Why Paywalls Won’t Work For Most Sites: Not Enough of the Right Traffic

Given the turmoil that larger content driven websites are going through, it makes sense that they are swiftly trying to think of alternate sources of income.  I’ve previously mentioned why I believe these outlets are failing and I mentioned something called a “Paywall” before, but I wanted to dig a little bit deeper today as to what these are and why most big publishers aren’t going to get any quick traction on this money making method.  I’ll also mention how I think a successful paywall can in fact work even if you’re “paying for the paywall.”   So let’s dig in.

What is a Paywall?

In technical terms, a paywall is a method of restricting access to content via a paid subscription. Beginning in the mid-2010s, newspapers started implementing paywalls on their websites as a way to increase revenue after years of decline in paid print readership and advertising revenue. So what does this mean exactly?  It means that in order to access particular parts of a website, you have to pay for them.  Sites will advertise these sections most often as “exclusive content” or the type of content you cannot get unless you are a paying member.  In my personal opinion, a paywall or any subscription based product is one of if not the best ways to make income online, but here’s the rub: they’re also by far the hardest.    Imagine you have 1,000 paying subscribers to a product or service that costs you close to nothing to produce and you’re charging $10 a month for that product or service.   That’s 10 grand a month right there and we’re only talking 1,000 subscribers.  But again, how hard is this to achieve?  It’s extremely hard unless you have one of two things going for you:  First, you need to have a huge audience of dedicated readers built into your site already.  Second, if you don’t have those direct readers then you’re going to have to get people to somehow see your product or service.  You do this by paying for it.   Let’s examine the first one: built in audience.

What is organic, referral, paid and direct traffic?

There are all kinds of traffic when it comes to measuring an audience on a website but I’d like to focus on four main sources of traffic that investors as well as site owners should truly care about.

Organic Traffic  – Organic traffic is basically search traffic.  How much traffic is coming to your site from search engines like Google, Bing, Yahoo, etc etc?  How many people are coming to your site per day because they searched a specific term and your site ranked high in the results for that term?  Most SEO experts say that this is the best form of traffic because a user has intent to visit a site, therefore advertisers can target these users and get higher rates of conversion on their ads.   For example, if someone is searching for “Lawn Mowers” and you rank #1 for “Lawn Mowers,” if those users visit your site and you have great content on lawn mowers then that webpage is an excellent place for lawn mower manufacturers to advertise.  Or that page could be a great place for you to recommend lawn mowers and drive people to buy products at companies you can get commissions from.

Referral Traffic – Referral traffic is somewhat similar to organic traffic but it comes in the form of other sites linking to your site and traffic coming from a user clicking that link and winding up on your site.  For example, if Business Insider writes an article about cars and they reference an article you wrote on a Ferrari, their site will send your article x amount of users.  Depending on the size of the site linking to you, you could get 10 visits from one link or many thousands of visits.    Referral traffic is excellent for boosting your audience and site metrics.  It’s not quite as targeted as search traffic but if your content is good enough it’s a great way to build up an audience of people who want to return to your site day after day.  Referral traffic is tough to come by these days but if your site has enough search traffic or social media presence, natural links can actually come slowly and build over time.

Paid Traffic – This is traffic that websites pay for, usually in the form of clicks.  For example, a website may “boost” a post on Facebook.  They will pay Facebook to show their posts to a larger audience that they are specifying in their ad campaign.  Then people will pay Facebook for each click a user makes to the website’s page its advertising.  Another example is Google Adwords.  You can pay search engines to have your ads show up in search results and pay them for each click a user makes to the page you’re advertising.   You can do pay for click pretty much anywhere but Google and Facebook are huge, Youtube is becoming much bigger, and there are plenty of others.  Then there are your content recommendation companies like Taboola and Outbrain that will charge you per click to show up in their content recommendation widgets.   Ever see a section towards the bottom of a webpage that says “Read More Articles like this?” and you’ll see around 6 little square pictures with titles on them?  Those are content recommendation widgets.  Advertisers pay to be one of those squares that users click on and will pay for each click they generate.

