What is a paywall? Basically, it is a membership site. It is a name most commonly used for newspaper websites. With a paywall, that just means that you have installed a system on your website where people must pay to view the contents of your site. Really it is no different than any kind of website where you must become a member in order to participate on or read the information on a website. I don’t know why the newspapers must use a special name, i.e. “a paywall,” but they do.
Over the years, I have thought seriously about using a paywall on one of my sites. That site where I have been considering that is my most popular site by far. In the end, I decided to abort my thoughts of setting up a paywall, because I thought that it might ruin the popularity of my site, and even damage all of my online efforts.
I am very glad that I aborted my thoughts of doing the paywall.
However, that does not mean that I am against paywalls or membership sites! Not at all. In fact, this very site (WaysToMakeALiving.com) will soon have a section that will be behind a paywall. More on that down the road. But, what I am against is putting up a membership site as your first site, or putting your most popular site behind a paywall. Why? Because that is the site where you make your name. That is the site where people get to know who you are and what you are all about. Without that site, people don’t know the quality of your work. If your very first site is behind a paywall, I predict that you will not do very well, because people will have nothing to judge you by, and you are asking them to pay when they have nothing to go on in the way of knowing whether the information you can provide is worth paying for. They also don’t know your writing style, how well you write, etc.
Over the weekend, a friend sent me a link to an article about paywalls, and why most newspapers who go the paywall route are failing. While the whole subject of paywalls has been off my mind for a while now, this article was a good one and gave me a number of thoughts on the topic.
One of the things discussed pretty thoroughly in the article was on the top of using a threshold system of charging people. What does this mean? Well, it means that they set a number of articles per month that you are allowed to read for free. Maybe they say you can read 3 articles each calendar month without paying, or maybe it is 10 or 25 articles, it’s just up to the publisher to decide that. As long as you stay below the threshold of articles, you will never have to pay for the site. But, if the threshold is 10 articles per month, when you try to read your 11th article, you might get a sample of the article and a request to join the site and pay a monthly charge. This is becoming very, very common among newspapers. Most of the big papers are doing this now, people like the New York Times and the Financial Times, and many others too.
According to this article, the papers who have tried using paywalls have lost as much as 95% of their readership! Can you imagine? So, 5%, and often much less than 5% are actually paying for access to the paper. Do you know what that means? It means that revenue generated by the website usually went down significantly. You may be wondering how it went down since they were giving it for free previously. Well, any good site that is commercial is also placing advertisements on their site. In the past, pre-paywall, they had a certain number of people who were reading the site, and thus exposed to the advertising. Suddenly, when they put up the paywall, 95% or more of their readers were gone, and their advertising revenue took a dive. Do you think that membership payment from only 5% or less of the previous audience can pay what they were earning for the advertising on the site? No way. It won’t even come close, to be honest.
So, if you are interested in Membership sites, I would encourage you to go read the article that my friend sent me. It’s quite enlightening and interesting to learn more about how the major newspapers are doing with this. Additionally, if you think you want to do a Membership site to earn a bit of money, I have an e-book all about setting up a Membership Site, check it out here.
I notice that industry specific websites also use paywalls frequently.
A good example of this in my industry is Lloyd’s List. They are somewhat successful, but, a couple of points:
1. The print edition is VERY expensive (around $1,000 per year)
2. They have 200 years of name recognition.
3. Nearly all of their published information is unique or difficult to find online.
4. Their subscribers are highly targeted executives (Thus, still good for advertising… And expensive)
5. Most subscribers are corporate entities, rather than individuals.
Last time I spoke with them, over 80% have moved from print to their online version.
Another industry magazine is Bunkerworld, that publishes daily fuel prices in about 700 ports around the world…. Information that is 100% unique (no other sources). Same type of subscriber base.
My point is that people will pay for information if: It is necessary; If it is unique; If it is highly targeted. Most of the major newspapers have some unique articles, but a lot of what you read is also online elsewhere through AP, etc. This makes it a tough sell, in my opinion.
Hi John – I would really agree with what you say on that. I think a huge difference between a newspaper and a highly targeted type of site like you are mentioning is that in the newspaper these days, so much is syndicated. The exact same articles can be found on hundreds of different papers because it comes from the AP or some other syndication service. Thus, no real need to pay, because you can find the same article elsewhere anyway. That is not the same on the type of publications you mention.