Case Studies to Guide #2: Paywall Implementation at Gazeta Wyborzca and Malaysiakini, by Marius Dragomir, Dumitrita Holdis and Ian M. Cook.

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Authors: Marius Dragomir, Dumitrita Holdis and Ian M. Cook – Center for Media, Data and Society (CMDS) at Central European University (CEU) School of Public Policy (SPP).

Guide #2 – Launching a paywall: What you and your team need to know, by Tomáš Bella.

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About author: Tomáš Bella is co-founder and web director of an independent Slovak daily newspaper: Denník N (dennikn.sk), which also develops open-source software for publishers REMP (remp2020). Previously, he was Editor-in-Chief of the largest provider of Slovak web journalism, sme.sk, and co-founder and first director of Piano, now the world’s largest company offering publishers paywall software.

Recently, international media reported that Piano Media, a company you co-founded, has bought the US company Press+, which is bigger than Piano. Who then bought whom?

Piano has bought the American company, which expresses the conviction of shareholders and investors that Piano has a brighter future.

What is the difference between Piano and Press+?

The Americans controlled the US market and offered the publishers of mainly local newspapers a so-called “quick” solution – they were setting up payment systems for their online versions. Piano is more about seeking individual solutions and tries to help large publishers and newspapers survive the onset of the digital era.

Printed newspapers are experiencing a dramatic decline. Is there an example of their successful transformation into an online form?

Basically, what’s happening is that apart from circulation decrease, advertising is also going down and hopes that ads – which translate into income for newspapers – will be transferred to their websites are not fulfilled. The only option then remains to increase income from newspaper sales – in their digital form. So far, New York Times (NYT) is attempting to go this way relatively successfully. Ten years ago, their newspaper sales income was 25 percent of total income because the majority came from advertising. Today, sales income is more than 50 percent, which is quite a success, yet it’s still not enough. In any case though, an important change is the fact that for newspapers, readers have become more important than advertising clients. And that is very good.

How is daily SME, where you are editor-in-chief, doing in this respect?

We are taking a similar route as NYT and since we started quite early, we also have decent results. Thanks to the Piano payment system, we have had a relatively quick increase in paying readers on the internet and if this keeps on, there is a chance that paying readers will compensate losses from advertising. However, many media companies in the world may not have enough time for this change since they started too late with it or because they do not have content someone would be willing to pay for.

What is the problem? Are readers not ready to pay for news content on the internet?

That is one part of the problem. The other part is technical. Many newspapers are not technologically ready to introduce paying for content on their website. Newspaper publishers haven’t been used to thinking about their readers the same way as, for example, Tesco retailer does. For years, Tesco has been tracking its customers’ customs and adjusts to them to make shopping easier for them. For too long, newspapers have been used to doing business with a few large advertisers – now they have to accommodate a large number of clients – their readers.

And Piano offers this knowledge to the publishers?

Yes. Publishers often don’t have a clue about how complicated the whole process is.

Do you think that even in such a small market as the Slovak one, a newspaper such as SME can survive the digital revolution?

In principle, yes. The question is though, what will the newspaper look like and how large it will be. If all the advertising suddenly disappeared, the newspaper would survive. But it would probably need to lay off half of the staff. So really, it’s a battle with time. We also need to know what should be in the newspaper so readers keep on buying it and keep it alive.

Based on the experience with Piano, can you summarize what today’s newspaper reader – not only a Slovak one – is like?

In the past, everyone kept a close eye on how many clicks a certain text on the web had and aimed at the highest readership. It wasn’t that hard – you supply an attractive headline, something about sex let’s say. But these texts were and still are for free. Thanks to Piano, we now have an opportunity to track an entirely different parameter: readership of articles that readers pay for. In this case, the headline doesn’t play such a major role and the outcome is interesting – paying readers generally read what journalists themselves would like to write. And that is quality articles.

The SME daily in its printed as well as digital form had, under your leadership, started to experiment with long articles, sometimes reaching ten pages. What has been the outcome?

It’s an experiment in which we want to find out what readers are willing to pay for. Ever since we introduced Piano, it was clear that readers are ready to pay for commentaries by well-known authors. Other than that, we still know very little about what they want. For example, we sent a reporter to the United States to follow in the footsteps of the current Slovak president Andrej Kiska, who tried to run a business there 20 years ago. For the first time, we were able to figure out – on the basis of income earned by people purchasing it online – whether it paid off.

And how did it turn out?

We made profit in the region of thousands of Euros. At the same time, it’s the first concrete answer to the question whether it actually pays off to send editors on trips abroad. This question has long been the subject of academic debates carried on until now and such trips were thrown out of the budget due to costs. Simultaneously, it shows that these days, it’s important for newspapers to have fewer high quality long articles than many short news stories, which are available everywhere.

Until now, we have basically been speaking about an online version of news. But what about paper? Will printed newspapers survive?

I think some renaissance of newsprint will come – just like with the renaissance of watches – they have basically become a matter of status. It may be similar with printed newspapers – once everyone can read them on their phone, they will – for some people – become a status symbol like Swiss watches. Before that, a fall to the bottom awaits us. And I don’t dare to estimate how deep the bottom is.

Shouldn’t we perceive the end of the era of printed dailies and perhaps newspapers in general as something that needs to be expected in capitalism and a market economy?

The problem is that newspapers have an additional function than just merely surviving in the market environment. On one hand, it can be said that the dramatic developments in media will clean the market of many unnecessary journalists. On the other though, the development can be so fast that no newspaper will survive. This is a certain flaw of capitalism, because in a global environment, you can compensate for the disappearance of, for example, an airline by another airline. In the case of a newspaper though, this can’t happen due to the language barrier. Should a Czech or Slovak newspaper vanish, a German one will not replace it.

Is this a real threat?

Yes. It’s already happened in the United States – in some large cities, all local newspapers have disappeared. And the results of that are beginning to be felt. Americans claim that a clear relation between the existence of newspapers in a certain city and a level of corruption exists. The function of a newspaper doesn’t just lie in that it is read by people. – They serve as an important source of information – for example about corruption cases – for television news.

During the 1990’s, Czech newspapers concentrated heavily on high readership so much that they turned yellow. Are we not paying a price for not having – in Central Europe in general – raised readers of quality content?

Increasing readership – and the number of clicks on websites – made sense economically because that was the way to increase advertising revenue. But then came Google and Facebook, where most advertising has been moving in the digital era and suddenly, higher readership of a news website doesn’t guarantee higher ad revenue.

How come Piano has not been successful in the Czech Republic, while for example in Poland, it worked?

Simply said, Czech publishers still believe that advertising revenue from websites can grow and therefore they are not urgently forced to look for a solution to making online news readers pay for content. In the case of Poland, the key was the market leader Gazeta Wyborcza’s strategic decision to go the Piano way and others then followed. There is no such leader on the Czech market.

Piano’s payment system is expanding and – with the purchase of the American competition – recently gained 630 clients. The company now has more information about reader behaviour in the world. What does the analysis of this data say?

The biggest value of Piano lies in the fact that its clients – newspaper publishers – experiment in various ways and we can analyse what works and what does not. We can then advise other clients what steps to take, which type of content to charge for and so forth.

So what is an online reader like? What has Piano concluded?

A paying reader is much more loyal – not only are the more loyal ones the first ones to pay, but when they finally do it, they actually read more. The second significant piece of knowledge learned is that very often, readers appreciate and find value in things that journalists frequently look down on and don’t consider “real work” – things like press reviews, summaries, graphs, tables, etc.

You have travelled the world because of Piano and have met hundreds of newspaper publishers. Can you somehow summarize their state of mind?

It has very often been a horrific experience in one particular thing. For example, an 80-year-old publisher from Northern Italy, whose grandfather had been a news publisher 100 years ago is suddenly asking me, a young person, to tell him how to save his newspaper. Their experience has been that it’s enough to make a good newspaper and that alone will guarantee its survival. And now something has happened and they don’t know what.

Does this mean that a whole generation of publishers wasn’t prepared for change?

Yes. For the past ten years, they’ve been attending conferences which were supposed to prepare them for the transition to the digital era. But back then, it was all about getting as many clicks on the website as possible. Today, we are finding out that it doesn’t work. I think the success of the New York Times and some other newspapers lies in grasping very early on that readership of their website will not be proportional to ad revenue and that they need go another way, the way of a paying reader.

