How to convert readers to paid content after offering it for free
Tim Rowell, general manager APAC at Piano, explains how to get started with building a subscription model.
In the post-pandemic world more than ever, publishers are turning to subscription models to increase revenue and diversify their revenue streams. According to new research from the Reuters Institute for the Study of Journalism, around 79% of publishers said their main revenue focus for 2022 is subscription revenue.
However, convincing readers to pay for content can feel like an insurmountable challenge when starting out with subscriptions. But there’s more than just flipping the switch from free content to paid content. Understanding your audience and the types of experiences and content that resonate with them is the first step to developing the balance between advertising and paid subscriptions that will maximise your revenue.
A common fear for publishers launching a paywall for the first time is that locking some content will dwindle the audience numbers that drive ad revenue. The right strategy will help you continue to achieve both. As Paul Tyrrell from Australian Community Media explained to Mediaweek, it achieved a growth in audiences in December 2021 with a jump of more than 12% in new users when compared to December 2020. In addition, digital subscriptions to ACM products are up 60% year on year.
Tyrell explains: “We have found a sweet spot where we are able to continue growing audiences with paywalls in place. We have found that once a reader becomes a subscriber their engagement levels increase with more content consumption from increased time on site and more page views. That counters any drop off we might incur due to the paywall.”The key is taking an incremental approach to driving both advertising and subscription revenue. Here are some of the strategies and tactics that will help you do both.
Define the right product offering for your audience
The first step in developing a subscriptions strategy is to thoroughly understand the audience. It is imperative to be clear on the answers to questions such as ‘Who is my audience’ and ‘What would they pay for?’. It will be impossible to develop a subscription model that works without first understanding your audience, why they value your product and what matters most to them. This will then form the basis for the rest of the strategy and help answer additional questions such as, ‘What benefits/features should we launch?’ and ‘What’s the right price?’.
Setting the right price
Pricing is always among the most important decisions a business can make. When it comes to subscriptions, the quality of the product and what you charge for it are always the two most important factors to driving success. If you’re launching a new subscription product for the first time, it might not be obvious what you should charge. Don’t assume your pricing based on what others are charging. Here are some best practices to get you started:
- Offering: It’s easy to compare yourself to the competition and think you should be charging the same, if not higher. However, that competitor might have been honing their subscriptions model for years and increased their price over time. While high-value content might justify the price tag, generally staying below a threshold will make it easier to build momentum.
- Watch out for ‘price cliffs’: A price cliff is what you hit when you’ve pushed one of your pricing options beyond your customers’ willingness to pay. When setting prices, you almost always want to be just this side of a price cliff, or the psychological price threshold that occurs at a round number. So if there’s a big price cliff for your product at $10/month, you’d want to be at $9.99.
- Associate with the right category to drive higher prices: Consumers often have set ideas about how much to pay for different products, called mental accounting. Based on this principle, associating your offering with a higher-priced category can help make higher prices seem fair.
- Lean on pricing research: Ultimately, the best way to determine the right pricing strategy for your business is to conduct pricing research prior to launching your project. This typically involves a survey that presents users with subscription options and then asks them a series of questions about the prices they would consider cheap, fair, expensive, and prohibitively expensive. The results will help you understand the perceptions of your audience and get a baseline of how likely they might be to subscribe at specific price points, paving the way for more accurate revenue estimates.
Build strong user experiences
Building strong user relationships from the first visit will eventually bring readers through the funnel wanting to subscribe. Treat your audience like VIPs by improving their user experience and creating personalised content recommendations to keep readers onsite for longer. This will start the subscription journey and, over time, entice readers to register or eventually subscribe. These relationships and engaged users will support not just subscriptions, but also your advertising programmes.
While the move to paid subscriptions may feel challenging, once a publisher truly understands its audience and can engage them with premium, personalised content, converting them to a paid subscription will be an easier offer. Continuing to develop these relationships even after the point of conversion will later pay dividends in subscriber retention.
Tim Rowell
