Subscriptions & Paywalls: Works for Strongest Branded Media Companies, Not the Other 99%

Gary Portney

Paywalls are being used by publishers in an attempt to replace advertising revenue. However, for all but a few, asking readers to pay subscriptions to read content has not risen to a level sufficient to replace that revenue. Add the complication of ad blocking and you've got a recipe for disaster.

Subscriptions are having a moment. 

Every company seems to be running to subscription models like a kid in a candy store. A few dollars here and there can add up, but it’s not going to add up for the vast majority of sites. 

Sure, some of the top media brands on the planet are generating a massive amount of revenue but for the vast, vast majority of publishers, this stream is never going to come close to the advertising dollars available. 

Too many people chasing too few dollars. The pie is not big enough. 

How many subscriptions will one have? How many make sense? What is the socio-economic makeup of someone inclined to subscribe? The numbers don’t add up, they can’t. 

I have spoken with many people on this subject over the last a couple of years and, at one point, toyed with the idea of building a subscription feature within the platform my company offers. I could never get my head fully around the idea. Then I just looked at my own behavior with paywalls and subscriptions when it came to any website. I do not have any subscriptions and I never have- news, sports, entertainment and everything in between.  I do have subscriptions for streaming services - Netflix, Hulu, Spotify. But that’s it. And of all the folks I spoke with, same thing, none, with the exception of two of them - they had subscriptions to the New York Times or Wall Street Journal, never both. 

Even if I had all the money, which I don’t, I still would not pay. I don’t have enough time to get through all my emails, let alone all the content I need to consume for work.  

I was literally in the middle of writing a detailed post on this over the last week, then a few days ago I read this articleThe Best Content Used To Be Free” on Media Post and written by Cory Treffiletti, whom I do not know, but it was timely and is going to save me some time by not having to write extensively on this topic myself. 

The Cold Hard Truth

Paywalls have been used by publishers on their websites for quite awhile in an attempt to recover revenues lost from declining paid print readership and advertising. However, for all but a few, asking readers to pay subscriptions to read content has not risen to a level sufficient to replace that revenue. A recent ranking by Visual Capitalist identified that only 20% of Americans pay for their news (I personally believe that number is inflated). And for those that do, about half subscribe to the New York Times. That means the rest of the industry has only attracted at best 10% of their readership to subscribe. In other words, the use of paywalls and subscriptions are not moving the needle nearly enough when it comes to being an alternate revenue source. 

As a result, the vast majority of digital publishers have to rely on advertising to generate revenues and survive.  But here too, digital advertising revenue has failed to offset the decline in print revenues and this has been exacerbated by nearly 80 million American consumers using ad blockers, and significantly more globally. 

The Promise of Paywalls

The idea of paywalls, whether hard or soft, is to block readers seeing some or all content without signing up for a subscription. As highlighted above, only a small handful of premium publishers can command this sort of dedicated readership. Soft paywalls are more broadly used allowing readers to view a variable number of metered articles, specific to the site/publisher, before requiring a paid subscription. The hope is  that showing some premium content might attract readers to become subscribers, and for those that don’t, the publisher still generates revenue from the ads on those pages.

The  facts show that neither of these paywall techniques work for most publishers. Worse still, there are numerous ways, freely described on the internet, on how to bypass paywalls (especially soft walls) and read content that publishers think is protected. 

Finally, adding subscription password sharing to the mix just makes most strategies suspect. 

Now Add The Challenge Of Ad Blocking 

31% of the ad-supported internet is unreachable due to ad blocking in the US and larger globally. 

When compared with the subscription numbers above, that’s 55% more than the total number of subscribers in the USA at 20% (again if you believe that number), and three fold the number of subscribers for most publishers who fall in the remaining 10% of the subscription market. 

The problem gets worse depending on demographics. For example, if your target audience and readership is tech-savvy, college-educated, employed millennials, ad block usage can be as high as 50%. When it comes to paywalls, ad blocking readers have the same access to content as their non ad blocking counterparts. They see the same content but the ads are missing. That means publishers with paywalls can monetize ad block users only if they subscribe, but still generate zero revenue from advertising. So one of the most coveted audiences still generates zero ad revenue for publishers. 

Resolving The Paywall Problem for Ad Block Users 

The answer could be fairly simple. Don’t blindly follow a paywall strategy. It won’t work for most publishers. It does not generate the needed revenue. Ad blocking is by far a bigger challenge and opportunity for publishers, not paywalls. The economics here are overwhelming and obvious. This is where some of their focus should be.

Advertisers have an important role to play here too. They cannot target and reach this premium segment of the marketplace and they are spending to reach them. Publishers that solely focus on trying to generate revenues through subscriptions while not paying attention to ad blocking, will miss out. Publishers that do take action, will benefit from doing so.

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Permission-based Advertising?

Adtoniq technology allows for ads to be served to ad block audiences with their permission which results in higher engagement and more conversions.

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