Paywalls: What They Are, How They Work, How to Build One

What is a Paywall?

Paywalls are digital gates erected in front of website content, often news or newspapers, that require readers to pay to consume the content. The payment required is normally in the form of a monthly subscription, but the types and fees can vary. Paywalls are used in mobile apps, streaming platforms, games, and all types of websites.

The Reuters Institute for the Study of Journalism found that 76% of U.S. digital news publishers have a pay model in place. That’s a big jump in just a few years from 16% in 2017. Audiences have become accustomed to paywalls in all areas of their digital life, and paywalls continue to appear in new and creative ways.

Why are Paywalls Becoming More Popular?

As online content grew in the late 1990s and early 2000s, newspapers started losing ad revenue dramatically. Paywalls arose as a solution — or at least, a way to mitigate these lost earnings. Digital advertising alone doesn’t generate enough revenue, since display ads require huge numbers of page views to be successful.

As the web has developed, the technology has grown quickly. There are many easy-to-implement paywall solutions, and plenty of easy ways for consumers to pay (and publishers to get paid). After a decade-plus of paywalls used in website content, the model has proved itself valuable and sustainable.

 

How do Paywalls Work?

Paywalls simply stop a user from continuing further in an app or on a website. They may appear as a pop-up, stop showing text legibly, or show a lock or stop symbol. A user likely has to enter their contact information, including an email and a payment method, to continue consuming content. There may also be a new user discount or savings opportunity at this initial step.

Paywalls are fairly straightforward, but there are some different ways to employ them. These are some common ways a web user might encounter them:

• A newspaper site asks readers to subscribe after they’ve read five articles.
• An e-learning site offers some free courses, but retains premium offerings for subscribers.
• An app that’s free to download offers basic features, then gates additional features or all features after a certain amount of time.
• A few paragraphs of an article might be free to read, then text becomes grayed out until a reader subscribes.
• An online game is free at first, but once a user gets to a certain level, they have to pay to continue.
• A B2B SaaS company offers a basic level of service for free, but more users or more features require a subscription.

Types of Paywall Models

There are a few types of paywall models to consider, based on the business’ revenue and traffic goals, what content is being gated and why, audience behaviors, and the long-term goals of the site or app. Common types of paywalls include:

Hard Paywalls

A hard paywall doesn’t offer readers any free content. Hard paywalls are the most restrictive type, but they allow publishers to build an audience of only the most dedicated and relevant readers. This can work for publications with strong brand recognition and reputation for high-quality and unique content.

Hard paywall examples include:

• Netflix: The streaming service doesn’t offer an ad-supported or free offering.
• The Wall Street Journal: The paper’s site was one of the first to erect a paywall in 1997 and remains hard-paywalled.

Soft Paywall

A soft paywall offers a way for a user to explore some of a site’s content before hitting the paywall. This can help a reader gauge whether the content is relevant and high-quality before subscribing, and offers more flexibility for the site or publisher than the hard paywall option.

Soft paywall examples include:

• Medium: The blog site allows readers to see some of the content for free, but posts are gated beyond a certain point.
• Spotify: Listeners can access a certain amount of audio content for free, but that includes ads, which users can eliminate with a premium subscription.

Within the soft paywall category, there are a few variations:

• Metered paywalls can be structured to kick in after a certain number of free content pieces or after a certain amount of time, and may reset monthly. This model works well for businesses constantly producing new content that can entice new subscribers with the free allotment.
• Freemium paywalls offer a mix of free and paid content, so that, for example, a news site’s weather forecasts are free to view, but more in-depth stories require a subscription.

Dynamic Paywalls

A dynamic paywall is a way for content publishers to tailor offers in a more sophisticated way, using available data about the audience. The offer to each reader can change depending on a reader’s behavior and geography. So, one reader might be asked to create an account to access a few free articles, while another reader hits the paywall immediately with an ask to subscribe. A more engaged reader might immediately be asked to pay, while another with fewer strong signals of intent would get a few more free articles.

Within the dynamic paywall model is multi-dimensional metering (MDM), which considers visitor relationships beyond the paywall. Instead of asking a user to subscribe or stop engaging with the site, it may ask them to sign up for emails, follow the company on social media, or take other calls to action.

Membership Model

A membership model isn’t technically a paywall, but it’s a way to generate revenue from readers. UK-based The Guardian uses a membership model, which asks readers to subscribe on a sliding payment scale. It’s easy enough to scroll beyond the membership ask or close the pop-up window, but the idea is for the ask to be intrusive enough that the membership experience is more seamless.

As paywall technology has matured and publishers have gained a stronger understanding of their audiences, FT Strategies found in its research that hard paywalls grew the most, followed by dynamic and freemium paywall models.

