As we embark on a new decade, I think it’s safe to say that the metered paywall’s best days are firmly behind it.
This method of charging readers for news is so commonplace now that it’s almost hard to contemplate how revolutionary — and even radical — it seemed when The New York Times adopted it in 2011. At the time, many within the media industry doubted that paywalls would ever work. Not only were people skeptical that readers would pay for news, but they also feared that installing any type of paywall would decimate web traffic, in effect obliterating a news site’s ad revenue.
The Times’s metered paywall solved both these problems simultaneously. Because the meter would count down the number of free articles a reader had left, it helped quantify for the reader the newspaper’s role in their monthly news consumption, thereby increasing the publisher’s perceived value. And by giving every web user an allotment of free articles — the first version of the Times paywall allowed a whopping 20 before the paywall kicked in — the negative impact on website traffic was kept to a minimum.
The gambit paid off, to an astonishing degree. The Times recently announced it had reached 4 million digital-only subscribers that generate $400 million a year in reader revenue. After the metered paywall’s success became apparent, then other publishers rolled out their own versions, and some, including both The Washington Post and The New Yorker, have seen tremendous success from this model.
But while the Times’s success proved that consumers showed some willingness to pay for news, the metered paywall hasn’t been the industry savior that some have hoped for. Regional newspapers in particular have consistently missed their subscriber goals, with only a tiny percentage of their overall audiences even consuming enough articles to hit the paywalls. They then tightened their meters to allow fewer free articles, but even with these draconian restrictions, most have only managed to convert about 1% of their readers into paying subscribers.
And the conditions for metered paywalls are only getting worse. In July, Google announced changes to Chrome that would make it harder for news sites to block freeloaders who use Incognito Mode to bypass the meter. Chrome is also clamping down on browser cookies, which may make it harder for news sites to count the number of times a logged-out user has visited in a given month.
Some publications have responded to these changes by rolling out what are called registration walls. With these, a user is prompted to create an account and log in before they can read their free articles. This way, publishers can more effectively count the number of free articles a user has consumed, regardless of which browser mode they use. But even this little bit of added friction is bound to turn a substantial portion of casual readers away, which can deal a substantial blow to a website’s traffic and ad sales.
Changes to Google Chrome aside, publishers had already begun to grow skeptical of the metered paywall model and its ability to communicate the value proposition of a news site. For example, why should a publisher treat all content as containing the same monetary value? A metered paywall looks at a 500-word news story and a longform investigative piece and assumes that a reader is just as likely to pay for one as the other. In reality, this doesn’t make any intuitive sense.
Which brings me to discussing Business Insider’s approach to paid content — an approach that I think other publishers should consider when assessing their reader revenue strategy.
To understand how the company established its paywall, you first have to travel back to a time when most of Business Insider’s revenue was generated through advertising, which wasn’t all that long ago. For the first decade of its existence, it was largely a pageview factory; its writers would take information that was reported elsewhere and write it up in a punchier, blog-like format. It pioneered early web-traffic gimmicks, such as publishing slideshows that loaded a new page for every slide, thereby triggering another ad load.
Though it focused primarily on business and tech news, Business Insider slowly began expanding into other topic categories. It launched a politics vertical, for instance, hiring Josh Barro as a star columnist. Lifestyle and entertainment content started creeping onto its homepage. Remember, this was an era when niche publications like Mashable and PolicyMic were broadening their coverage in a VC-fueled quest to scale their web traffic.
But then the German media conglomerate Axel Springer purchased Business Insider in 2015 for a reported $450 million. The company had just concluded a bruising fight with Google over the search giant’s right to display its content, and its CEO has long been a skeptic of the information-wants-to-be-free ethos that many in the industry had adopted. “I see no justification, neither democratic nor market-related, for content to be generally free on the internet,” he told The Wall Street Journal in 2009.
It was around the time of the Axel Springer acquisition that Business Insider spun off a new brand called Insider. Helmed by Nicholas Carlson, Insider started as an operation mostly focused on creating short videos that it then distributed on Facebook, but it eventually established its own website. At that point, it slowly began migrating content verticals from the main Business Insider site to this newly-established entity.
By 2017, Insider was publishing articles on food, beauty, and style. In 2018, three verticals that had, until then, been operating under Business Insider — politics, news, and military/defense — were also moved over to Insider, so that now Business Insider focused solely on business-related content. According to Carlson, most of the traffic for Insider comes through Facebook, and it relies almost entirely on programmatic advertising to generate revenue.
Meanwhile, Axel Springer didn’t wait long post-acquisition to begin developing Business Insider’s paywall strategy. To streamline this process, it brought over Claudius Senst, who at the time worked in Germany as the company’s SVP of business development. In his new role as head of consumer subscriptions at Business Insider, he immediately set out to assess how a paywall could be structured. “We spent a long time testing what was the right fit for the Business Insider brand when it came to consumer subscriptions,” Senst told me in a podcast interview last year. “… In late 2017 we started rolling it out to a broader audience.”
Business Insider Prime costs subscribers $12.95 a month, or $99 a year. But instead of debuting a metered paywall, Senst and the BI editors developed a system for differentiating the paywalled content from the articles that remained free. Under this framework, clicking on a Business Insider link could lead you to a free article or immediately trigger a pop-up requiring a user to log in and/or subscribe. I asked Senst why he chose this model over a meter. “Where I struggle the most with the metered approach is that if I read three amazing, in-depth journalistic pieces and then hit a fourth story that’s just a short snippet of an article, and on that story I hit the paywall, I always feel betrayed as a user,” he replied. “I feel like ‘why is it asking me to pay now?’”
In other words: not every article is created equal. Sometimes a journalist just wants to write a bloggy column based on news reported by another outlet, and a publisher should feel free to publish that column without worrying if it’s “exclusive” enough to justify the paywall. By placing it in front of the paywall, in fact, the publisher could generate ad revenue while also exposing its brand to a larger audience. Meanwhile, readers are forced to pay for the content that truly is exclusive and exceptional.
So how does Business Insider differentiate between free and paid content? “The editorial leadership team knows best whether a story is need-to-know information,” versus “a story that you might be able to pick up somewhere else, where we might find that we have a different tone, but not an exclusive angle,” said Senst. “That is a decision that the editorial team performs for each and every story. Over time they get an understanding over what kind of story is a subscriber story, versus which story is a broader, general interest story.”
Let’s take a look at the current Business Insider homepage to get a sense of what he meant. An article about billionaires traveling to Davos on private jets is completely free to read. A piece about Bank of America promoting 74 employees to managing director positions got the paywall treatment. So did an article about a major advertising firm’s plan for future growth. It’s not too difficult to discern how the information presented in the latter two pieces is vital to those readers who work in finance and advertising, whereas the first piece has little actionable value beyond pure entertainment.
It’s been about two years since Business Insider moved some of its content verticals over to Insider and rolled out its Prime paywall. Founder Henry Blodget recently revealed that the site has about 200,000 paying subscribers, which gives it a run rate of around $24 million. He told Poynter that Insider Inc, which is the parent company that encompasses both Business Insider and Insider, “just hit a target for revenue diversification … with about a third from ads, a third from subscriptions and a third from data and research.” The company is reportedly profitable and generating north of $100 million in revenue.
Moving forward, I wouldn’t be surprised if others try to replicate Business Insider’s model. If the 2010s were about convincing consumers that content is worth paying for, the 2020s will be spent differentiating paid content from free, with the recognition that not all articles will be valued the same by readers. Some information, as it turns out, truly wants to be free.