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Expo preview: Six things you need to consider when looking for a paywall solution

So you are heading to World Publishing Expo 2014 and your online department has asked you to look for the best paywall solution to enable your paid-content activities. In this article, author and WAN-IFRA Principal Associate Consultant Gregor Waller (pictured) says there is one factor to keep in mind above all else: Once you have chosen a solution, you are pretty well stuck with that technology; you cannot easily swap it for another one.

by Nick Tjaardstra nick.tjaardstra@wan-ifra.org | September 5, 2014

With a paywall solution, you are choosing the base system that enables you to diversify into a substantial, new paid-content business. The paywall solution will be as central to your digital publishing business as your print circulation system is for print. You will deeply integrate and interface this paywall solution with your key systems: ERP/business systems, CMS, DAM and CRM.

Typically, paid-content projects start with this superficial understanding: “We have one product that people can subscribe to.” But reality soon reveals that paid-content is not “another project” – it is a diversification strategy that deals with moving targets. A growing paid-content business is very unlike print and requires constant iterative learning about which product offers work and which don’t. It means constantly developing and optimising a portfolio of debundled contents, products and product bundles with highly complex and tailored price structures, special products, different amounts of different types of free content on different platforms and … dynamic editorial requirements.

The market will teach you that paid-content success depends on continuously adapting your product offers according to the results of constant A/B-testing, meaning offers will be complex. If your paywall solution is not flexible enough to handle that complexity and to cheaply and quickly adapt to your customers’ rapidly evolving demands, your paid-content strategy will fail.

Thus when you are choosing a paywall solution, you are not choosing a camera system. You are choosing a cornerstone of your future paid-content business, and you will be dependent on your supplier. So the choice is absolutely critical to the execution of your paid-content strategy.

The most important thing to consider: What is your paid-content strategy and the scope behind your research for a paywall platform?

1. Strategy and scope

One possibility is that a decision has been taken to implement a paywall simply and quickly. That implies a freemium/ selected-content or a hard/total lockdown paywall. Maybe you do it because everybody else does it, or you want to test the willingness of your audience to pay for different content types, topics, or similar. The low complexity of this scope allows for cheap systems. Don’t spend money on deep integration, because the results will not tell you how much revenue you could make with a dedicated paid-content strategy and product. Another possible scope could be described thusly: “Metered has worked elsewhere – so implementing a loyalty-exploiting metered model should work with our product as well, even if we do not have enough loyal users.”

In this case, you might want to learn how to convert visitors by means of either product improvements or improved digital marketing skills.

If you just want to test a paid-content model, I recommend licensing an SaaS solution. It carries low investment and integration costs and is quickly integrated. If you already feel safe with your metered strategy, you will want to own your system. Both complexity of the model and investment and integration costs of such a paywall system are medium. The integration time needed is medium as well.

The most complex scope: “We have a clear paid-content strategy and we have to make it a success. Thus our complete product portfolio will be integrated in the strategy. We foresee many new products to be added and combined in a multitude of offerings to fulfill the demands of the digital audience. Thus all aspects of our product offerings will be continuously optimised until the revenues from our customer-oriented product offers have reached the level that our news organisation needs to fulfill its mission.”

In this case, you have decided that paid content must deliver a substantial part of your future revenues. Thus you need a highly flexible and scalable system that allows you to quickly and cheaply tweak your offerings based on the needs of the paid-content target groups identified. That’s why you stress the real-time marketing capabilities of the paywall solution – which allow you to convert as much of your potential target groups as possible. Complexity and investment in such a system are substantial – as are integration cost and integration time – but so are the potential financial rewards.

2. Flexibility and scalability

Again: A paywall platform is not a production-oriented system that must be evaluated on the basis of cost efficiency. First and foremost, a paywall system is a revenue-enabling system, and must be evaluated for its revenue-enabling capabilities. The more different revenue opportunities the system allows you to discover, test, and implement with scale, the better for your digital financial picture and for your investment case.

Because we are in paid-content’s infancy stage, a successful paid-content publisher in the next 10 to 15 years must conduct many tests of product innovations and continuous tweaks and new configurations of product offers. Thus the business case for a paywall platform also must consider the marginal cost of each A/B test and the opportunity cost of revenues missed.

For example: Imagine that one platform allows your paid-content manager to implement three new product-offer tests per week by himself, and another platform requires four hours of custom programming by a systems engineer for each offering. The first system has a cost advantage of 12 hours per week, plus project coordination costs – or somewhere around 80 to 100 man-days per year.

3. Performance

Digital customers are demanding; response times of more than 20 milliseconds per system request (a determination whether an individual visitor is entitled to see an article) are generally unacceptable for people who are used to not being interrupted while consuming news.

The keywords are server-based “in-memory systems” as well as non-solely-cookie-based tracking systems. Even more importantly: Does the paywall solution support real-time analysis and marketing? For example, if your payment platform does not support displaying realtime ads to “morning-news lovers” you will not be able to actively market those audiences with a special offer for their specific type of use – and you will miss the revenue potential.

4. Cross-platform capability

As you know, cross-platform access to a news brand is one of the most important drivers for the willingness to pay for a news offering. So, with mobile news consumption growing to more than 50 percent of all traffic, if a paywall platform cannot be integrated into HTML5 or native apps, you’d better think twice.

5. The business model

With growing paid-content success, there will be a point where owning a paywall system is more profitable than SaaS – but make sure your controllers compare the complete costs of the two options. That means comparing revenue sharing for the SaaS solution with hosting, maintenance, and depreciation of the initial investment for the owned solution – plus the development/customisation cost for the marketing tools (which come for free with an SaaS solution).

Smart managers tackle that challenge by selecting a paywall platform that is used by leading paid-content publishers. Thus with every update, they enjoy the new features and functions that those publishers have already tested and implemented.

6. Integration with legacy systems

One of the main challenges is integrating a paywall solution with the publisher’s legacy business systems. Smart paywall platforms allow you to run all digital workflows in their system while allowing your legacy system to serve as the leading system for customer data and revenue and sales figures.

The very best systems can even extract data about apps, ePaper, and so on – data that are often poorly structured – from your legacy system and prepare them for optimal use in your paid-content workflow. Those systems are so flexible that you can decide later whether internal or external hosting is best.

Gregor Waller is Principal Associate Consultant, WAN-IFRA. He has served as VP strategy & innovation, CFO, and member of the Board of Directors of Axel Springer’s Welt group, and understands the various challenges that a publisher faces when transforming the business to digital and diversifying into a paid-content model. He can be reached at consulting@wan-ifra.org.