Has that been the point of Piano?

Yes. It was important to break down the barrier of web users’ resistance which claimed that information should be for free. It has taken some time but it’s changing, especially in the case of SME. The number of paying users of Piano has exceeded 20,000. Some publishers, however, were not satisfied with their number of paying readers and left Piano. It’s becoming clear that this national model, when a number of publishers join in one payment system, has its limits.

What are they?

It works well when publishers think about how to convince as many readers as possible to pay for content and how to make it easier for them. It doesn’t work when newspapers think about whether someone else in the national payment system somehow earns more money and, if so, then how to take it away from them. And lastly, it’s about how many enlightened publishers of the first type you can find as opposed to the second type.

If we simplify the whole problem, newspapers received two major blows in the past ten years. First was the onset of internet, which is pushing printed news out. The other was the dramatic fall of ad revenues while publishers were hoping advertising would just transfer from their print to digital edition. But this has not been happening because advertising has moved to, let’s say, Facebook. Is that correct?

Yes. Some media, which will live on advertising alone, will most likely still exist in the future, but that is not the case of quality newspapers we are discussing here.

Meanwhile, The Guardian seems to be taking a different path. They are trying to increase readership of their website and still do not charge for content.

I’ve met people from the Guardian and, in general, they are not opposed to charging fees for their content. They are only waiting for the right time; until then, they want to gain as many readers as possible. And for now, they are running at a significant loss.

Is there any model at all that at least raises hopes?

That would be the New York Times and The Economist. Their online versions have significant revenues from their paying readers. But those are global media.

Do you think that small national markets can follow this model?

Yes. But there are many obstacles. Sometimes, they are very trivial. For example, unlike in the United States, where the automatic extension of subscriptions is common, this is not the case in Central Europe and it is very difficult here. It wasn’t until last year that we managed to convince one bank to facilitate an automatic extension of its subscription for Piano and deducted the fee from the client’s account.

Why is that? Is it a cultural difference?

Yes. In the US, once you pay a subscription, they extend it every year automatically. If you want to cancel it, you have to ask for a cancellation. Here, it’s the other way around. We were worried about how people in Slovakia would react if we automatically extended subscriptions to Piano. But it went well and thanks to it, the number of subscribed readers has increased. This trivial technical detail is in reality quite deciding.

Are there other barriers, which if eliminated, would help gaining subscribers?

If, for example, everyone had an Apple smart phone, the problem would basically be solved. Publishers may have many objections to Apple, however, payment through Apple is technically very easy and doesn’t present the client – in our case a reader of online news – any obstacles.

Is there an option in case I want to read just one article which interests me and pay for it online without having to subscribe to the whole newspaper?

These are called micropayments, which exist but are very rarely used in practice because they are too complicated.

Are we then just waiting for a revolution which would enable such things? That I will open some article online, pay for it in a matter of seconds and I would be allowed to read it?

That is my dream too and numerous companies in the world are trying to solve this problem. So far, without success.

When they succeed one day, is there not a danger that the world will be divided into paying elites and the rest, which will be left with information for free and thus of much lower quality?

I think the world has been divided this way for quite some time now. For example, it is already divided into readers of Blesk (a Czech tabloid) and Hospodarske noviny (Economic /Financial times). I’m not even very worried that the Internet will cease to be an egalitarian platform, even if some people will have a better connection than others. Rather, I think the world of the Internet will adapt to normal society in which no one can just walk in wherever they want and demand a right to speech.

You are probably talking about those who comment in discussions below articles, and many of which tend to have psychopathic tendencies. Why can’t they be blocked?

A few years ago, the general opinion was that hatred would disappear from discussions after anonymity was banned. As it turned out, people continue writing offensive commentaries even under their name. You can see it on Facebook. We thought that the problem was the Internet, which provides anonymity. Today, we see that the problem is not the Internet, but society.

Why can’t these discussion forums under articles be forbidden or moderated the same way it’s done in the West?

Because it’s too expensive. The BBC has a whole department which monitors and moderates discussion comments. The department has 25 people. And no one here is daring enough to get rid of discussions completely.

Isn’t that a certain difference between us and the West?

I get asked a lot about this in the West, because this phenomenon of gigantic discussions with thousands of commentaries doesn’t exist there. They believe it’s due to people being forced to keep silent during Communism and now feeling the need to express themselves. Any restrictions are received very sensitively. Yet I think the group of people which comment and read these discussions is much smaller than it appears. Nonetheless, it’s a very loud group and that is why newspapers are afraid to get rid of discussions.

Is there any other difference as far as media go between the West and our part of Europe?

The biggest difference is between markets where people subscribe to news and those where they buy them in kiosks. In Germany, Austria or in Scandinavia where subscription prevails, a sense of stability exists and newspapers are not pressured to put such an emphasis on headlines and front pages. Newspapers are much more self-confident.

The internet as a public space has also created the blogger phenomenon. Journalists, mainly western ones, saw blogs as competition and considered them enemies. SME’s website, which you were heading for a long time, on the contrary opened up its space to bloggers. It was the first daily in the world that did something like that. How has the blogger phenomenon developed over time?

It has gone through a classic development curve: big expectations subsided. Nonetheless, the blogosphere has its place and bloggers on SME’s website still have many readers. Fewer people write blogs these days but more people read them. It’s natural selection.

What other natural selection awaits newspapers?

One question for example is whether it makes any sense to have a foreign editorial team or a sports’ section in a small market such as ours. Answering the question what a newspaper can afford to drop and what needs to stay in order to keep its essence is the hardest. And the answer must be found quickly, because there is very little time.

How do you read news? On mobile, paper or computer?

As far as news goes, I mainly get stories on Facebook, where I find links to particular articles in various newspapers. I then read those.

Isn’t it a little risky?

It’s been said that you make your own Facebook. The way I do it is I open the link, save the article on my computer and then I read it in the evening on my tablet. By the way, the tablet has greatly influenced the way newspapers are read, especially longer texts. It’s strange but the fate of newspapers may depend on whether tablets will cost $20 instead of $100 and how big their screens will be.

Which news website in the world do you like the most?

Ten years ago, I would have answered this question easily because back then, news websites were read by opening their home page. It’s no longer like that. I mostly read articles I get links to on Facebook. As a reader, I land directly in the article and don’t even see the home page. That’s how most readers behave these days. This is yet another shock for online newspapers – their homepage no longer tell its readers which content they should consider important. In addition, it further threatens ad revenue, always heavily focused on the homepage.

Comparing the homepage of SME and Czech news websites, can you see a difference right away? And what is it?

Media’s seriousness can be determined by a method of counting the number of headlines on the homepage. SME has many more than the BBC, but perhaps due to a lucky coincidence, it had the advantage of being the main player right from the beginning on the Slovak market and it could thus set the rules. Czech websites are different – for example, a Czech tabloid is much more aggressive than its Slovak counterpart and even Czech serious news websites compete for clicks with tabloids. Naturally, this influences their look and content.

Piano allows you to analyse reader behaviour in large numbers. What else have you found out about people that surprised you?

I was surprised to find out that people behave on the Internet differently than we had thought for a long time. As I mentioned already, they read long articles. According to original assumptions, they should not have done that. I was also surprised to learn that passionate opponents of paid content have become its passionate advocates. Salesmen are familiar with this phenomenon – once I own something, I don’t want to give it up. That is why the key task is convincing the reader to pay for online content at least once. At that point, the reader is willing to keep on paying and eventually becomes an advocate of this practice.

The newspaper market in Europe, and in the Czech Republic and Slovakia especially, is undergoing yet another radical change. I am talking about ownership changes. Penta, the Slovak financial group, infamous in connection with the Gorilla corruption case, has purchased several important media companies. According to latest information, its purchase of 50% of SME is about to take place. What do you think about that?

Should this happen, it will be the aftermath of the inability to transform the newspaper into a normal business. And for many newspapers, it’s already too late.

Are you saying that foreign owners are leaving because newspapers have not managed to stay profitable in our market, so they are, as a result, now being purchased by local oligarchs?

