The freemium model is spreading in B2C and B2B, as are paywalls more broadly.
At a recent publishing conference, long gone were the days of impassioned debate about whether a paywall is ‘right’.
The revenue models are working for many and an over-reliance on advertising revenue has been addressed, albeit with mobile making online advertising more lucrative (and to a lesser extent, contextual, programmatic and native ads).
The original discussion seemed about more than revenue, as if the whole concept of the web was under threat. Academics were writing about the democracy of the internet and whether this would be eroded by a dearth of free news content.
Of course, it’s silly to think that ethics play any part in the discussion. Once some companies proved the ability to sell combined subscriptions and then digital only subscriptions, the bandwagon was jumped. These are businesses after all, and many had been in trouble for years.
In this post I’ll detail some examples of approaches to metered paywalls, and look at what factors influence paywall strategy.
At Econsultancy’s Digital Cream 2014, I moderated the B2B content marketing discussion.
Although paywalls weren’t the hottest topic of conversation, those delegates from publishers (from those that provide online tools for their customer base, to research houses) did admit still to be wrestling with the idea of what to seed for brand awareness, what to give away, where the crown jewels should be kept.
The topic of how much to give away might not too heated a discussion for those with hard paywalls in place. In B2C one thinks of The Times (UK) and in B2B, Amazon’s cloud service (12 months limited trial functionality for free) or perhaps LexisNexis, the legal and tax technology provider and publisher.
But soft, or metered, paywall companies have plenty of decisions to make. What and how much to give away can change depending on promotions, seasonality, competition and performance.
Even those with hard paywalls in place must decide when to give away free content, especially when moving into new subject areas and markets, or again when undertaking promotions.
Examples of freemium models or metered paywalls
The obvious one is Spotify, though this is an example of a freemium model that isn’t really a paywall. All of Spotify’s music is available without paying, but some of the functionality is not.
For example, free users on mobile can only listen to playlists on shuffle. And of course, free users listen to the service’s advertising spots.
Although Spotify isn’t making money yet, its approach raises the question whether a B2B company could adopt this reduced functionality, full content model. WordPress might be the closest example I can think of, if we define ‘content’ as the ability to self publish.
Freemium models in B2C are less common than B2B, simply because there’s more B2C content out there. Nevertheless, many big newspapers use freemium models, as do some niche B2C publishers.
Ten free articles a month. Interestingly, one doesn’t have to register to attain these, but you will get the below interstitial when you’ve read five articles.
Working on a cookie basis means that reading via Facebook, or from another device, or after clearing your cache, you will be able to read more free content. However this strategy obviously aids sharing of content by users.
Three articles free every week.
Free report samples, that at the moment give away the contents page and a large amount of the introduction/context of a report, with some highlighted snippets revealed throughout.
As well as this, some of the shorter or less strategic reports are free in full for registrants.
Tools such as e-learning and the case study library are only available for bigger subscriptions. These value adding tools make various subscription packages possible (for varying numbers of users) whilst maintaining an aggressive freemium model that starts with blog content and moves individual users towards full access.
Bundling is an analogous part of B2C, where products can be added for full subscriptions, but unbundled and offered on their own, too.
B2B & B2C
The FT sells subscriptions to its business intelligence tool, corporate subscriptions to its archives and academic subscriptions, as well as its newspaper product.
For the B2C product you must sign up for free access to up to eight articles per month.
Factors in setting paywall strategy
Pricing in B2B is an interesting area and one that takes some market research to get right. There are some suggestions that the nature of content behind a paywall in B2B demands a serious price tag, to properly convey value.
There’s definitely some game theory at play here, and pricing is certainly a sensitive area that is hard to test as there’s the risk that different prices will ‘leak’.
A case in point was the Financial Times. Dan Barker, in this post, detailed how he found different prices for an FT.com subscription when conducting a simple Google search.
It should be said that this was over a year ago and the FT has since got on top of this issue, with only one price now available per package.
The NYT has a strategy that combines promotion with full price subscription by offering a lead-in price as standard.
Users pay 99c for the first twelve weeks, whatever the access. The Economist also uses this strategy as do many other B2C publishers.
This plays into pricing. How can products be effectively unbundled from the full monty subscriptions? The NYT is shortly to release a mobile product which can be bought on its own but is part of a paid digital subscription.
Niche and audience size
This is down to competition. If you don’t have much of it, there’s less pressure in B2B on really pushing the metered paywall. Why give away two pieces of content when you can give away one?
There’s also audience size to consider. If your audience is fairly modest in size, shrewdness when giving stuff away is particularly important.
This affects how boldly you can wall content. If your brand is well established in a market, there’s residual faith in your content that will drive subscriptions. Of course, this isn’t to be taken for granted, especially if you have a diverse audience, but The Times in B2C can bank on its heritage and offline interest.
In new markets, especially in APAC where free content is more assumed, giving away something more for free may be a safer strategy.
Customer service and functionality
One of the results of improving web design is that customers demand more. Functionality such as search is often demanded by customers. When paying for content, customers expect a certain level of service and this should be borne in mind. Often a new and useful functionality can be more valuable than additional content.
As in the NYT example, if shared content is important to you and a main traffic driver, the freemium method needs to allow for this.
There is lots I haven’t covered here, and I’m by no means an expert on the topic, so let me know your thoughts on setting paywall strategy.