How to Choose a Paywall Model

Recent research from the Lenfest Institute found that there aren’t necessarily hard-and-fast paywall rules, but that publishers should continuously measure and evaluate data to decide what’s right for their audience. Spend some time considering which paywall model will work for your business, taking these areas into consideration:

Content Pipeline

Readers who subscribe to your site will be looking for consistently engaging, high-quality content to feel like their payment is worth it. Ensure that your publication schedule is up to snuff, and that you have the content creation and technology resources to support it.

Audience

A site with a loyal audience will have an easier time erecting a paywall. Do some research to understand what your brand’s reputation is and what your readers are looking for. Hard paywalls are most successful for business and finance publications, where readers use the information for their jobs.

Competitors

If a reader can find the same or similar content elsewhere for free, they will, so consider carefully if your site will be the only paywalled one in your immediate industry or niche.

Revenue

With a paywall in place, you may very well increase revenue over time. But in the shorter term, make sure you take into account the lost ad revenue that a paywall (especially a hard paywall) will cause. Also consider the hit your site may take with organic traffic, since paywalls can be bad for SEO — they cause a higher bounce rate, and hard paywalls are more difficult for Google to index in search.

How to Choose a Paywall Provider

Choosing the right paywall provider depends on the size of your business and what type of features you want in a paywall. Consider these factors as you’re choosing a provider:

Flexibility

If you’re new to using a paywall, look for a provider that supports various types of paywalls. Every paywall provider is different, and they don’t all offer every type of paywall model. You may start out with a hard paywall and later want to try a metered option, so look for a provider that can evolve and grow with your business.

Integration

Make sure a third-party paywall service connects to your CRM and other key systems, and that it’s easy to charge readers and take in payment.

Technical Needs

Look at the paywall tools that are a match for your in-house developers and the size of your company. For a smaller business, try a WordPress paywall plugin, or something similarly straightforward. Online platforms like Pelcro offer easy setup and automation for paywall installation. With developers on your team in-house, you can code a paywall into your website and customize accordingly.

Cost

As with any software purchase or new development project, take a close look at the pricing model and how it will compare to the new revenue you expect to earn from the paywall.

Examples of Paywall Sites

Journalism

The Wall Street Journal was a very early hard paywall adopter, with nearly 30 years of asking readers to subscribe to consume any of its content. Its subscriber base is estimated at more than 4 million. Wired launched a paywall in 2018, reporting a 300% increase in subscribers in that first year.

Creator Platforms

Substack asks for subscriptions with a soft paywall that allows readers to sample a few newsletters from each writer. Similarly, Medium asks for a subscription fee after a few free articles.

Streaming Services

These services have exploded in popularity, with varying degrees of ad-supported streaming. Some, like Hulu, offer several pricing tiers, with the cheaper option still showing ads. Spotify, as mentioned above, offers some free content and a premium plan. Each service may change and refine their offerings over time and raise subscription prices regularly.

Shopping

Amazon Prime is a ubiquitous example of a membership model that offers free, faster shipping to members, along with free video streaming, for an annual charge. Sites like Thrive Market charge a monthly fee to shop its goods.

Software

B2B and B2C software companies use paywalls in various forms to upsell their users. For example, design platform Canva offers basic designs for free, asking only for an email address, with more features available with a subscription.

Benefits of Paywalls

Revenue

As the primary reason for paywalls’ existence, revenue drives the decision behind adding a paywall to a site. Paywall income adds another entire revenue stream for a business alongside ads and other money coming in, and can help to fund investigative journalism and other high-quality content. The money is also steady, and can grow: For example, The New York Times made almost $1 billion from its digital subscriptions in 2022.

Audience Data

You can learn a lot about your audience from paywall data. Study how many posts a reader consumes before subscribing, and see which articles drive readers to subscribe — these data points can help inform your broader content strategy.

Engagement

Paywall models offer a lot of flexibility in how and when you set them up, and how you use them to engage more with your readers. You might offer free access to the site for a period of time if a user signs up for your email list, for example. You can also send custom content to subscribers once you have their email address, helping to keep them interested. It’s also worth testing whether users will pay for ad-free experiences or other premium offerings.

Brand Building

More intangibly, erecting a paywall can help boost your brand’s reputation as a high-quality content producer. While brand reputation has to be strong for the paywall to work, subscribers often take paid communities or sites more seriously, so think about what you’re offering and why it’s valuable before setting up that paywall.

