The different types of paywalls (and how publishers use them)

Earlier this month, @CJR published an article titled, “What the pandemic means for paywalls,” which talks about the dilemma faced by many large publishers about which content to put behind the paywall and which to keep freely available in public interest.

“Journalism is, at its core, a public service,” Joy Mayer, the director of Trusting News, a research and training project that promotes journalistic credibility, said in the article. But for any newsroom with a paywall, “There is always going to be tension between financial sustainability and the desire to offer that service in a way that is accessible to everyone.”

Paywalls started showing up on the Internet only in the mid-2010s. Long after standard banner ads, as an alternate means for publishers to generate revenue. Declining revenues from print and the rise of ad blocking were both contributing factors for the growth of paywalls.

In this post, we’ll explain what paywalls are, the advantage and disadvantage of various paywall strategies, how effective paywalls are, and whether or not it’s the right strategy for your website.

What is a paywall?

A paywall is a mechanism for gating access to content, especially news, by offering it via purchase or paid subscriptions. More broadly, paywalls can also be seen as a form of value exchange between a publisher and its audience. Despite the name, not all paywalls necessarily require a monetary exchange. For example, an ad block wall (a subset) can persuade readers to allowlist a particular website. Publishers might also offer access to content in exchange for users providing their email address. Or sharing content on social media.

Types of paywalls

Hard paywalls

Hard paywalls require a paid subscription before providing access to any content. They are usually the most difficult to circumvent, but also the riskiest strategy overall. Hard paywall examples include The Times and Financial Times.

It is known that websites that implement a hard paywall lose a significant chunk of their audience. Users can exit the site and find the information they’re looking for elsewhere. Jimmy Wales, the founder of Wikipedia, has argued that using a hard paywall diminishes a site’s influence, and that by implementing a hard paywall, The Times “made itself irrelevant.”

• Advantage: Users cannot circumvent hard paywalls
• Disadvantage: Riskiest paywall strategy, significant number of users will abandon the website

Soft paywalls

In contrast, soft paywalls allow users to access some digital content based on criteria that is decided by the publisher. The idea is to allow visitors to experience the quality of the content before requiring them to purchase a subscription. The New York Times uses a soft paywall. It is frequently cited as one of the most successful digital subscription programs.

Soft paywalls are often “metered.” Meaning they allow access to a set number of articles before restricting access to content. Then, nudging the user to buy a subscription. The metered model is less disruptive than hard paywalls. It allows the publisher to entertain casual visitors. While also being able to use the larger visitor data set to run tests and fine-tune the metering.

Publishers who use metered paywalls pay close attention to something called “stop rate.” This is the percentage of total visitors that eventually hit the subscription paywall after exhausting their weekly or monthly limit of free articles.

Soft paywalls also tend to be more “leaky” or “porous.” Meaning that they allow certain technical conditions that enable users to access content beyond their metered quota. For instance, when a user deletes their cookies or visits the site in incognito mode.

• Advantage: Allows publishers to entertain most casual visitors
• Disadvantage: Only a smaller subset of users eventually turn into paying subscribers

Freemium paywalls

In addition to hard and metered (soft) paywalls, some publishers also selectively restrict access to premium content. Keeping the majority of the content open and free to access. One publisher that uses this strategy is eMarketer, wherein they publish report summaries and articles that are free to access, but users must pay to get the full reports.

The freemium paywall allows publishers to use both the ad-supported and subscription-based revenue models in conjunction. Therefore, have something to offer to all types of users based on their individual preferences related to content consumption.

• Advantage: Allows publishers to offer something for all types of visitors
• Disadvantage: Only a smaller subset of premium content is monetized

Dynamic paywalls

Hard and metered paywalls follow relatively simple models that decide when the paywall should appear. Dynamic paywalls go deeper and present subscription requests and pop-ups only when the probability of a visitor converting into a paying subscriber is discovered to be high.

To do this, dynamic paywalls analyze data related to visitor frequency, reading habits, and interests to correlate and predict how likely they are to turn into a paying subscriber. The New York Magazine employs this kind of a dynamic paywall.

• Advantage: More likely to accurately identify users who are likely to become subscribers
• Disadvantage: Implementation is more complex relative to hard and metered paywalls

Ad block walls

Most publishers have an ad block rate between 10-40%. Not having a strategy in place to engage this audience means leaving revenue on the table.

One of the ways in which publishers engage their ad block audience is by setting up an ad block wall, with the intention of educating users about the business need for advertising revenue and convincing them to allowlist a website. If the user chooses to disable their ad blocker and allow ads, the publisher can continue to serve advertising and generate revenue.

Ad block walls can also function as hard or soft walls, similar to paywalls. Hard ad block walls will have higher conversion rates, but casuals readers will be more likely to bounce. Soft ad block walls can be less disruptive, but they are easier for users to dismiss and result in less conversions.

• Advantage: Offers a way for publishers to communicate with their ad-blocking audience
• Disadvantage: Can lead to users bouncing or easily dismissing the allowlist request

Server-side vs. client-side

Paywalls can be either server-side or client-side. Based on where the decision of whether or not a particular user gets to see the content happens. With client-side paywalls, the content is delivered but hidden out of view, making it easier to circumvent. Server-side paywalls are almost impossible to get around. However, since search engines crawl and index web pages based on the content that is publicly available, using them might lead to reduced coverage in search.

Are paywalls effective?

Thankfully, there is a lot of data and industry opinion on the subject of how effective paywalls are. More importantly, the various factors that affect the chances of success or failure.

The Canadian Media Research Consortium (CMRC) found that of the 1,700 users that were surveyed, 92% would rather find a free alternative than pay for content on their preferred site. An earlier research by Pew Research Center found that 82% of Americans hold the same opinion. Based on public opinion, the CMRC study concluded that given the “current public attitudes, most publishers had better start looking elsewhere for revenue solutions.”

Despite general reader perception, the use of subscription-based revenue models is growing among publishers. A study from Reuters Institute showed that more than two-thirds of leading newspapers (69%) across the EU and US were operating some kind of online paywall as of 2019. With the average price for paywalled news at $15.75/month.

The general industry consensus about hard paywalls is that, with very few exceptions, they are hard to sustain and that the negative effects (loss of readership) outweigh potential revenue.

Other approaches, such as metered, freemium, or dynamic paywalls have been successful for many premium publishers. However, success is strongly correlated with the following factors:

• Targeting a niche audience
• Providing unique, exclusive, or highly valuable content
• Having significant insight and data related to users’ reading habits and preferences
• Testing and choosing the right paywall delivery strategy

Every strategy has its pros and cons, but it’s up to publishers to find a solution that balances user experience with revenue.