Direct or Bookmark Traffic – As far as I’m concerned this is the creme de la creme of traffic and by far the hardest to obtain.  Most sites, if they’re extremely lucky will get 10% of their traffic from this source.     Direct traffic refers to when a user comes directly to a website without doing any searching for it.  It means they’ve likely bookmarked that website and visit it daily out of sheer interest and love for that website. Unfortunately direct traffic is tough to measure as even Google Analytics has a tough time determining who is bookmarking sites and who is coming through other means that they might mark as “direct.”   Bottom line, if you have 10,000 people coming to your website every single day because they love your site, you’re in great shape.  Again, this traffic is very very hard to get and by far the most valuable in terms of building a successful paywall.

Where do Paywalls fit into all these types of traffic?

Now we can go back to my original article title and figure out the reason why I believe websites are having such a hard time getting paywalls to work.  If you don’t have a built-in audience to your website, you would be a fool to think that all of a sudden you can charge people who come to your site mostly through paid acquisition or search engines to all of a sudden PAY just to read your content.  If anything, they’ll be turned off to your site and never want to come back.  This is the exact reason why many sites are going to feel the pain when they realize their methods of attracting paid subscribers isn’t a walk in the park.  However, if you are a site that has a huge built-in audience, a dedicated readership, people who would feel crappy if they couldn’t read your content, then you’re in great shape.  This is why the New York Times is killing it with their paywalls.  This is why Forbes is killing it with their paywalls.  This is why The Atlantic is killing it with their paywalls.  They already have huge dedicated fan bases who are willing to go the extra mile to continue reading the content on these sites.  It’s 100% clear that the sites who have the best direct traffic metrics are the ones who will build their subscription businesses the fastest.  However, don’t fret all you sites out there who have none of this.  There are still two key ways you can build a paywall on your website and here they are:

Create an amazing product people will pay for – This is far and away the most important thing and way easier said than done.  If you think you’re going to lure someone into paying for something on your website that’s free to begin with and there are 1000’s of other free alternatives out there, you better think again.  Whatever it is your offering has to have some incredible intrinsic value to it.  It better go well beyond what your site and other sites are already doing.  It better be something original that’s not available ANYWHERE but your site.  Whatever that product is be it a newsletter, exclusive video, educational courses, anything, it HAS to be top notch and worth the money.  As far as what you charge, that’s something you’d have to experiment with.  But if it were me?  I’d go with cheap and try to get big numbers on subscriptions.

Pay for subscribers with extreme caution – If you don’t have a strong direct traffic base you can build one by paying for it.  How?  There are thousands of ways but most people use ads.  To get more detailed most people use Facebook ads because you can target easier.  Let’s say you had a monthly subscription that updates people on the latest sporting goods news.  You could create ads centered around people who have these interests and see if you can get them to subscribe.   However, this again goes back to my original point.  Your product better be damned good or these people will move right away from the page nearly the second after they click on it.  And finally, don’t just spend money over and over and over in hopes you’ll recoup.  You better well have a system of managing how much you spend vs. how many subscriptions you are getting, otherwise you’ll run out of money extremely quickly.  Tracking is key here as well as managing your budget and spend.

Bottom Line

No matter who you are and what your goals are, know this about paywalls:  To build a successful business incorporating paywalls there’s no way of getting around the fact that it’ll take a long time.  To get the direct traffic it takes to successfully do it for free takes years.   To get subscribers by spending money it takes tons of testing, tons of money spent and tons of research on creating the right product as well as targeting the right people.  Then if you happen to get that right, it’ll still take a while to get the numbers you desire.  Any site who tells an investor they can do well with subscription services in a short period of time is in for a rude awakening and is completely kidding themselves.

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