What to Consider Before Launching a Paywall on Your Website

Before you launch a paywall, and once it’s launched, make sure you’re keeping an open mind on what will work for your business. You may have to experiment and tinker with the paywall to get to the right option. Here are some common considerations to keep in mind:

Time the Paywall Right

Too early in a reader’s journey, and a paywall might turn away too many users; too late, and users might be surprised or frustrated by the paywall. In a free app, don’t immediately put up a paywall before a user has a chance to see the app’s basic features. Generally, a user should be able to gauge the value of what you’re offering before you ask for payment.

Give Users Different Pricing Options

As a consumer, you’re likely used to tiered pricing, which can be found everywhere from streaming TV shows to SaaS subscriptions. Offer flexibility to your users, such as subscriptions on a monthly, quarterly, or annual basis, and consider a trial period before you ask for a financial commitment. It’s also a careful balance to find new members with your content, giving away just enough for free while meeting revenue goals.

Make the Paywall Part of the Ecosystem

A paywall doesn’t exist in a vacuum. Your audience relationships should be created and nurtured carefully, with measurements in place to understand engagement. You might use churn analysis and engagement testing to keep subscriber rates strong, and consider the other ways you offer readers value through their subscription, such as with newsletters, gift articles, and more. The Lenfest Institute’s research found that subscribers who also receive a publisher’s email news product are 5-10x more likely to subscribe, and those who follow the brand on social media are 4-6x times more likely to subscribe.

Pricing variation, churn analysis, and engagement testing are key tools for publishers to keep subscribers engaged. By experimenting with price, understanding sources of churn, and targeting subscribers to improve their engagement, publishers can improve their retention rate.

Track Data Before, During, and After Paywall Setup

Gather all the data you can about your users and content ahead of time, and do some modeling of various scenarios so you won’t be surprised by traffic dips or other (ideally temporary) declines. Also, keep track of user experience metrics and listen to your users so you know if a paywall causes strife.

How to Create a Paywall in 5 Steps

It’s easier than ever to create a paywall. Here are the key steps to follow as you’re getting started.

1. Evaluate Your Content

The content you ask readers to pay for has to be worth it. Gauge how much valuable existing content there is, and what the ongoing publication pipeline looks like. This will prevent the loss of subscribers quickly if they don’t see anything new being published. The entire content process has to be strong, starting with the strategy and ending with polished production.

2. Evaluate Your Creation Infrastructure

Paywalled content goes beyond simple written content to include true digital storytelling, with top-notch design and graphics, plus video and audio. Consider what resources you have already and what you might need to add to keep readers coming back.

3. Evaluate the Provider Options

Take a look at paywall provider options in your price range to see what they can offer, or scope out the work and time frame if there are in-house resources available. Consider how easy a tool is to set up, what metering options it provides, what reports you can get, whether you can do transactions for just one article, and which other features are included, like newsletter subscriptions.

4. Implement the Paywall

When you’re ready with your subscription platform, turn the paywall on, and monitor carefully on a daily or even more frequent basis. You may continue to tweak how and when you deploy a paywall, but user sentiment and signup rates in the beginning are important signals on how it’s going.

5. Test, Learn, and Test Again

The data your tool provides will help gauge how the paywall is going, and so will the other metrics you’re likely already tracking, such as site traffic, ad revenue, and more. Your paywall strategy will likely change as trends come and go, and as your business grows and matures. Understanding the potential and the limitations of the paywall will require a lot of data and testing.

Key Takeaways

Paywalls have grown more sophisticated since they became commonplace in the 2010s. There are many varieties — hard, soft, and newer multi-dimensional paywalls — and businesses should carefully consider their audience, revenue goals, and content offerings before choosing the best paywall type. Test and learn to get to the right model for both the business and its audience.

Frequently Asked Questions (FAQs)

Can I create a paywall without requiring users to login?

A metered paywall doesn’t require users to log in immediately, so a user can consume some amount of content without having to create an account. With a hard paywall, any user can usually view the site’s home page, article headlines, and perhaps the first paragraph without logging in. Eventually, though, all types of paywalls ask for user login and payment.

What is a digital subscription?

A digital subscription is a paid offering for users to be able to access all (or part, if it’s a tiered model) of the content on a publisher’s site. These subscriptions might include extras on top of content viewing, such as newsletters, ad-free experiences, gift articles, comment access on articles, or a tangible gift item.

What is the average number of articles publishers should set for their metered paywall?

The number of free articles has declined since paywalls were first introduced. Publishers commonly offer five free articles per month, but some offer three or even zero, depending on their model. While it’s tempting to give away more free articles, that works against the goal of scaling up paid subscriptions quickly. Try setting up a free registration option first for your readers to consume a few pieces of content, then test a few places to add a paywall so you can understand your readers’ tolerance for it.