alluring as these rewards are, it’s worth noting implementation, go-live and ultimately, ROI. from the get-go that a paywall isn’t just a software buy into the tech stack, it’s a fundamental organisational shift. With that in mind, we interviewed some Digital Officers The C-suite, editorial, commercial and tech – ergo the and media purveyors to help identify the pain points entire organisation – must buy into the concept of paid encountered along the way to successful paywall content and successfully pivot their thinking to support 10% implementation – so you can avoid them. the strategy and implementation that is needed to achieve have a thriving digital success. The misconception that you can just ‘buy and revenue model. Read on for answers to the ‘what?’ ‘why?’ and ‘how?’ forget’ partly explains why, according to recent research, questions that surround the set-up and implementation 76% of publishers have a paywall but only 10% have a of paywalls. thriving digital revenue model.

3 The Planning Stage

1. Should I build a paywall?

To paywall or not to paywall

This is the fundamental question that must be One motivation for publishers to launch a paywall “It is the combination answered before any other, and the answer is FOMO (fear of missing out), which has been felt should provide a concrete response to the “why?” industry-wide. An Italian Media CTO we spoke to said of falling advertising question too. Paywalls require time, money and “everyone is moving in that direction, everyone in effort, so it’s important to understand where your Italy is doing it. Everyone in the USA has a paywall revenue and the investment is going before getting started. or is moving in that direction, so it’s only a matter of time.” For this publisher, external national pressure growth of digital that Kunova notes that “[it is] the combination of plus the added impetus of the global pandemic falling advertising revenue and the growth of accelerated their decision and provided them with finally convinced media digital that finally convinced media owners there’s motivation to get started quickly. money to be made from online readership.” Of owners there’s money course, the ability to paywall hasn’t been around But FOMO wasn’t a factor for Marco Di Bernardo, forever, only becoming a mainstream option after the CTO of Switzerland’s 20Minuten, instead he to be made from online The New York Time’s blazed a trail by putting their worried about another very real issue that’s been content behind a paywall back in 2011. And even talked about on the internet for the past couple of readership.” then, it’s taken a decade for the NYT to squash years: the impending deprecation of third-party concerns from all its critics, as it nears 8 million cookies. “We are a free sheet, we don’t sell only paying subscribers today. advertising... our mission is to turn our community into a registered community.”

Zephr 4 The Planning Stage

The larger the proportion of the revenue mix taken up by advertising for a publisher in 2021, the more cause for concern there should be. Google and Facebook capture over 65% of the digital advertising market in the UK, and the outlawing of third-party data will only make it harder for media companies to compete.

Finding your answer to “why?” is very important before taking any steps into the world of paid content.

But there is no single right answer. If you are looking to avoid the stick of declining advertising revenues and the end of third-party cookies, or are more incentivised by the carrot of reliable, recurring revenue and deeper customer relationships, then a paywall is the way to go for your organisation.

Zephr 5 The Planning Stage

2. Is it better to purchase a paywall solution or build your own?

Build vs. buy

This consideration depends entirely on the For some, this isn’t an option not just because of , capabilities of your organisation, the number of upfront costs, but due to the immense amount Bloomberg reported, spent developers you have in-house and whether they of effort and time it takes to make changes have the ability, and more importantly, the time, once your paywall is up and running. In-house to build what you need. Bigger publishers like the builds are slow to move and make iteration and New York Times, Axel Springer and the FT have the experimentation very cumbersome. It can take months + tech resources to build, implement and iterate a weeks, if not months, to code a new decision 14 paywall quickly, but the majority of publishers do engine off the back of commercial strategy not. The New York Times, Bloomberg reported, changes, and for publications with smaller spent 14 months and $50m on their paywall over developer teams, this is simply not feasible. ten years ago - time and cash most publishers Di Bernardo added to this point, “nowadays $50m don’t have to spare. there is no good reason to build software in on their paywall over ten this area because there are so many good years ago - time and cash players in the market.” most publishers don’t have to spare.