Yes. Newspapers ceased to be a normal business, in which it’s possible to foresee the future to a certain degree. SME daily has at least a small advantage due to income from Piano and a certain hope can be seen. But it doesn’t have to be enough.

What will be the journalists’ reaction if Penta enters SME?

Only a few years ago, we would be talking about how many journalists would leave the paper and how this will damage it. Today, the situation is different. Many newspapers have stopped fulfilling their socially beneficial function due to economic cuts. The question to be asked now is whether it’s better for society to have a small independent newspaper with about 30 journalists or a large newsroom, where the owner exercises its interests let’s say once a year. It’s a pressing question to which I do not have an answer.

You travel around the world, attending conferences as a Piano representative and media visionary. What do you start your presentations with?

I usually show the map of Europe and point to the spot where Slovakia is.

How did you come up with the idea for Piano in the first place?

It was really my friend Marcel Vass’ idea. He manages an internet advertising system called Etarget and realized that media would face large problems in a few years in the same way as his clients would. The idea as to how to ensure in the easiest way that readers pay for online news content was born from this realization. That is how the Piano national model, in which publishers agreed on common advancement, was created. It seems though that this national model has too many pitfalls. Nevertheless, we have gained many valuable experiences.

Having bought the US competitor, are you now the global leader in advancing online paid content?

Yes.

Is it utopia to think that one day, for a single Piano subscription, I will be able to read a number of global news and weeklies I now have to subscribe to individually?

I hope it’s not utopia. It should turn out this way one day because such should be the logic of capitalism – it would be convenient for most customers. Millions of dollars are poured these days into the development of payment technology and a huge race for the winner. It’s clear that many readers would purchase online news if it was easier. Therefore it’s a great opportunity and a way to make big money. In the end, we may be saved by technological development.

You left the position of CEO of Piano a year ago and remain only as one of the owners. Why?

It’s more a matter of business these days. And there are better people for that than me.

Why did you return to SME?

Because I see an opportunity here. The media market is a witness to such things, that – as is often said today – if you still have a job in the media, it has never been more interesting than now. All the wrong choices have basically been made and there is nothing else left to do other than freely experiment and ask such heretical questions as whether to cancel whole departments. In certain respects, it’s very liberating and frees much creative energy.

You then remain an optimist?

Basically yes. But it doesn’t mean that in some countries, it won’t end very badly.

After finishing journalism studies, Tomáš Bella joined the Slovak daily SME in 2000, where he edited a computer supplement and was involved in improving the SME.sk online portal. With 2 million users, Sme.sk is the leader on the Slovak online news market. In 2011, he founded Piano Media, company which helps publishers introduce payment for online news content. He returned to SME in 2013 as Deputy Editor-in-Chief. This year, Piano Media became the global leader in know-how on paid online content. He is married and lives in Bratislava.

Interview by Martin M. Simecka, published in weekly Respekt (No. 39, September 22, 2014)

© Copyright Economia, a.s. – Published with kind permission of the publisher.

Both on the speaker’s dais and among participants, there were several clear themes for news media publishers – “big data”, paid content, branding for news media, content packaging for targeted audiences, as well as clever approaches to creating new revenue from print.  All of these themes support the view presented by Earl Wilkinson, INMA global CEO during his closing presentation.  Wilkinson underscored that digital is here to stay.  The presentation, distribution and management techniques characterized by successful digital media companies will progressively dominate in the media management world.  Wilkinson emphasized that the adoption and evolution of these techniques are at different stages of development around the world.  But in every case, digital content creation and distribution and the supporting tools will be the key to future success in digital as well as print.

First among the digital themes has to be “big data” and its role in developing advertising and audience.  Frode Eilersten, Schibsted’s newly appointed Executive Vice President for Strategy and Digital Transformation presented the media group’s investment in data acqInnuisition and analysis to support advertising sales, product development and marketing.  Eilersten who recently joined Schibsted from US consultancy McKinsey highlighted the investment required in data acquisition and analytics, but also the need to build an internal business culture to make use of the data to solve complex business problems.  Data in particular was the “secret sauce” in advertising networks that allowed a publishing company to create extra value from the advertising presented to their audience.  Data and research was presented as one of the required success factors in the development and launch of paid content at sites as different as the New York Times and the TB+ premium content model developed by Tønsbergs Blad, from a small town southeast of Olso.

Content marketing or native advertising was another important area of discussion.  In content marketing, the role of advertiser and publisher are increasingly blurred. Advertisers are now supplying, choosing or at a minimum approving content for publication on news media websites in exchange for an “advertising” fee.   The advertiser recognizes that strong editorial brands offer special “brand benefits” to their audience.  By associating themselves closing with strong news brands, advertisers enhance their own brand credibility and recognition.  There were many potential implications of this discussion.  The movement of advertisers to create their own media and sidestep news media for brand advertising was one important implication.  Bennetton’s Colours magazine or Google’s advertising and marketing quarterly Think+ were cited as examples of this trend.  For publishers, content marketing creates the need for a clear and well articulated plan for how to create and present “advertiser content” in order to maintain the overall credibility of the news brand.  Finally, speakers highlighted how publishers will increasingly need to think about investing in the brand of their news media in order to create value in the publishing brand not in just the audience for an individual story.

Finally, the conference came back to its roots and presented some interesting programs to enhance the reception and profitability of the printed product.  Two examples of this approach stood out.  First, presenters from Die Welt Kompakt and NRC.Next presented content packages developed to target young professionals.  But other examples targeting children as well as women reminded the conference that targeted content well-delivered can still create an audience attractive to advertisers.   The second approach to the product development came from Sandy MacLeod, Vice President Consumer Marketing and Strategy at The Toronto Star who presented several examples of well researched and well delivered content products like improved TV guides and puzzle books provided for a price.  MacLeod made the compelling case that there is still revenue available for the print product, if you look for it.

The INMA European News Media Conference provided a wealth of examples for regional media companies to pursue.  For many in the audience the challenge is how to minimize the risk to developing, customizing these models to their different media markets.  For large companies like Schibsted, Axel Springer or Sanoma Corp, there are ample corporate profits available to experiment without too much risk.  Internally these companies have the ability to raise internal start-up capital and to recruit and train media managers with digital capabilities.   The challenge for smaller companies lies in finding resources, both talent and capital, to develop experiments.  But the need to continually experiment, measure, improve or discontinue new products was presented repeatedly as one of the fundamental requirements to success in the emerging multiplatform world of news media.

Is it the right time to erect a pay-wall?

Before making a decision, you should know the answer to the following basic questions:

• Is the volume of traffic to my site sufficiently saturated or does it continue to grow significantly, thus leaving some space for traffic growth (due to e.g. the growth of penetration of internet connection or consolidation on the local market)?
• Are the visitors to my site sufficiently loyal? What proportion of the traffic consists of returning visitors? What is the average amount of time spent on page per user? How many pages on average are visited by a user? How often do readers return to my page during a day/week/month?
• If traffic to my site drops due to the introduction of a pay-wall, will it jeopardize revenues from online advertising? What percentage of my monthly ad inventory is sold? What will it mean for revenues should the decline in the number of unique visitors be 10% and the decrease in the number of page views reaches 20%? (The percentage of drop in traffic here is only illustrative – it may vary according to the form of pay-wall and many other variables, however, it is advisable to prepare several scenarios that will make the theoretical implications of introducing a pay-wall clear ahead of time.)
• What are you going to charge for? It is not only your premium content that your visitors are willing to pay for. Do not be afraid to experiment – you can charge for many different features or services on your website, not just for access to content itself. To give you a few examples, you can charge for additional features to your online weather forecast, you can charge for readers’ comments to articles, m-version of your website, ad-free version, uncut versions of interviews, or earlier access to articles from the printed edition.
• Will you be the first on your market to introduce a pay-wall? If not, what success have your direct or indirect competitors had with the pay-wall? What did they do wrong and what can you learn?
• How popular and developed are online payments in your market? Are online transactions available and how wide-spread are they? Do your local banks support recurring payments (these are crucial for any subscription!)? Have your local banks developed an interface for e-banking payments? What are the most popular other forms of payment on the Internet (e.g. SMS payments, pre-paid card, cash on delivery, etc.) Note: without having the ability to enable readers to pay quickly and easily, the success of the introduction of charging for your content is very dubious.
• Will you develop the system of online subscription internally or will you prefer to use the service of external companies which specialize in pay-walls and have optimized tools and experience gathered from previous implementations?
• Do you have a clear idea about the pricing for accessing your content? Are you planning to conduct a survey among your online readers to determine the boundary between a “low” and a “high” price? Attempts to make online subscription cheap – or, more precisely, affordable to the public – have at large proven not to be effective. The introduction of a pay-wall does not lead to a mass conversion of visitors into subscribers and so it is reasonable to set the price not too low, so that effective marketing could attract random subscribers and then you have to try to keep them at normal price. You may also consider price discrimination for companies or organizations (discounts for volume licensing) while offering a price advantage for the financially disadvantaged (students, seniors).
• Will the introduction of a charge include any other forms of your electronic assets (e.g.  mobile phone version, mobile applications, tablets, e-ink device version)? Making use of “opt-out” print-digital bundle offers you an opportunity to boost circulation revenue by delivering more value to existing subscribers. Under this approach, print subscribers are automatically enrolled in a digital access subscription at an additional cost unless they opt out of the enrollment.
• How much will the implementation of the pay-wall (whether internal or external) cost? What fees are associated with the various forms of payments available for accessing your digital subscription? What time should be allocated for the implementation of the pay-wall? How much time will be allocated to marketing communications and/or free trial?
• What form of charging will best suit the needs of your title: do you offer specialized coverage, which cannot be found anywhere else on the market? Or is there a real danger that following the introduction of a pay-wall, the readers will begin to migrate to the competition where a similar type of information and its processing can be found free of charge? Is it therefore more appropriate to introduce a metered pay-wall?

