5 ways Time Inc. is trying to make paywalls work

Last week, Time Inc. erected a paywall at Entertainment Weekly in what it says is the first of more to come for its titles. Others will follow this summer. Time Inc. is struggling to turn around its revenue declines and gain the confidence of Wall Street, so it needs to use all the levers it has. Many publishers have already begun doing the same: In a survey of its members a year ago, 95 percent of members of the trade association Digital Content Next had a paid subscription strategy.

But while the rise of paywalls may mean free news is reaching a limit, publishers are looking beyond the basic paywall. The Information and Capital New York are charging high annual subscriptions, for example, and publishers including Slate and the Guardian are offering its readers “memberships.” Others have discovered the limits of the paywall, most notably The New York Times, as its digital subscription growth has leveled off and efforts to spin off new paid products have had limited success.

So Time Inc., in casting about for new sources of revenue, is looking as much to the registration data as the hard cash it hopes to shake out of consumers. Here are five ways it’s trying to make paywalls work:

Give people options
The Time Inc. paywall approach is rooted in the belief that its brands have hard-core users who will pay for access, but not all are equal in their willingness to pay. So in the case of EW, it’s offering three tiers of payment: $1.99 a month for EW.com and the digital magazine replica; $20 a year for access to the same; and $25 a year for all digital access plus the weekly print magazine. (The paywall only applies to articles; videos and photos will continue to be free.)

Registration
With consumers who won’t pay, Time Inc. looks to get value in the form of registration data. So it’s asking EW readers to register after they read 10 articles a month. (After 15, it asks you to pay.) When users register, they’re asked to give an email and indicate which subject areas they’re interested in. Using that data, Time Inc. can market products and services to users or serve them ads based on their interests.

“The first piece is the data we glean from the registration process and, ideally, different passion points they have,” said Stephen Selwood, svp of brand marketing and revenue at Time Inc. “EW in April had 19.9 million uniques, and we know very little about who those visitors are.”

Centralization
In keeping with its shift toward centralization, Time Inc. developed its paid-content system in-house (using TinyPass for metering and analytics) so it can work on any of its brands. There’s no way of knowing how users will react to the price points or how high to set the paywall beforehand, so by centralizing, Time Inc. hopes to test and learn more efficiently.

“We need to make sure our system is flexible so we can refresh our offering or creative,” Selwood said. “Maximize the consumer revenue without dramatically impacting overall traffic — that is the magical sweet spot we’re trying to hit. And that’s a delicate balance.”

Sell other products
Using the registration data it collects on users, Time Inc. plans to sell people other products and services. Time Inc.’s Real Simple, for one, sells more than 1,000 licensed products at Bed Bath & Beyond. Based on the articles people read on and off the site, Time Inc. could target those products to them. Alternatively, it might ask people to take a survey or watch a video in exchange for content. Or let an advertiser sponsor coverage of an event-based topic, like Comic Con, for a limited time.

Protect traffic
Paywalls are controversial because of the risk that they will cost the publisher traffic and associated ad revenue, concerns that weren’t lost on Time Inc. So in the case of EW, it implemented a soft, or metered, paywall: Article clicks from search and social media aren’t counted toward the 15 free articles. And video will remain free, as long as it keeps commanding high CPMs. “We’ve tried to protect a lot of the one-and-done traffic,” Selwood said. “They are likely not loyalists today, but in the beginning, we want them to sample as much as they can.”