6 The Planning Stage

András Kárpáti, the CTO of Telex, sums it up nicely: “both buy or build solutions can achieve your goals, and there are advantages and disadvantages to Danuta Breguła, the former Subscriptions both; if you buy, you have to know Manager at Poland’s Gazeta Wyborcza, pointed out some of the merits of an internal build. She what the system can do, but if you explained that today’s media industry is as much build, the system can only do what about marketing and experimentation as it is about editorial, meaning that many different you know.” stakeholders need to be involved in the decision making. Those that decide, and can afford, to Ultimately, the decision to buy or build comes build in-house, have additional control over which down to the capabilities and demands of your features and capabilities to implement. This organisation. For the majority of publishers, gives you choice at the beginning, but also makes the build option is out of reach due to limited changing your mind or pivoting strategy much resources, and even for larger organisations the more difficult. decision is far from obvious. Increasingly powerful and flexible tools available on the market make paywalls much more accessible to all publishers, and their ease-of-use benefits businesses looking to make quick changes and iterations at scale.

7 The Planning Stage

3. What do I look for in a paywall provider?

Choices, choices, choices

If you do choose to buy, the next decision is It’s important to identify your needs before how to find a paywall provider that works for starting your research because a web search your organisation. or colleague recommendation will help you uncover a lot of vendors. There are “more On the market these days, there are two types than 30” paywall providers on the market of commercial SaaS providers – end-to-end these days, according to the Italian CTO we that try to encompass the entire paywall interviewed; he said that when you start to ecosystem, and “best-in-breed” solutions look at functionality and features, the list of that do specific operations, but better, and fit providers “becomes very short because most neatly together in your stack. Best-in-breed of them are quite basic.” This is where your providers typically have extensions that specific goals come into play. If each paywall connect to other best-in-breed technologies, on the market has specialist capabilities, so interoperability is a snap. you need to decide which are of most importance to you.

8 The Planning Stage

For example, Di Bernardo noted that 20Minuten “It was highly Make sure you are with the right company to was looking for vendors that provide just a rules avoid sunk costs coming back to haunt you. engine, without a lot of other unnecessary add- important that Full, detailed demos are available from any decent ons. He explained: “We don’t need subscription SaaS provider, so take the time to fully explore management or an integration to Salesforce, we whatever solution and understand what you are signing up for. Ask only need a sophisticated way to integrate our questions, share your pain points, and be sure to user flows.” Another big determinant was ease-of- we got was set yourself clear expectations with regards to the integration, he goes on, “it was highly important that capabilities of the technology. whatever solution we got was approachable by our approachable by APIs because we like to have our stack as modular as Kárpáti from Telex can vouch for this. His news possible - with the current set up we are not locked our APIs because organisation was formed after 80 journalists in, we can easily change to another rules engine.” walked out of the newsroom when the Hungarian we like to have our government took over his former , This raises another key point: getting a paywall creating quite a storm in the media world. Vendors up and running requires a lot of effort and time, stack as modular immediately started to approach Telex with software including onboarding with the new platform, suggestions and media advisors offered tips on migrating data across and connecting the paywall to as possible...” what to do and which way to go. Kárpáti and his other tools in your TechStack, the effort to integrate colleagues took their time looking over the market a paywall provider into your mix is mostly paid before landing on two possible fits for their situation. upfront. Investing time into platform research will more than pay off if you can avoid difficulties or misunderstandings later on in your journey. 9 The Implementation Stage

4. What’s my paywall MVP?

Getting up and running

To make a paywall run efficiently In our experience, while using local banks you need, at the very least: Most likely, you already have an ESP and a basic marketing automation tool built into for the payment gateway is the cheapest your CMS, so this shouldn’t require much option, it’s frequently the biggest blocker more work. to quickly launch paid content because the #1 integration is difficult and passing subscriber A paywall software that lets Digital subscription management can be information from the payment provider to you create user journeys and handled, in many cases, by the latest payment the ID system to grant access is critical to a capture identity. tech companies, which allow you to set successful paywall launch. prices and packages within their ecosystem and import those directly for use within your Head of Customer Success here at Zephr, paywall user journey canvas. However, ease Robert Rocheleau, explains: “We’ve seen An#2 email service provider (ESP) of integration, making sure that recurring clients with a range of different tools, to deliver off-line messaging. payments are an option, the ability to take from payment providers to customer data various payment options and a reasonable platforms. Those that sync data between tools cost per transaction are the key drivers when have been able to learn more about their choosing a payment provider. customers, allowing them greater clarity when making commercial decisions.” A#3 payment provider to handle payments in your currency.