“I don’t want to and I won’t pay”

First of all – charging for online content meets with resistance from readers, which can be summarized into two groups. One group protests in the following manner: why do I have to pay for access to content when I already pay for the Internet connection to my ISP? Why are revenues from online ads not sufficient to cover the costs associated with the production of content?

Another group of people opposes a different way: charging for access to content on the Internet is in direct conflict with the Internet’s very essence, i.e. the free dissemination of information. Restricting free access to information is a limitation of the freedom of speech and is thus in conflict with the principles of democracy.

I think there is no need to disprove these arguments – it is more than obvious that such arguments are based on distorted, sometimes naive ideas about the online ecosystem and free access to information. Of course, when free of charge access to an online edition of a newspaper has been provided for over a decade, naturally, a habit has been created and therefore the resistance to any change is very strong. And it will probably take several years from the introduction of a pay-wall for the average reader of online newspapers to adjust to the new paradigm – i.e. that not all sources of information on the Internet are for free.

Therefore, when deciding whether to start charging, it is necessary to develop a consistent communication campaign, which helps to explain the objective reasons for the introduction of charging. Results of a survey used in the study “Paying for What Was Free: Lessons from the New York Times Pay-wall” suggest that people react negatively to paying for previously free content but change can be facilitated with compelling justifications that emphasize fairness. Framing the pay-wall in terms of financial necessity moderately increased support and willingness to pay (find more here).

Which kind of payment will you choose?

There are several approaches to charging for online content. So far, the most effective way of charging for content shows to be the metered pay-wall – the publisher sets a limit to the number of articles accessible free of charge for a certain period of time (e.g. 20 articles per month); as soon as the reader exceeds the set limit, the system prompts for payment (or registration with subsequent payment). This method of charging for content does not fundamentally jeopardize your website traffic and thus does not ruin your advertising sales (it is commonly known that a vast majority of visitors is not very loyal – they do not read more than a few articles per month; of course, details of your visitors’ behavior and their reading habits need to be carefully examined prior to defining the limit for free articles in case of a metered pay-wall – some interesting insights might be found here).

In addition, the homepage or the section fronts tend to be excluded from the measurement of the number of pages visited by a metered pay-wall – visiting these is not real content consumption. You are free to decide what to exclude from the metered pay-wall count – I would strongly suggest excluding content generated by users (e.g. blogs, users’ comments to articles, discussion forums, etc.). In addition, I recommend imagining a situation when you do not want your visitors to be constrained by charging fees for access to your content (e.g. emergency situations or special coverage of important social events in your country, when you want Internet users to choose your coverage as primary source of information). As soon as you incorporate a functionality that disables the counting of traffic of a given article against the set limit of the pay-wall into your CMS, it will allow your newsroom to play an active social role.

Apart from the metered pay-wall model, you have an option to use the so-called “hard” pay-wall. Using this approach, you disallow your readers to access your content without having to pay a fee. This model, chosen by London’s The Times, had caused a substantial decrease in traffic to their website (reportedly over 90%). This form of a pay-wall model is recommended more for very specialized and exclusive type of information – not for general interest news. You can combine both models (metered and hard-lock), although it will probably lead to a confusion among your readers and it will be more difficult to explain why there are different rules in place within the same website.

What are the hosted solutions?

Micropayments (also pay-per-view) – Charging readers a very small amount of money for single pieces of online content never gained much popularity among Internet users. The main disadvantage comes from the fact that processing fees charged by the payment processor are quite significant. That is why the idea has never really taken off with publishers. An alternative would be micro-donations – users have the option to easily donate small amounts of money.

• Flattr.com – bank transactions and overhead costs are involved only on funds withdrawn from the recipient’s accounts.
• PayPal.com – offers support for micropayments to merchants for US to US, GB to GB, AU to AU, and EU to EU transactions only. This feature is offered at a special rate of 5% + $0.05 per transaction.
• Znak it! – creates a virtual currency „znaks“, which can be purchased through PayPal. Znak it! fee is 6% from a transaction.

Metered pay-wall – metering enables casual readers to continue sampling content for free – so it does not impact SEO or limit exposure for “big” stories that cause traffic spikes. The only readers asked to pay under the metered model are the readers most likely to pay – the ones getting the most value from your content.

• Cleeng – offers micropayments, metered pay-wall or subscription model. Pricing models and features differ, Cleeng charges a flat rate to publishers. There is no commission rate for conversions – more details.
• Press+ – focused on metered solution since 2009, the leading digital subscription system for publishers in the US, now serving over 440 affiliates worldwide.
• TinyPass – offers metered pay-walls, micropayments, and downloads as well. User’s initial fee is deposited on an account and debited by payments.
• MediaPass – metered and hard-lock pay-wall product, mainly designed for bloggers.
• Piano Media – a national pay-wall system, Piano gets a 30% cut of the proceeds and divides up the rest to partner sites. In 2013 Piano introduced metered system which can be applied in conjunction with their national pay-wall (hard-lock or freemium) model or separately. (Disclosure: The author of this article worked for Piano Media.)

Alternatives – value exchange for access to content, visitors choose to complete an action you define (engagement advertising, take part at a microsurvey) or they can subscribe to access the content.

• Google Consumer Surveys – consumer surveys work as a pay-wall: a reader visiting your content have the option of responding to a survey to access content for free.
• DoubleRecall – adds interactive advertising to users and then allows them to read the article after interaction for the rest of the day. “Captcha” content release system based on a premise – users may prefer typing in two ad words per article than paying for content.
• Social Vibe – similar to Double Recall, an interactive advertisement suited for integration into an overall monetary plan.
• SponsorPay – an advertising monetization platform emphasizes mainly mobile interactive ad experiences in exchange for access mainly to games.

However, look beyond these standouts, and the picture is much more mixed. Fortunately, with more paid content projects being launched in the last two years, we now have the data to understand the factors that determine success or failure.

While it is easy to point to the size and resources of the New York Times and the Financial Times, they alone do not guarantee success. While pursuing a very different paid content strategy than the FT and the New York Times, The Times of London has not been as successful with its paid content model, and it is backed by the resources of News Corp. Away from the big beasts of Western Europe and the US, Piano Media works with many smaller publishers and has shown that size doesn’t necessarily matter.

As Tomáš Bella, CEO of Piano Media, said in our previous coverage of paid content, user experience does matter.  It is a point that Earl Wilkinson, the executive director and CEO of the International News Media Association, echoed in talking about the differences between success and failure in paid content strategies. Wilkinson said:

What media company executives tell me privately, across the industry worldwide, is the radically different performance in digital subscriptions has nothing to do with content or design. It has everything to do with a very poor user sign-up experience online.

