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Will Users Pay for Online Content?

Consumers are deciding to pay for online content as they tire of filtering the whole Internet for high-quality articles

“So I’ve figured out how to get traffic — how do I make money?”

That’s a genuine quote from a new Gold Member, and one we hear often, although usually without the “I’ve figured out how to get traffic” part. Generally we advise figuring out the money part first, and funneling the traffic appropriately, but that’s not what we’ve seen publishers do historically.

iTunes was launched by Apple in 2001 after years of music being downloaded for free on the web, and in 2010, magazine publishers took the same approach. The Economist called it “the year of the paywall, [1]” and even though paywalls have wavered over the past few years, publishers have shown renewed focus over the past year and are finding favorable results by and large.

One of the most intriguing recent approaches to paywalls was the one The New Yorker undertook in 2014. For months over the summer, it opened the floodgates on its content, before capping it with a metered paywall in November. What happened? Well, traffic and time spent increased during the free-for-all, as expected, but not as much as one might think.

No, the real catalyst for explosive growth came when the wall went up! Readers wanted to pay for a digital magazine’s content [3].

“It wasn’t a massive increase in readers between July and November. There was an increase, but there wasn’t a massive increase,” NewYorker.com editor Nicholas Thompson told Nieman Lab back in March.

“What’s weird is we launched the paywall, and then there was a massive increase.”

In the meantime, “all-you-can-read” outfits like Magzter have jumped on consumers’ propensity for spending on good content, particularly good niche content. All-you-can-consume subscriptions are doing quite well right now. It’s why we recommend bundling your print, digital and online archive into higher-priced subscription packages.

Back in 1999, Netflix launched as a subscription service where you could rent DVDs and send them back, while paying a low monthly price. In 2007, they started offering online movie streaming, and suddenly they were a household name, meanwhile putting Blockbuster out of business in November of 2013.

In volume, there are customers who will subscribe.

Will users pay for online content when there’s free content available? 

The main reasons publishers are adding paywalls, is because digital advertising revenue has been a rollercoaster. Maybe because after years of advertising blindly in print magazines, they can finally see the return on their investment. Throwing money at a wall is no longer an option.

Now, publishers turn their heads toward their subscribers as their source of income.

Subscribers who, after many years of sifting through a carnival of content on the web that has gone from bad to worse, are coming around to the idea that high-quality content is worth paying for.

Time Inc. pioneered the metered paywall, where a visitor to the site gets to read a certain number of articles before they get prompted to pay for a subscription. The metered paywall may also have a positive psychological effect on the reader, when they realize how many articles they’ve read from the magazines, identifying their own likeness for the content.

Time Inc’s properties like EW, Time, People, Money, Health, Real Simple all launched metered paywalls over the summer. “Deepening our relationships with digital audiences who value our premium content is of paramount importance to us,” Time CEO Joe Ripp said in a statement. In other words, “the advertisers aren’t paying, so we hope you will!”

I recall reading an article on Poynter back in 2011 titled, “Why would anyone pay to read The New York Times online?” which was right amid the paywall bubble.

The argument [4]was:

“Digital news is different. It is an intangible good. My access to it does not inhibit your access to it. It has a cost to produce, as a whole, but the cost of extending it to one more person is insignificant. There is no natural scarcity, so we don’t have to impose an upfront price.”

But the follow up was on point:

“So, if it’s always been possible on any given day to pick up the local paper somewhere for free, why did people ever pay? Not because they had to, but because it was easier to get it placed on their doorstep every morning (convenience), because they felt if they were going to read it every day they ought to pay (duty), or because they wanted to support the institution and people that produced it (appreciation).

Those are the same three reasons someone might subscribe to the The New York Times’ digital content. Not because they have to, but because it’s easier than hacking your way around it every day, because they remind you occasionally that you should, or just because you want to support the work they do.”

This applies to metered paywalls only though — a regular ‘ol paywall without metered access only stop a reader from proceeding, it doesn’t allow them samples before they get to the real deal.

That’s what’s so different about news publishers and magazine publishers, they don’t tend to differentiate between which news is “premium” and which is “free.” Instead, it’s all premium, and the only way they can gate content and still get the traffic they need to convert, is by letting it loose … up until a point.

Magazine publishers have the option of divvying content up into free and paid content. Free content ends up on their main portal [5], where they publish free daily articles. All of the free content pages are designed, using 3C zone architecture [6], to convert free visitors into paid subscribers to a print or digital edition of the magazine.

The paid content goes in the magazine subscription website [7], which can be accessed once the user has registered. There’s a paywall with enough content to tease, but not enough to give it away. In most cases, there’s no metered access. All the free content is on the portal, and if they want a content upgrade, they subscribe.

If you structure your content like the above, users will pay for content, and they do.

People said they’d never pay for music when iTunes came onto the scene. They could just get it for free online, right? As it turns out, people like having their music curated for them, they like it when it downloads as the song they expected, and not something scrambled, with an ad laced in the middle, or something else entirely. And $1.29 a song went from looking like a huge investment, to a valuable, time-saving necessity for listening to music.

By developing high-quality content and packaging it into a magazine website, you’re creating content that people want to pay for. Depending on your niche, it could be sooner or it could be later that people decide that you’re a necessity, but the time will come.

Do you pay for online content? Have you seen a shift in positivity toward premium content? Let’s discuss in the comments.