10 The Implementation Stage

Clunky integrations aren’t just a headache “We’ve seen clients with a range for your backend, but for the customer too. From a user’s perspective, there is nothing of different tools, from payment worse than having to click through multiple windows to choose a package, insert payment providers to customer data information, verify a captcha and then wait for payment confirmation, just to read an article. platforms. Those that sync data Simplifying this process will unclog a major choke point in your subscription funnel, so between tools have been able to before making your decision about a payment provider, take your reader’s point of view learn more about their customers, under advisement.

allowing them greater clarity when And that’s all it takes, at least to create a making commercial decisions.” minimum viable product that will collect 1st party reader data, feed this through to a paywall provider and capture payment from new subscriptions.

11 The Implementation Stage

5. Do I need other resources to manage my paywall?

Taking it to the next level

This depends entirely on your organisation Another method to consider is contracting a If there is a willingness within your and how you’re structured. Bigger companies project manager to see the implementation organisation to handle the extra work will have the tech resources available to and initial marketing through as well as hiring associated with paid content launch, then integrate paywall software into their tech a data analyst to make sure that the paywall is by all means, go that direction. However, if stack and the marketing and audience hitting KPIs. you know that you require consulting, do resources to manage and devise campaigns to not hesitate to go outside your organisation. drive registrations once launched. The Italian CTO said, “We contracted a Frequently software providers have project manager to take care of the high- onboarding teams and consultants who can Smaller organisations though, don’t have level stuff while we manage the technical help guide you through initial launch – don’t that luxury. Kárpáti from Telex noted that implementation. He is contracted through be afraid to ask for help. when they launched donations, they the end of the year and if the paywall proves “reorganised our teams and now we have a successful, he will stay.” team responsible for generating reader-based revenue. It’s not just one technical resource, but a data analyst, a journalist, a marketing person and a tech developer.”

12 The Go-live Stage

6. Which kind of paywall should I be using?

Picking a type

Assuming you’ve gotten this far in your Hard Paywall – Block access to all your Metered Paywall – Set a limit of free articles paywall journey, this is a critical question to content and force users to register and pay, that each user sees and then demand either answer at implementation, because it impacts giving you valuable first-party data and registration or payment to see more articles. editorial, revenue and tech. There are a few money, for access to content on your website Publications that use this method include different kinds of paywalls, each has its merits and your apps. Publications that use this The New York Times and . and drawbacks: method include and The . Dynamic Paywall – Employ user scores to dynamically segment the user base and then Premium Paywall – Block access to content open or close articles for every individual that your editorial staff perceives as the most based on their cohort’s likelihood to valuable, i.e. local news, opinion columns, subscribe. Publications that use this method videos, podcasts, while leaving wire content, include El Confidencial and SME. blogs and comments open. Publications that employ this method include La Stampa and Membership / Donations – Leave all content Frankfurter Allgemeine Zeitung. open but ask users to donate based on their perception of the value provided. Publications that use this method are , Rappler and elDiario.