Your audience expects the easy user experience and excellent customer service of major e-commerce sites, and if you can’t provide that, your paid content strategy will suffer.

Research and data are key

To deliver the best paid content user experience, both Piano Media and the New York Times used research and analytics to refine their approach.

Paul Smurl, Vice President, The New York Times Company, speaking at the Digital Innovators’ Summit in Berlin earlier this year, advised companies to “listen to readers and take their guidance”. It takes “rounds and rounds of research, in person”, he said.

For most companies and especially small independent news organisations, this kind of intensive research costs too much. However, this should be one of the criteria you use when evaluating a paid content company to work with. How deep is their research, not only generally about their own paid content products, but also what kind of audience research can they provide to you.

Wilkinson pulled no punches in criticising the poor user experience many news publishers provide when they are asking their audiences to pay for content.

The consumer expects Amazon. Instead, they are getting a clunky registration process that is the product of poor engineering.

And he believes the reason for such poor engineering is clear.

There are too many print people touching digital (and not enough digital people touching print) in the news industry. Either change the people or outsource this process.

Getting the user to the sign-up page

Of course, you first have to get a potential customer to your sign-up page, and as we recently covered, email and social media marketing are key in getting the customer there, according to British magazine publisher IPC Media.

As most publishers know, building a digital audience is relatively easy, but engaging that audience enough to be able to generate revenue from them is another thing. IPC media head of subscription marketing Beatriz Montoya said at a Media Briefing conference in London that the publisher was considering allowing readers access to some premium content if they left their email. Many other sites have added pop-ups that encourage readers to sign up for newsletters.

Email registration is the first step in engaging customers more deeply with your content and encouraging them to subscribe. It gives you a communication and marketing channel to your online audience, but when developing your multi-platform sustainability strategy, it is important that your digital marketing works in concert with your traditional marketing strategy.

Knowing your audiences better

The heavy use of data does not end in designing your paid content offering. In fact, while paid content and advertising are often seen as competing strategies, they are complementary. Digital paid content strategies are about deeper engagement with your audience and deeper knowledge about your audience, and that can be a very attractive proposition for advertisers.

Business Day in South Africa launched the first paid content strategy in the country, BDLive, earlier this year. They use a metered model, where digital audiences get some content for free before being asked to pay. It is similar to the approach used by the FT and the New York Times, and they have worked with Evolok to provide the sign-on and management system.  South African website The Media Online looked at progress at BDLive, including how it is leveraging deeper user data to improve advertising performance.

For advertisers, the subscription model relies on sophisticated analytic tools and data gleaned from user profiles and user behaviour to enable advertisers to construct clear, precisely defined campaigns with minimal churn.  Since its launch, BDlive has attracted a number of campaigns from major South African companies and sold sponsorship packages in a range of niche areas to both large and small corporate brands and public sector firms.

Keeping your subscribers

Of course, gaining new digital and print subscribers is one thing, keeping them is another. In addition to the success of the metered model, many publishers are coupling this with a bundled model, in which they combine print and digital or desktop, mobile and tablet apps in a single subscription. To make this print-digital bundling possible, it is important for news groups to make sure they have CRM, customer-relationship management, systems that are up to the task.

The sign-up page may be turning away would-be subscribers, but Wilkinson believes that another reason for poorly performing paid content strategies is the poor integration of print and digital CRM systems.

Obsessed with delivering a perfect “print + digital” sign-up experience, publishers can’t get their back-end databases to talk with each other efficiently enough – and that back-end difficulty is getting translated to the front-end.

How many times have you gone to a website to buy something and stopped because the shopping or payment process was too difficult? That is what too many potential customers are finding when they try to pay you for your content. The industry has been focused on print and digital editorial integration, but Wilkinson is highlighting that commercial integration is just important.

As more publishers adopt paid content strategies, we now know that people will pay for digital content and we also are beginning to understand what determines success or failure. As you pursue your paid content strategy, remember:

• Digital audiences have high expectations when it comes to ease of use. Use data and research to make sure you aren’t turning potential customers away.
• Use the data you gain from your paid content strategy to deliver better results for your advertisers. This will allow you to grow your subscription and advertising revenue.
• Make sure your CRM systems across print and digital work together so you can deliver the best customer experience to your subscribers regardless of the platform.

Email marketing seems so low-tech, but it is enjoying a resurgence because it is inexpensive and, if done well, it works.

In an article on technology news site Wired, highlighting an “email newsletter renaissance”, former Hufftington Post Chief Technical Officer Paul Berry said:

As much as we’re told e-mail isn’t sexy, no one sends more e-mail than Facebook or Twitter, and the reason they do is we’re all on e-mail and it brings you back.

An email marketing success story

Two years ago, the Foundation for New Journalism in Iberoamerica launched a programme to provide technical and commercial skills to the rapidly growing number of news and information start-ups in Latin America. As part of this programme, 10 start-ups were chosen “based on their journalism and ethical standards, and their potential for growth” to take part in an entrepreneurial journalism programme.

The results were impressive leading, on average, to an 80 percent increase in site visits across the start-ups, according to James Breiner, writing for IJNet and News Entrepreneurs.  A Salvadoran sports site was a standout success:

El Salvador FC, a soccer website, increased its total visits by 264 percent to more than 1 million by employing a series of strategies, such as updating news at least 10 times a day, promoting news through email and seeding its news in other blogs and web pages.

Obviously, email was part of a broader strategy of regular updates and a wider social media campaign, for example, successful Facebook campaigns drive about 20 percent of the traffic to the site. But you don’t have to choose between email and social media – an effective digital marketing and engagement campaign can and should use both.

It is also important to point out that simply building audience doesn’t guarantee sustainability; despite its success with increasing traffic, El Salvador FC is not yet profitable. However, as the site works towards the break even point, its email and social media strategy has added audience with low costs, although it is time intensive. El Salvador FC founder and editor Carlos Lopez Vides said:

This type of marketing costs us nothing but does require a big time investment. It recognizes the power of the users to share and recommend the product. We, the editors, have to empower the users to maintain their interest and support.

As Lopez Vides says, email marketing is inexpensive. A study in the UK found that it a fraction of the cost of other marketing methods such as direct mail or telemarketing. It was even cheaper than SMS marketing. The same study found that it also had a higher response rate than direct mail or internet advertising, although lower than direct mail or SMS marketing.

How to create a successful email campaign

Just as with your digital strategy in general, data will be key to the success of your email newsletter marketing efforts, and with the renewed interest in email newsletters as an audience building or marketing tool, we have access to data on best practices even before you start.

Email marketings software company GetResponse analysed 21 m messages sent during the first quarter of 2012 to determine the best open and click through rates and also the highest engagement times. The analysis found (emphasis theirs):

One of the most important conclusions is that sending newsletters during readers’ top engagement times of 8 a.m. – 10 a.m. and 3 p.m. – 4 p.m. can increase their average open rates and CTR by 6%.

However, they also point out that you need to analyse your own data to make sure you understand how your subscribers behave.

Another factor that can affect open rates is the subject line of your email. Another newsletter service provider, MailChimp, analysed 40m subject lines to see which ones worked best. They even have a tool that will give you a rating of words used in your subject line based on historical response rates. They compared the best performing subject lines, email newsletters that were opened by 60 to 87 percent of recipients, versus the worst performing subject lines, those that were only open one to 14 percent, and they found:

On the “best” side, you’ll notice the subject lines are pretty straightforward. They’re not very “salesy” or “pushy” at all. Heck, some people might even say they’re “boring.” On the “worst” side however, notice how the subject lines read like headlines from advertisements you’d see in the Sunday paper. They might look more “creative,” but their open rates are horrible.

That doesn’t mean that you can’t be creative in your subject lines, but their research found that it was all about expectations. “The best subject lines tell what’s inside,” they said.

Fortunately, email newsletter software such as GetReponse and MailChimp has become increasingly sophisticated, allowing you to do A/B testing. This feature allows you to test the performance of subject lines or delivery times, for example, Mailchimp will send the same email using two subject lines to a small percentage of your list, then automatically sends out the email with the best performing subject line once the trial period has ended.

Marketing your paid content offering

Email registration for newsletters has also been used as part of a paid content revenue strategy, allowing those who register to access premium content on your site.

