What is a paywall?

A paywall describes a method of re­strict­ing access to online content via a paid sub­scrip­tion. Es­pe­cial­ly digital content providers like news­pa­pers or magazines and their re­spec­tive pub­lish­ing houses use paywalls to monetize their websites. According to a recent study by the Reuters Institute for the Study of Jour­nal­ism, 76% of news­pa­pers in the United States now have a pay model in place, up 16% from 2017. In other words: Internet users can no longer read a spectrum of online content entirely for free, and instead are in­creas­ing­ly being met with paywalls.

In the analog pub­lish­ing industry, the paywall concept has already existed for a long time in the form of sub­scrip­tions: If you want regular access to current articles and to the contents of a print product, then you have to complete a sub­scrip­tion. Likewise, if you want to pick up your morning paper at the newspaper stand, then you’re expected to pay. In the past, news­pa­pers, journals, and magazines were financed by sub­scrip­tions, retail sales, and ads, and continue to do so to a lesser extent today. In­creas­ing­ly, pub­lish­ers now also carry this payment model forward to online media.

With a growing online jour­nal­is­tic offering, the revenue made through print sub­scrip­tions and retail sales has decreased, as during the 2000s the greater amount of digital content belonging to online news­pa­pers was still free. In the mid 2010s, a shrinking amount of readers were buying news­pa­pers and magazines at a physical store: The internet became more and more important for in­for­ma­tion gathering, and the behavior of newspaper readers changed with it. News­pa­pers’ print versions were being bought more rarely.

Today, jour­nal­is­tic content is for the most part read online. So, pub­lish­ers have had to find a way to monetize their jour­nal­is­tic work online. The solution: payment barriers. Some 48% of media outlets in the United States have a paywall, which is a 10% increase in just two years. The rise in paywalls in the US is also higher than in EU countries, sug­gest­ing that paywalls have largely become standard practice.

Different kinds of paywalls exist: pub­lish­ers use different models to offer customers a variety of digital sub­scrip­tion offers. Some are so subtle that readers won’t even perceive them as a paywall, while other models act as hard payment barriers that can’t be worked around. Paywalls are therefore clas­si­fied in different friction levels.

In this model, a selection of web content is closed to non-sub­scribers. Users that don’t complete a digital sub­scrip­tion with the provider also don’t have the option to read any of its articles. This kind of barrier is not as common, because when readers stumble across hard paywalls then they’re usually inclined to find the desired in­for­ma­tion elsewhere. The risk that otherwise in­ter­est­ed readers should leave for a com­peti­tor is therefore very high.

In addition, a tough payment barrier will hugely affect a website’s visitor numbers. For this reason, fewer ad­ver­tis­ers might be prepared to show their ads on these platforms. However, well-known news­pa­pers and magazines with a hard paywall do exist: the Wall Street Journal, the Financial Times and the British Times are among them.

A soft paywall (also known as a freemium model) provides free content and premium offers. Users can read a big selection of articles on websites with a soft paywall without paying fees or com­plet­ing a sub­scrip­tion. However, in­di­vid­ual articles are offered as premium content, and are only visible to paying customers. This freemium model is the most widely used method to partially monetize digital content in the newspaper landscape. While this model is par­tic­u­lar­ly strong in France and Germany, in the United States this type of paid content is barely non-existent, with only 12% of pub­lish­ers putting it in place.

Another option that provides a softer payment barrier is the metered model. Stemming from the word “meter” for “measure,” a metered paywall is a payment barrier that dy­nam­i­cal­ly adapts to its users. Generally speaking, all content displayed on a website with a metered paywall is free, but every user has a cap on the number of articles that can be accessed.

With the as­sis­tance of technical materials (news­pa­pers often use cookies, pub­lish­ers are able to follow how many articles a visitor has read per month. Once the limit has been reached, the user must buy a sub­scrip­tion or wait until the next month, when they’re able to read free articles again. While users can easily leverage on this model, many websites using this model require user reg­is­tra­tion, allowing them to better un­der­stand their readers’ behavior. In the United States, the New York Times uses the metered model with great success.

Next to the metered model, different dynamic payment barriers exist, which perfectly adapt to a website visitor’s behavior. Pub­lish­ers can, for example, evaluate data on returning customers and user profiles. After just a short time, pub­lish­ers are able to un­der­stand their reading habits, interests, and the an­tic­i­pat­ing selection of articles they will read every month.

For a user who returns to the page several times a day to read business news, a dynamic paywall will rel­a­tive­ly quickly point to the payment barriers. On the other hand, a reader who visits the page just a few times every week and reads only a few articles will continue to be able to read content for free. New York Magazine employs this kind of dynamic paywall and cal­cu­lates the prob­a­bil­i­ty that a reader will complete a sub­scrip­tion based on data. The challenge is to con­sis­tent­ly deliver value to make sure readers return.

The most un­ob­tru­sive payment model to monetize digital content is one based on voluntary donations. More than a million readers fi­nan­cial­ly con­tributed to The Guardian so that it could stay free and outside of a paywall, either through one-off or ongoing support to help make the newspaper sus­tain­able. In this open paywall model, donations are made by readers who value the newspaper’s editorial in­de­pen­dence and com­mit­ment to in­ves­tiga­tive reporting. While readers can freely engage in all content on the site, a sidebar links to various funding options.

Seven and a half years after the in­tro­duc­tion of its metered paywall, the New York Times managed to acquire more than 2.5 million digital news sub­scribers. This number accounts for 36% of the company’s sub­scrip­tion revenues in the first nine months of 2018.

Paywalls are es­pe­cial­ly prob­lem­at­ic when al­to­geth­er relevant in­for­ma­tion and news is sealed behind payment barriers. Critics argue that those with a lower income don’t have the financial means to pay for this kind of premium content. The prin­ci­ples of the open internet and freedom of speech are buried due to this. In addition, paywalls can also promote digital bubbles, since readers with a monthly digital sub­scrip­tion will be more inclined to read articles written by that source. Molding public opinion therefore becomes easier.

Paywalls can also have negative effects on the marketing efforts of media providers. Hard paywalls can lead to a decreased number of website visitors. And since fewer users will see ads on this website, ad­ver­tis­ers may instead choose to run their ads with pub­lish­ers employing soft paywalls or metered paywalls.

A host of paywall providers exist for the US market. Their so­phis­ti­cat­ed mech­a­nisms allow pub­lish­ers to monetize on a single article by employing a paywall.

The German start-up Steady offers paywalls for different kinds of online content. Different mem­ber­ships allow providers to turn every­thing from articles, podcasts, and newslet­ters into money. Besides the mem­ber­ship option, Steady offers pos­si­bil­i­ties like ad­ver­tis­ing and donation models.

This Dutch company has until recently offered in­di­vid­ual articles for sale in a digital newspaper stand. Via mi­cro­pay­ments, users had access to their articles of choice, without having to commit to a sub­scrip­tion. In August 2019, this strategy was given up in exchange for a premium sub­scrip­tion model. Now, Blendle offers select news articles for a small monthly fee, oriented around the business model of big streaming providers like Netflix and Amazon.

The award-winning sub­scriber man­age­ment and billing platform of MPP Global, eSuite, is designed for the media and en­ter­tain­ment industry to power paid content strate­gies. It supports freemium, metered, and dynamic paywalls with maximum flex­i­bil­i­ty, and boasts a client list that includes Sky and NBC Universal.