13 The Go-live Stage

The Italian CTO, who will employ a metered in the media industry whereby content won’t hamper pageviews nearly as much, paywall from the outset, said, “We did creators, be them writers, gamers or vloggers, but will convert far fewer users into paying consider a hard paywall, but that was ask for contributions from their audiences. subscribers. The dynamic model aims to quickly dismissed because we fear losing our Despite similar scepticism to that faced by the get the best out of both advertising and audience. We want to have an easy model that NYT a decade ago, namely that consumers subscription by targeting users with the we change in the future and this is why we won’t pay for content they can get for free payment gateway when users are identified decided to start with a meter.” A hard paywall, elsewhere, the donation model seems to be as having the highest likelihood to subscribe; despite directly driving conversions, may drive proving itself viable, and even lucrative. the donations model relies on the altruism away new visitors to your site, those who are The top earners on Patreon, a popular creator of your readers. unfamiliar with your content and therefore membership platform, bring in over $160k per very unlikely to pay straight away. month, showing just how much loyal followers We urge you to put a lot of thought into are willing to pay for quality content. each model before making your decision. Telex’s Kárpáti, on the other hand, plans to And deciding which type of paywall is most stick to donations for as long as possible So while all models will generate revenue, appropriate for publication shouldn’t be because, “our donation model is successful there are tradeoffs for each. With a hard guesswork. This brings us to our seventh and there are some tax implications, you don’t paywall, you will lose pageviews, impacting and final question... have to pay VAT, for example.” This model has ad revenue; a premium model will have a been particularly successful for companies like less adverse effect on your pageviews, but The Guardian, and follows a trend elsewhere still dampen ad revenue, while the meter

14 The Go-live Stage

7. What data do I need to inform my paywall strategies?

Know your audience

Every publication has a unique audience, with some time to verify whether I’m a promising different readers coming for sports, opinion, customer who could afford to pay more next features, politics, recipes, travel, etc. It’s year because there is a possibility I will fall in imperative that you know who your visitors love with their content and be willing to pay are, what they like and what they engage with, more.” before launching your model. What Breguła said aligns with what Breguła from Gazeta Wyborcza offers this Journalism.co.uk’s Kunova thinks the example: “I’m in Poland, and the WSJ or the audience expects from their news sources. NYT stopped sending me fancy subscription She said that “audiences expect premium offers... instead, because I’m in Poland, they content to be high-quality… this requires a offered me 50 cents a week for 52 weeks. massive shift in culture; newsrooms need to That’s smart because I’m not a “prospect” drastically re-evaluate their output. Simply according to their systems, the most they can put, people won’t pay for wire/generic/ get out of our relationship is that I’m in their rubbish content available elsewhere, and database and they count me as a customer. original, quality reporting is much harder and With a low-priced subscription, they can buy costly to execute.”

15 The Go-live Stage

By knowing your audience and their Before making the jump to paid content then, “Audiences expect premium expectations, you are at the beginning of it makes sense to analyse user data and find the paid content journey. There are massive out which articles, topics or sections are content to be high-quality... differences in willingness to pay across driving user engagement, and use that data borders and industries, and your offering to inform your paywall strategy. With a better this requires a massive shift needs to cater to all of them. Our advice: keep understanding of your audience you will be an eye out for your most loyal advocates, able to make better decisions about which in culture; newsrooms need to a 2019 INMA study showed that just 10% paywall/s to use, how to message your offers, of online readers drive 74% of revenue. and when to trigger conversions. drastically re-evaluate their output.”

16 Closing Thoughts

An outcomes-centric approach

There are other factors to take into account The common thread between the answers when launching paid content, but by taking from all our CTOs was that there is no the above points into consideration before one-size-fits-all approach to paywalls. It is you begin speaking with your colleagues and important to work backwards from your KPIs others in the industry, you can clarify the to the capabilities you are looking for, and thinking around your subscription and only then to decide on the best route for your ROI goals. company. The decisions of build vs buy, which platform to use and what paywalls will be most effective can only be made with a true understanding of your business’ resources, your audience’s preferences and your commercial goals.

17 If you are looking to start maximising subscription revenue and manage personalised subscriber experiences, you’re not in this alone. There are tools out there, like Zephr’s Intelligent Paywall solution, that give digital publishers the power to build, test and iterate deeply personalised user experiences, without using up the resources of an entire development team.

To find out how Zephr can help you hit your subscription KPIs, get in touch! www.zephr.com | [email protected]

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