As digital advertising rates dropped, publishers have used email newsletter signups to gain more information about their users, which they use to deliver more targeted advertising and as part of the marketing strategy for their paid content offerings.

British magazine publisher IPC offered email newsletter subscribers access to ‘certain content’ to entice readers to sign up for newsletters or register with sites, says The Media Briefing. Once IPC has an email address, it works to gain even more data about these users so that they can tailor marketing messages about subscriptions and paid content options.  It is a typical funnel marketing strategy.

Email marketing may seem simple, but successful news organisations and media companies are using it in incredibly sophisticated ways as a means to increase their audience and audience engagement and also as the first step in marketing their paid content offerings. The key is to make sure that you’re taking advantage of all of the tools that modern email marketing software delivers so you can get the best results.

Defying the print media crisis in many parts of the world, Latin American newspapers and magazines continue to enjoy rising circulation and advertising revenue due to growing middle classes and economies left largely unscathed by the financial crisis.

However, internet use is growing rapidly in Latin America, and traditional media groups are exploring digital paid content strategies to try to protect and consolidate their dominant position, especially in the face of competition from new digital-only news organisations.

For instance, the Brazilian newspaper Folha continues to enjoy sustained growth in print circulation while also developing a dominant market position online, and it has become the poster child for paywalls in Latin America with the launch of a metered paywall strategy in January 2012.

While metered paywalls, in which users are able to access a certain number of articles before having to pay, are one of the most popular strategies globally, it is just one approach in use in Latin America, a reflection of the diversity in media markets across the region.

Latin American media experiment with different models

Until 2011, digital paid content strategies were the exception not the rule for news websites around the world. In the US and in Western Europe, paid content strategies have been driven by a drop in print advertising and the inability of news organisations to make up for that fall with digital advertising. News groups had to diversify their sources of revenue. The major shift in the industry came after the New York Times rolled out its metered paid content strategy in 2011, signing up 668,000 digital subscribers, according to its most recent quarterly report. Since then, more than 300 newspapers in the US and newspaper groups in the UK and Germany have implemented paid content strategies, and many have followed the lead of the New York Times and rolled out metered paywalls.

This success has given important legitimacy to paid content strategies globally. But for Latin American news groups, the economic imperative to develop paid content strategies is less, as performance in their print business remains strong. As in other regions, digital media market conditions vary widely in Central and South America, and there is no one-size-fits-all paid content model.

In our last look at paid content strategies, we highlighted the wide range of models in use as news organisations move beyond the binary debate of paid versus free and experiment with a wide mix of models. To recap, the major approaches include:

• Hard paywall with no access to digital content to non-paying customers.
• Free online but paid on mobile.
• Hybrid paid and free networks.
• Freemium strategy where general content is free but specialist or premium content requires payment or subscription.
• Long-form magazine or investigative journalism is repackaged and sold on ebooks or tablets.
• All access bundles in which subscribers pay a single price for access in print and digital platforms.
• Metered paywall in which a certain number of pieces of content are free but payment is required above the limit.

Of these strategies, all-access bundles, metered paywalls or a combination of both are proving to be the most popular and the most successful, and often, all-access bundling is part of a metered paywall strategy.

Market conditions help guide the choice of the most appropriate paid content strategy, and with the diversity of markets across Latin America, media companies have implemented a number of different approaches.

All access bundle and metered paywall – Folha (Sao Paulo, Brazil) – Folha was the first newspaper to implement a metered paywall in Brazil in January, 2012. They initially charged only for their tablet and mobile phone apps, but in in June of that same year they included their website.

Folha gained 45,000 new digital subscribers during their first year. Since then, many other newspapers have either followed suit or are studying how to implement a similar strategy.

When Folha launched their paywall, the rules were that each visitor would have 20 free articles per month while the homepage, cultural schedule and a site for children remained free. After reaching the 20 article limit, readers would have to register some information, then they would have an additional 20 articles before they had to pay.

In March 2013, the limit was lowered by half to 10 free and an additional 10 after registering. The ability to change the number of free articles is seen as a strength by proponents of the metered strategy. Unlike the New York Times model, which does not count pages accessed via links from social media towards the monthly limit, Folha does not make this distinction.

Folha offers two types of subscription:

• Those that subscribe to the print edition and have access to the digital products.
• A digital subscription that enables access to the content on any of the platforms.

According to Roberto Dias, Digital Content Director, Folha’s website has 21 million unique visitors per month, with over 270 million pageviews. “Today, every article by Folha is read by a lot more people than 30 years ago. What we really need to do is to look for sustainable models for the journalistic production process, which is expensive.  I think every newspaper is going to find their own; we are looking for ours as well.”

Hard paywall – Reforma (Mexico) – Since 2002, the Grupo Reforma have had a paywall on their websites and charged online subscribers 20% less than a paper subscription.

This was a means of protecting the print business, according to Jorge Meléndez, vice president of new media in an interview with the Knight Center.

After nine years, Reforma has 50,000 online subscribers and its daily circulation reaches 300,000. Currently, they have 5,555 new users per year. However, when they started the paywall, traffic shrunk by 30% and it took one whole year for it to return to its original level.

They currently offer a digital-only subscription that is good for up to four devices and a paper subscription that includes access for up to six devices. Offering bundles that encourage readers to continue to receive the newspaper is common, especially because print advertising still commands a dramatic premium over digital ads.

Digital kiosks – This model, similar to Apple’s Newsstand,  is particularly prominent in Spain, where Orbyt, Vocento and Kiosko y Más are some of the market leaders. In most cases, these kiosks provide access to a PDF version of the publication (similar to the one in print) and people can buy one or more publication from the kiosk at a price that is on average 50% of cover price.

In Latin America, kiosks are a fairly new concept, though one that is being developed.  One of the first to operate in the region is a Colombian kiosk for magazines called Pasalapagina.com; they offer access to 30 Colombian magazines for a monthly subscription fee.  According to a market survey, the amount people are willing to pay at the kiosk in Latin America is about 50% of cover price.

Platform specific strategies in Colombian media –  Semana, a political magazine, is the only Colombian media outlet ever to charge for the content they offer to tablet users.  Initially, the magazine launched a free app that reached over 110,000 users. They then introduced a fee charging for the digital subscription.

El Tiempo and El Colombiano, two of the leading dailies, are also working on paywall projects that they hope to implement in 2014.  Currently, these newspapers have free access to their digital editions and rely on online advertising for revenue.  However, they also offer a product called e-paper (an electronic version of the newspaper) for a discounted price.

In March 2012, El Colombiano, located in Medellin, implemented in its tablet edition a ‘freemium’ model which, after registering, allows the user to download the newspaper in its PDF version and have access to other publications such as smaller neighborhood newspapers and magazines. During the first month they attracted 7,000 users.

Markets in transition

When developing a paid content strategy, publishers and media executives will need to consider the specific conditions in their market to determine whether a paid approach is appropriate and, if so, which strategy to choose.

Determining the market opportunity is key, and it is important to consider the unique market conditions in your country, both in terms of digital consumer adoption and digital market development.

The vast differences across Latin America help explain the wide range of paid content models being used. The overall level of internet penetration is currently at 42 percent in Latin America, but that only tells half of the story. Internet use varies widely, ranging from 66 percent in Argentina and 58 percent in Chile to 16 percent in Honduras and Guatemala, and 14 percent in Nicaragua.

Paid content systems involve costs in terms of development and infrastructure, and if internet penetration is too low, it might be difficult to generate meaningful revenue. There is also the issue that many Latin American consumers are not yet comfortable with sharing credit information online. However, it’s important to note the rapidly changing market. The online population of Latin America grew faster than any other global region in 2011, rising 16 percent to 129 m visitors in December 2011, according to The 2012 Latin America Digital Future in Focus report by comScore.

While Latin American internet users might be fewer in number than in some other regions, the intensity of their use to some extent counterbalances this. As in other parts of the world, social networking is driving much of the growth in internet use. Moreover, Latin America is home to five of the most engaged social networking markets worldwide.

As internet use continues to grow in the region, the digital market opportunity both in terms of paid content and ad-supported strategies will increase for news organisations, but so too will new digital competition.

