Monetizing Digital Content – How Paywalls Work

You must have heard before that there’s no such thing as free lunch. One of the oldest capitalist sayings has proven to stand the test of time and guess what? It’s true – nothing comes for free; UNLESS your presence and attention can somehow be monetized.

This leads us to present-day web portals and their formatting. If they’re free of charge, users are bombarded with dozens of ads – most of which are completely irrelevant.

Website owners have one option at their disposal, though – introducing a paywall and letting their users pay for the distributed content.

This guide explains how paywalls work, highlighting the main pros, cons, and specifics of introducing a paywall.

What Is a Paywall?

In simple terms, a paywall is exactly what its name says – an imaginary digital wall that prevents people from accessing content until they’ve paid for it. The introduction of a paywall is meant to have a two-fold effect: make users pay a monthly or annual subscription and help the business in question keep producing relevant content.

What Businesses Use Paywalls?

Paywalls have been used in various industries in the last decade. As CheckoutGate works with numerous subscription-based businesses, we’ll focus on journalism, mobile apps, and streaming platforms in this segment.

Online Newspapers

In journalism, for example, the main reason why some large players decided to set up paywalls was that readers used adblockers. Since electronic and digital media alike earn substantial amounts from advertising, blocking ads harms their budget and revenue strategy. Paywalls helped some of them increase their revenue while growing their customer base. Typically, niched-down websites – such as The Wall Street Journal – have been more successful in making sustainable paywalls than general news portals, like The Times.

The thing with paywalls is that users are most likely to pay a subscription if the content behind the paywall is exclusive. Knowing that Nobel Prize winners write for The Wall Street Journal will inspire economy enthusiasts to allot a certain amount of money to access these columns and analyses.

Likewise, if readers think they can find the same information elsewhere, they’re less likely to pay for the service in question.

Monetization of Mobile Apps

Mobile apps, on the other hand, have taken the use of paywalls to various directions.

For starters, let’s discuss mobile games. If you go to the App Store or Google Play and check out the most popular games, you’ll see that most of them have in-app purchases. This means that you can use some features and play some levels for free but eventually you’ll hit the wall; the paywall.

Those sums are usually not high, but just enough to make the user make the payment and continue with the game. Sometimes one payment unlocks all the features within the game; some other times, you have to make progressive payments as the gameplay unfolds.

The same principle is also often applied in lifestyle and fitness apps. Some apps let you access a certain number of exercises and features within the freemium part. Others require subscribing from the very beginning, without any free options.

Streaming Platforms and Paywalls

All relevant streaming platforms have a paywall today, but some have retained free tiers, as well.

Deezer, for instance, still offers its users a free plan. The same goes for Spotify. Although it comes with a limited number of features (lower sound quality, no personalization) and includes ads, this freemium model is enough for many listeners.

Most video streaming platforms, such as Hulu, Netflix or Apple+, can’t be used for free after the initial trial period.

Hard vs. Soft Paywall

There are two main types of paywalls: hard paywalls and soft paywalls.

The aforementioned The Wall Street Journal is an example of a hard paywall. When you go to their homepage and click on an article you’d like to read, there’s a CTA to pay a subscription. So, a hard paywall means that users can’t access any content on the given platform until they make a payment.

Businesses using a soft paywall, on the other hand, allow their customers to use some of the services, content, or products for free before they hit the paywall. The gaming and fitness apps mentioned above, various commercial websites, and online newspapers – think The New York Times – all use a soft paywall.

Should I Introduce a Paywall?

Many merchants might ask themselves this question. From the outside, it seems that introducing a paywall is a good idea to additionally reinforce the number of loyal followers and ensure recurring payments.

From the inside, be careful with paywalls because imposing such a measure abruptly and suddenly could be a bad choice. Let’s illustrate this with the example of The Times – the high-class UK newspaper – when they introduced a paywall in 2010, they experienced a major drop in their readership. One would think that paying a few quid a month wouldn’t be an issue for the higher-class British; however, the reality check proved differently.

5 Steps to Introducing a Paywall Smoothly

If you’re thinking about introducing a paywall, consider the five following steps before and during this process:

• Communicate with your audience. Your followers and users are the best address for this question. Make a poll and ask them whether they’d pay for your products/services/content. Add the potential prices and tiers in the poll if you like.
• Check out the analytics. See the figures regarding the website/app traffic, the number of monthly visitors, your current ad revenue (if any), and your generated sales. As a rule of thumb, an eCommerce business generates revenue from selling goods; hence, introducing a paywall would probably be counterproductive, unless we’re talking about plugins you’d like to sell.
• Try several options. When introducing a paywall, never go with the hard version. This is something only powerful, globally present brands can afford. Start with a soft, metered paywall. Try putting the paywall at different places within your app/website and how people would react. Our two cents: hide a smaller share of your content behind the paywall at the beginning and keep moving the threshold gradually.
• Consider payment integration. Every website that used to be free and then introduced a subscription had to handle the payment part. As you may know, subscription businesses are considered high-risk enterprises, which is why they need merchant accounts that are hard to place. For such companies, payment processing is different, with additional compliance procedures and higher fees than ordinary payment billing. Find a reliable third-party payment integration partner thereof.
• Measure the results. Keep an eye on your business results, revenue, and traffic once you’ve set up the paywall. If you notice that the numbers are going down, suspend the paywall for a while. However, if everything stays in order and people start subscribing to your business, apply the metered paywall method mentioned above. Who knows, perhaps you’ll eventually get to the hard paywall.

CheckoutGate Intel: Some online business hubs and web portals launched separate websites once they introduced a paywall to their original platforms. That way, you can retain the existing customers who don’t want to pay a subscription.

Conclusion

When you step into the data chaos on the Internet, it’s clear that people who want checked, reliable information won’t find it on free mainstream platforms. It seems that paywalls and paid content are the future of professional, top-notch content on the Web.

If you want to make this future become your business reality today, apply the steps explained in this guide and start protecting the quality of your information with a paywall. We can help you along the way with the payment part, from implementing automated integration to opening a merchant account. Contact us and have your merchant account opened in the shortest time possible: https://acceptpaymentsnow.typeform.com/to/NbSkFD7R.