Thoughts On Paywalls

March 19, 2011

In two weeks the New York Times will put up a paywall. Anticipated for some time, now that the day has arrived everyone wonders, What will happen to the Times now?

From what little I know about the Times’ plans – what everyone else knows about the conditions of the paywall and the price points – I’m going to guess that the paywall will have a rocky start but ultimately enough people will pony up subscription fees so the Times will staunch the tide of red ink.

But I have fewer concrete thoughts on the Times’ potential success than on my own experience with paywalls through Early And Often, a subscription-based Chicago political news service Jimm Dispensa and I produced in conjunction with the Chicago News Cooperative.

From day one, Early And Often operated behind a paywall, with some success. Distilled for your reading pleasure, here are some of my lessons learned on paywalls.

  1. Publications behind paywalls have consumers, not readers. A paywall forces you to sell a product, not produce writing that you hope people like. This is a tremendous difference! Now that people have to fork over hard-earned cash, your paywalled product will be judged by a much higher standard than those that are free.
  2. Paywalls mean you are no longer serving the public good, you are serving customers. This makes customer service, pricing and consistency of product quality especially important.
  3. Your product must serve a specific consumer need, not merely inform. Unless your customers believe they get real value by purchasing your product, you will lose paying customers.
  4. Know what your target audience wants and focus on it like a laser. If you are producing something your audience is not interested in, you are wasting time and money and losing customers.
  5. Many, many fewer people will be willing to pay for your product than you think. You will also need to spend a great deal of time convincing people that they want to pay for your product. It takes time to build an audience.
  6. Forget about the size of your audience. Measure your success by the quality of your audience. If you start with a small group of influential or very loyal readers they will support you through thick and thin.
  7. Make sure you have a customer service function in your organization. Quick response to billing or access issues means the difference between success and total failure.
  8. Keep pricing simple. If you have to explain it, you’re losing customers.
  9. Consider your price point carefully. It is better to charge too much than too little because you can always drop your price. Also, you get to a profit faster with a small group of people paying a lot of money than a large group of people paying a little money.
  10. People who complain that you are charging too much money will never pay for your product at any price. There are some who want your product but can’t afford it. Once they have enough money, they will buy. This is an important market pressure. It signals quality to buyers. Consider: Nobody ever complains about Ferrari prices. Good paywalled products aim to be like Ferraris.
  11. Paying consumers do not expect the most important news to stay paywalled. Either they will distribute it freely without your permission, or you can get ahead of the wave and make occasional high-profile items available for free.