Mobile segmentation strategies in which users pay for the convenience of accessing content on mobile devices such as smartphones and tablets, while being able to read it for free on laptop and desktop computers, face challenges in Latin America. Tablet use is lower and growth has been slower due to pricing, limiting the immediate opportunity to use tablets as part of a platform segmentation strategy. According to market research company GFK, it is estimated that in Chile there will be 400,000 tablets by the end of 2013, for about a 2 percent market penetration.  In Colombia, 7.4% of the population owns a tablet, but tablets rank first when it comes to desired possessions. In the poll, 20 percent of Colombians indicated they wished to have one, according to an IPSOS-Napoleón Franco poll.

Of course, mobile phone use is high and smartphone use is growing. It is important to remember there are great differences between countries in the region, so fragmentation will be key. In Brazil, there are 27 m smartphone users, and in Mexico there are 23 m smartphone owners. Mobile phone penetration is 55 percent across the region and much higher in individual countries, such as Colombia with 95 percent penetration.

Other challenges exist including limited bandwidth and the broad prepaid user base. In countries such as Guatemala, 94 percent of mobile phone accounts are prepaid, and even in  Brazil, 80 percent of subscribers use prepaid accounts, according to the GSMA, a mobile phone trade group. Prepaid subscribers tend to be more price sensitive

All of these factors need to be considered when building a paid content strategy around mobile phones.

Facing the challenge from digital content start-ups

The diverse market conditions make the challenge facing the industry a complex one.  On one hand, there are the opportunities presented by the increase of the potential audience both for the print edition and its digital counterparts. On the other, there is the risk of squandering them by cannibalizing their own print product. A premature move towards full digitalization at this time may sentence healthy print editions to an untimely death, but failing to develop digital products and revenue streams may cede future digital opportunities to new competitors.

The Colombian experience in this regard is interesting: fast-growing all-digital outlets such as La Silla Vacía and Kién & Ké are gaining ground on their traditional media counterparts, particularly in the younger demographic.

Most current strategies focus on differentiating the various digital products – online, on tablets and on smartphones – in order to serve the needs of the audience, while keeping an eye on the fierce competition from other digital-only media outlets. These digital competitors are probably betting on a faster rate of decline for the traditional model, especially as Latin America moves closer towards its development goals.

Audience measurement key to strategic choices

Many experts agree that traditional print products in Latin America still have a bright future ahead of them. In order to navigate the complex set of strategic choices across the markets of the region, newspapers and magazines have developed or need to develop tracking features to better understand their users and the ways they are consuming information.

For example, a newspaper might be interested in knowing their audience breakdown based on users in cities versus smaller towns, or what percentage of readers are coming from abroad.  Not all users are the same and not all of them are willing to pay the same; similarly, advertisers might favour a certain category of users or a certain pattern of online behaviour.

The next step for traditional media in Latin America is to figure out what kind of digital strategy is best suited for their particular publication. Technology will provide many of the tools to make this assessment and come up with creative ways to court the audience and develop digital products with a range of revenue streams.

The amount of information available and the level of depth of niche-specific content are also important factors when considering a paid content strategy.  For instance, sports content in Latin America is a type for which users have been more willing to pay; on the other hand, music and entertainment news content is rarely purchased.

In the end, innovation and creativity are a must when it comes to designing the models that will govern the region’s paid content strategies.  The question is, in the interim, while traditional newspapers still enjoy healthy circulation and advertising revenues, will they invest in integrating newsrooms and developing radically different models to stay ahead of the digital game, or will their current success lock them in a potentially obsolete way of doing business?

Malaysia, like many southeast Asian countries, tightly controls traditional print and broadcast media, but sensing an economic opportunity, the government decided to take a hands off approach to the internet. The internet would be free of the censorship and controls that the government exercised over print and broadcast media. “This provided a window of opportunity for Malaysiakini to establish itself as the country’s first free and independent media, albeit online,” site co-founder and CEO Premesh Chandran, wrote in the 2010 IPI-Poynter Brave New Worlds report (PDF).

At the MDLF Media Forum in Jakarta, Chandran shared how the site was able to convince their audience to pay for Malaysiakini’s independent journalism. Emphasising their position as an independent source of news and information was key. “The rest of the traditional media is very much controlled by the government so our readers come to us for an independent perspective on issues,” Chandran said.

It was a selling point to readers, but a challenge to attracting advertisers in the years immediately after the site launched. Early online advertisers were government-linked companies and would hardly be willing to support an independent news site like Malaysiakini.

In 2002, the company realised that it needed to explore other forms of income. “Subscribers, they are the ones who want this independent news so let’s start charging a fee,” he said. Staff were initially sceptical, and the site faced unique challenges, including having to provide an anonymous payment system because the site was seen as “politically sensitive”. They developed their own pre-paid card and were able to convince a convenience store chain to sell it.

They started out charging the equivalent of about $20 to $30 a year for their service. Now, the annual subscription is about $50.

The unique nature of their content helped them earn subscribers. “When we launched (subscriptions) in 2002, we were really the only portal in the country offering independent news,” he said, adding:

It is very important for a site to ask why does it exist, what is unique about its content. Who really wants its content? Who is going to be wiling to pay for this content? If you don’t have a differentiator with your competitors, it is going to be really difficult (to charge for content).

However, Chandran also credits Malaysiakini’s success with changes in the country. “People are desiring more democracy. People are desiring justice. People are saying no to corruption,” he said, adding:

People would subscribe to Malaysia not just to read us but as a way to support more independent media, which in a way is supporting a change in democracy in Malaysia.

Malaysiakini taps into these changes by making their readers feel a part of something larger: a movement for change. “People are proud to say they are a subscriber to Malaysiakini … that Malaysiakini means something to them, that Malaysiakini has changed something in their lives,” he added.

Malaysiakini’s paywall is like many paywalls these days, providing some content for free as an enticement for new subscribers. The letters section is free, and they provide one free article a day. “But 90 percent of the site we charge for, but only the English and Chinese parts of the site are for subscribers only,” Chandran said. The Malay and Tamil parts of the site are free, both because credit cards are less common in Tamil and Malay communities and Malays make up the majority of the population. Malaysiakini wants to be able to reach the large Malay population.

For news organisations that want to develop a paid subscription system, he said, “people don’t mind paying when they know they are getting something … but keep it simple.” He compared it to the satellite TV subscription model, and like that model, he believes that it will work in many countries around the world.

The Wall Street Journal and the Financial Times both charged for their content, but apart from the South China Morning Post in Hong Kong and some minor, but oft cited examples, such as the Arkansas Democrat-Gazette, we had very few examples of digital paid content success for general newspapers. With both The Wall Street Journal and Financial Times being internationally-recognised business newspapers, they were seen as exceptions to what was seen by some as the rule that people wouldn’t pay for general news and information online.

The New York Times paid content launch has widely been seen as a success, and the trickle of news groups adopting paid content strategies has become a flood. A fifth of newspaper websites in the US now require payment for digital all-access, a figure that has doubled over the past year. Much of that growth has come from one of the largest US newspaper groups, Gannett, which is rolling out paid content strategies across 80 sites. Through a mix of higher print cover prices and the new digital subscriptions, Gannett’s CEO Gracia Martore told analysts that the company would meet its target of increasing circulation revenue by 25 percent by the end of 2013, which would add $100m of operating profit at the large group. Gannett’s newspapers are local and regional rather than the international media brands of the New York Times, the Financial Times and the Wall Street Journal.

The rush to roll out paid content strategies goes beyond the hard-hit US newspaper industry. Paid content projects are appearing across Europe, with German publishing giant Axel Springer announcing the end of the ‘free beer’ era on the internet and Slovakia’s Piano paid content system expanding to Poland. With the growing number of paid content projects, we now have a lot more examples of what works and what doesn’t.

Successful paid content pioneers have found:

• Hybrid systems are more effective than total paywalls such as The Times in London.
• Analytics are key to understanding what people are willing to pay for.
• Focus on usability, making the paid content system clear and easy to use.
• Success also depends on how well you market your paid content options.
• Digital subscriptions are simply part of your total subscription strategy. Many publishers are bundling digital access with print subscriptions.

