Don’t penalize loyal users with paywalls, reward them

Paywalls are all the rage at media outlets now, thanks in part to the widely followed launch of one at the New York Times. (s nyt) But as a number of observers have pointed out, paywalls feel wrong because they penalize a site’s most loyal readers. Is there a better way of monetizing them? Digital-media strategist Jeff Jarvis has proposed what he calls a “reverse paywall,” where the more active users would see their charges reduced but admits this would probably never work in the real world. But what if loyal readers were rewarded in some other way? Their loyalty should be the source of some benefit to them, not the trigger for a penalty like a paywall.

The idea behind a metered wall (or fence, or gate, or whatever term you prefer) like those at the New York Times or the Financial Times (s pso) is that you never see them unless you read a certain number of articles per month. In the case of the NYT, that number is 20, while the Financial Times has set the meter at 10 stories before the fence goes up. The New York Times has said most of its readers will never encounter the paywall at all — and it also has a “social media” exemption that allows links from Twitter and blogs to pass through the wall without triggering it (although such links count towards the 20).

Why are you penalizing your most loyal users?

But as many people have pointed out, this approach effectively penalizes your most loyal customers by charging them — while those who engage with your content the least get everything for free. That seems backward in a lot of ways (although the New York Times seems to believe readers should subsidize its journalism, and therefore those who value or use it the most should pay the most). Among those who think it’s backward is Washington Post managing editor Raju Narisetti, who said as much at a recent conference on the future of news:

Jarvis’s idea for a “reverse paywall” is to charge everyone for access to content, then give those who provide value to the media outlet a discount of some kind — for example, a cheaper rate if they view more ads, load more pages, post story links to Twitter or Facebook or a blog, give the NYT more information about themselves, comment on stories, or provide information about a story that helps the paper. As Jarvis says:

My idea for the reverse meter values the engaged reader over the occasional reader — and even rewards greater engagement. And therein lies, I think, the key strategic skill for news businesses online: understanding that all readers are not equal; knowing who your more valuable readers are; getting more of them; and making them more valuable.

Jarvis notes a reverse paywall would never work because most people simply wouldn’t pay, and therefore would never go to the website. But Narisetti’s idea flips that on its head: Why not find ways to provide rewards to the more engaged readers, and then integrate ways of monetizing that relationship? (Narisetti’s presentation, which he gave me permission to upload to Slideshare, is here.) This is not as easy as it sounds, of course — many people will still just read the news they want and move on, and even Facebook has had difficulty building an economy around its Facebook Credits virtual currency. But the focus is the right one, I think, because it’s about benefits instead of penalties.

Build membership rewards instead of penalties

What if instead of a discount, regular readers of the New York Times could gain some kind of credit for their activity and engagement on the site, which they could then redeem for special features? This is how the membership model works on the web community Slashdot, where users get “karma points” for posting comments, flagging negative comments, and other positive behavior. Those with high karma points are then given more responsibility, including the ability to be a moderator and/or award others karma points.

I’ve called this the “levelling up” approach, similar to what a player of online games like World of Warcraft (s atvi) does with their character. The New York Times has taken some steps towards this kind of model in its comment section, by giving more active and well-behaved readers more features — including inviting them to post comments without moderation. Why not make this just the beginning of a membership platform, with more features for those who get more engaged?

These don’t have to be only online features either. Why couldn’t loyal readers or fans of a writer like Nick Kristof — who has built a huge following through his use of social media — win rewards for their activity and then redeem those points for something special involving the writer, like a personal appearance or invitation-only forum of some kind? Some of this could even be integrated into a Kristof-specific app (one of the things I mentioned in my recent “Five things I would do as CEO of the New York Times” post).

The bottom line is that charging your most loyal readers money to read your content is probably the most regressive approach to monetization imaginable — and the fact that anyone actually pays those monthly fees is a tribute to the brand loyalty that readers have developed to places like the New York Times. So why not try to come up with ways of turning that loyalty into a benefit instead of a penalty?

Post and thumbnail photos courtesy of Flickr users Giuseppe Bognanni and jphilipg