The Technology Behind Paywalls

I've always been curious about the choices you might have when constructing or designing a paywall for online content...Well, Bill Mickey , an astute writer for FOLIO magazine, has presented a clear picture of what some well known mags are experimenting with to monetize their proprietary online digital content:

Online paywalls are still being scrutinized as a possible revenue stream to supplement declining revenues in print and online display advertising. Yet, there are still relatively few publishers that have found success in the strategy. What’s conspiring against more rapid implementation, especially these days, are significant capital investments in technology, a strategic about-face, a possible decline of total audience, and the daunting prospect of determining if your content can be fashioned into a service or experience, thereby unlocking its value.

There are different models of online paid content—metered, pay-per-article, subscription, and so on. At The Deal, LLC, a b-to-b media company serving the financial and investment sector, an enterprise subscription model was selected.

Even in the b-to-b world, where content is valued for its depth of data and service orientation, adjusting to a paid model can be painful. The Deal, which had a paid model that CIO Michael Lonier called a “mixed bag” of individual subscription packages, re-engineered its platform into one that provides access on an enterprise license level. The decision was based on a conclusion that a fully-licensed model offered a steadier income stream that smoothed out the “cyclical and longer-term secular changes in sponsored advertising,” says Lonier.

“We’re about a year and a half into a significant transformation of our product, and prior to that we had a more conventional b-to-b kind of product mix with a qualified magazine and free stuff and some paid stuff and some premium products. It was a mixed bag of products, which we supported with a subscription strategy and sold primarily via telemarketing,” says Lonier.

The Deal moved away from that strategy to one where all the content was streamlined onto a common platform and format where it could be sold as an enterprise-level service called The Deal Pipeline, complete with its own dedicated sales team. “We sell with a relationship model like you would sell almost any other high-end service,” says Lonier. “There’s a sales team that works with different accounts.”

The jump, as all publishers know, was both risky and painful. In The Deal’s case, the publisher went all in. Not only is the content at a much higher price point, but the company is targeting a smaller customer universe. “The first year is tough for this sort of thing,” says Lonier. “It will be for anyone. You have the baggage of the way you used to do things. Especially, in our case, since we are shooting for a higher price point.”

Lonier is careful to make an important distinction that the value proposition for The Pipeline is what the content does for the customer, not the content itself. “We don’t sell content, we’re selling an enterprise information service. Content is part of it. The other part is access and deliverability. All of that is designed to add value.”

Subscription Paywalls

Harvard Business Review has a paywall that’s primarily accessed via a subscription model. Print subscribers don’t have automatic access. Readers can subscribe to print ($79/year) or digital ($99/year), or both ($129). Non-subscribers also have the option of buying a single-copy PDF of a story for $6.50.

It’s a fairly aggressive paywall in both pricing and access—non-subscribers can read the first full page of a story before bumping into the subscribe message. According to Kevin Newman, director of Web technology at HBR, the magazine is exploring ways to be a bit more flexible. The goal is to tease just enough to achieve conversion. “Our strategy is changing to allow users, instead of having that firm wall, to have an opportunity to get a deeper sample and then restrict after that,” says Newman. “Hopefully, we’re accommodating users and finding that pivot point where users become subscribers.”

In-House Solution for Flexibility

The infrastructure Newman’s team has built was engineered completely in-house. This approach allows Newman the flexibility to make changes on the fly, especially since specific paywall strategies are difficult to commit to as user preferences and behaviors change.

“We went in this direction because we want to do this piecemeal,” he says. “We want to introduce it to the users without disrupting their experience and find the right mix for people who aren’t customers. We haven’t found any other products out there that can deliver that kind of functionality.”

Accordingly, the HBR paywall system exists in between enterprise systems (user data and transactional operations, for example) and the content systems (CMS). This allows Newman to experiment with new approaches without having to re-engineer integration with the other systems. “In between there we’ve got the applications my team runs,” he says. “The point at which we’ll be experimenting with the paywall is exactly there. At what point do we want the content to be displayed, or put up an offer? It’s all very much in the application and not tied to the enterprise systems. It’s back to the more flexible approach. If users rebel and reject our approach we want to dissemble it and get back to where we were, without all the overhead.”

Similarly, The Deal built its system in-house as well, all the way down to the way the publisher controls subscriber access. “We built a whole new platform,” says Lonier. “We moved away from an old Sun Server world and built a virtualized network. We employ services in the cloud. Every page is a set of queries—when people access our content people are actually manipulating queries.”

Would you continue to use your favorite site if there was a paywall?

Bad [for] News
In its recent State of the News Media report, the Pew Project for Excellence in Journalism broke out a section on online economics. Keep in mind that the report is on news media, not media in general, but the results don’t bode well for paid content in a mass-news market. In a phone survey, 82 percent of online news readers said they’d surf somewhere else for news if they confronted a paywall—even if it was their favorite site.