Hybrid systems work better than total paywalls

Publishers have tended to view paid content in black-and-white terms, that it must be either completely closed or completely free, said Tomáš Bella, the founder of Piano Media. Bella was at the Slovak daily newspaper SME when it put all of its content behind a paywall in 2006. “The revenue was so small that it was not worth running the system,” he said.

Now, he adds, “from binary – free or paid – we are moving to a much more nuanced model.” People are moving to mixed models so as to keep digital advertising revenue as high as possible while also adding digital subscription revenue. Piano pioneered the national paid content model, which the company likens to a cable television model, where the subscriber pays a single fee to access content from a number of channels or sources. Many of the sites have a hybrid model, a mix of free and paid content, on their sites.

This more nuanced approach has led to a number of different models in terms of the balance of free and paid content for Piano customers. Slovak weekly news magazine Týždeň has experimented with digital content in the past, by selling a text-only copy online. However, their audience didn’t embrace it because it differed greatly from the magazine, which is known for its photos that make up about 40 percent of each issue. Most avid readers would wait until they could buy the printed magazine rather than pay only for the digital edition.

In 2009, they launched an updated website with staff blogs and blogs from external contributors as well, greatly increased the amount of video on the site and included more images from their award-winning photographers, said Federika Homolková, managing director of publishing house for Týždeň.

More than half of Týždeň’s content is only available to Piano subscribers, including content from the print magazine and more than half of the videos they produce.  With digital advertising rates declining and the ongoing economic crisis, creating so much original content would have been difficult to sustain without the digital subscription revenue, Homolková said, adding:

I’ve met with managers of newspapers from Poland, Germany, Holland. Can your website survive just on advertising? No. You need another source of revenue.

This year, Piano expanded to Poland, bringing together major daily newspapers, magazines and Polish National Radio to a national paid content system. Gazeta Wyborcza has joined the scheme, making about 10 percent of their content, as measured by pageviews, for subscribers only, according to Michał Gwiazdowski, digital content publisher for the newspaper.

Before joining Piano, Gazeta Wyborcza only published some content online from its special supplements weekend magazines and a special supplement for women, and what content it did publish digitally was published only after a long delay following the release of the printed magazine. However, now the content for subscribers is published on the same day that the print edition is released, Gwiazdowski said.

Another hybrid model is the popular metered paywall, in which a customer is able to read or view a certain number of pieces of content free, anywhere between five to 20 pieces of content, before being asked to pay. This model has proven popular because many website visitors are ‘casual users’, reading only a few articles a month, and it only asks the most loyal audience to support the site. The commercial benefit is that the site remains open to search engines and social media, which helps to maintain traffic and therefore digital advertising rates.

The New York Times has seen only “modest reductions” in page views and unique users since introducing the metered paid content strategy last year, according to Michael Golden, vice chairman of the NYT Company. Fifteen months after launching the strategy, the newspaper now has 592,000 digital subscribers, according to a memo from New York Times publisher Arthur Sulzberger Jr. to staff. The memo included details of the third quarter results at the newspaper, and the new figure represents an 11 percent increase in subscribers over the second quarter.

Analytics: What content are your customers willing to pay for?

For sites offering a mix of free and paid content, the next question is what content to charge for. “It`s not as obvious as many think,” said Gwiazdowski, and with Gazeta Wyborcza, just starting with the Piano system, he will be watching user statistics closely to improve their paid content offering. To help Gazeta Wyborcza and other members of its scheme, Piano deeply analyse how audiences use their customers’ sites and consume content before making recommendations on the free-paid content – i.e. hybrid models with a mix of free and paid content – options.

Based on the analysis of traffic at member sites, Piano has experimented with new ways of dividing the paid and free content. For instance, some content might be available free to readers in the country but require payment for readers coming from elsewhere. With its national payment system, they have found that charging for early access rather than archives has been more effective. They have even experimented with charging for an old site design that some users prefer to a new design. “Publishers should understand that they bring more value than content to readers. … They often don’t grasp that the structure and design of the site is valuable,” Bella said.

It is only possible to make informed choices about these options with research. At the recent WAN-IFRA World Editors Forum in Kiev, Golden said, “Your customers will tell you what they want.  Are you listening carefully?” The New York Times researched what readers wanted and what they expected before rolling out its paid content strategy. They also did research on the prices that readers were willing to pay and also the content bundles that were most attractive.

The New York Times can afford to spend the money, but for smaller publishers, this is where companies like Piano Media and Press+ help by providing research and analytics support to help publishers understand how to structure their paid content offering.

Usability and ease of use key to customer adoption

This data is also key in optimising the usability of the paid content system. This is one of the reasons that led Bella to suggest a national payment system because the data suggested that a single bill, a single username and password would be appealing enough to users and deliver enough revenue to publishers to be attractive.

Golden said at the World Editors Forum:

Such a plan touches every part of the organization, IT, finance, marketing, editorial, advertising, production. Your customers expect a wonderful experience and you have to unite to deliver it.  The standard is set by Apple, Amazon, Google. We have to measure up.

Bella compared the attention required to e-commerce sites who meticulously measure the performance of their sites and optimise every detail of their sites, down to the look of individual buttons.

Marketing: Communicate the benefits to your audience

Golden echoed that sentiment when he explained how marketing had been key to the success of the New York Times’ paid content plan, and he urged editors to aggressively promote their paid content offerings. He said, “Act like an e-tailer.”

Bella said Piano has run 10 marketing campaigns in the three countries in which it operates, Slovakia, Slovenia and Poland.  “How you communicate the benefit, makes a big difference,” he said. You need to combine selling the paid content offering and explaining what service the newspapers are providing.

With Týždeň and Gazeta Wyborcza, both publications are either creating more original content or posting more content online due to the support of digital subscription revenues. “I think we helped ourselves – we gave more content than before, so we were ‘opening’, not ‘closing’ content,” Gwiazdowski said. Communicating that to audiences is important in selling the shift to paid content.

Some marketing solutions that have proven successful include:

• Email marketing that includes the best articles from across Piano’s national networks. Users see this as a new, valuable service. The New York Times has email newsletters promoting its content, which entices readers to return to the site more frequently and hopefully to become subscribers.
• Sites have created special sections to highlight their best premium content to entice new subscribers.
• Homolková at Týždeň said that making the case that the payment scheme costs only a few Euros, the cost of two beers, and delivers a range of content has also proven effective.

In addition to traditional marketing channels, Gwiazdowski said that Gazeta Wyborcza also tried some novel methods targeting their online audience. “We talked to people (in the comments) under articles, on Facebook, via e-mail. We’ve been explaining what readers can get and why we need to charge them for our content. I think talking with people helped,” he said.

Another strategy that is working is the “all-access” print-digital bundle. Publishers in the US are finding that they can charge higher rates for the bundles “…if you tell customers ‘we’ll get you our content however, wherever you want it’”, says US newspaper strategist Ken Doctor.

While Piano has learned successful marketing strategies, they have also learned marketing strategies that do not work. Early on, the company “let ourselves be forced to say that ‘you are paying so the quality of journalism will go up’”, Bella said. One week after the paid content system launched, some customers were demanding to know how the quality had improved with the launch of the system.

Bringing it all together

One of the key things that Bella learned with Piano and that the New York Times experienced is that paid content success is much more than launching a system to take payments. You’ll need to analyse carefully how your audience uses your site to gauge what they are willing to pay for, and you’ll need to do market research to fine tune other aspects of your strategy. This will also help you optimise the usability of your site for your strategy. You’ll also need to effectively market your strategy, stressing not only how being paid for content benefits your news organisations but also how it benefits your audiences.

Gazeta Wyborcza joined Piano in August, but the scheme has already exceeded expectations, Gwiazdowski said. In the long term, by 2015, he believes that “paid content will be one of the biggest sources of income for publishers like us”.

The revenue from Piano has proven critical for Týždeň as competition for online advertising has grown from Google, Facebook and the increasing number of websites. Fortunately, the revenue from Piano has been growing month-on-month, Homolková said. Paid content revenue has meant that the Týždeň’s website is financially sustainable.

This isn’t to say that digital sustainability is simply a case of developing a paid content strategy. Publishers need to understand that it is more complicated than simply adding a payment system. To succeed, publishers need to think carefully about the marketing and user experience and whether they have the resources to do it, Bella said, but if publishers take this comprehensive approach, then a paid content strategy can bring good results.