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March 26, 2020, 2:38 p.m.
Business Models

Slate launches a metered paywall to draw more membership revenue from readers, not just listeners

“Up till now, Slate has provided almost all of its written work for free. But going forward, we think the way we will truly thrive is by continuing to diversify our revenue — by asking readers like you to support us more directly.”

A publication’s paying subscribers may be just a sliver of the “monthly uniques” touted on press releases, but they’re a critically important one. The monthly or annual charges on their credit cards are the steadiest revenue stream available to most media companies — especially compared to, say, advertising sales during a pandemic. That stability is one reason why a number of alt-weeklies suffering from a sudden ad crash have rushed to launch membership programs in the past week. But the broader shift to reader revenue and away from advertising goes back way farther, long before any of us had heard of COVID-19.

Slate, of course, has seen nearly every trend in digital news come and go over its 24 years online, and it was relatively early to membership as well, having launched the successful Slate Plus six years ago. When it launched, then-editor David Plotz answered the rhetorical question, “So, what is Slate Plus?”

First, let me say what it’s not. It’s not a paywall. Let me say that again: It’s not a paywall! We’re not asking you to pay for stories, and we’re not turning on a meter that stops you 10 stories into the month. Everything that’s free on Slate will remain free for all Slate readers.

Well, starting this week…it’s a paywall. The kind with a meter that stops you 10 — or some other TBD number — stories into the month.

Plotz’s successor’s successor, Jared Hohlt, announced the news in a post late Wednesday afternoon:

Starting today, Slate is trying something new. We will be asking our most loyal readers — those of you who visit the site the most — to help keep making our work possible by joining our membership program, Slate Plus…

Up till now, Slate has provided almost all of its written work for free. But going forward, we think the way we will truly thrive is by continuing to diversify our revenue — by asking readers like you to support us more directly. In the coming months, some of our most engaged visitors will be prompted to join Slate Plus in order to keep reading articles on the site.

Nothing will change for their 60,000 paying members of Slate Plus. And nothing will change for many casual readers who don’t read enough articles to hit the paywall. But those “most loyal readers” will now need to join Slate Plus to have access to unlimited articles (after a free two-week trial).

By gating their written work but leaving podcast availability unchanged, Slate hopes to convert more readers than listeners into Slate Plus members. Audio already accounts for more than half of Slate’s membership revenue, Slate CEO Dan Check said, and they’re now nudging the people enjoying Slate’s written work to contribute too.

In his announcement, Hohlt cites the increasingly tough climate for digital media as one reason for the change. But Hohlt, Check, and product manager Heidi Strom Moon said the timing of the metered paywall, nearly a year in the making, owed more to their realization that they could only fine-tune the paid model so much absent real-life data from users.

That’s why they’re not saying, for now at least, how many articles it will take to bump into the gate. What’s the magic number to maximize both conversions and ad revenue? They’ll see. “We have assumptions, but we want to see what happens with the actual readers,” Check said. “We have industry benchmarks, but we know our people will be different.”

Eventually, they just had to launch the thing, find out what works (or doesn’t), and adjust from there. “We realized we could debate our assumptions endlessly internally, and that we’re better off getting real data from our readers,” Check said.

The site has long appended kickers to their articles that ask readers to “support [Slate’s] independent journalism” through Slate Plus and had previously gated some written content (including some “Dear Prudence” advice). But their experience with Plus was that while bonus podcast episodes were converting audiophiles, readers were not converting at the same rate. “If you want people to join or subscribe, asking them to do it voluntarily is not quite enough,” Check said.

It will be a comparatively loose meter, at least at first. Check said the initial threshold was at least double the industry average of five articles a month. (Podcast pages will not count toward the limit and all coronavirus coverage, Hohlt emphasized, will remain free.) That means only the “most engaged visitors” will be forced to join Slate Plus to continue reading and the total number of people who run into the paywall in this first week is expected to be “very small.” Check likened this first paywall iteration to “dipping a toe in the water” but acknowledged they expect to get all the way in eventually.

Slate joins a long list of digital publications, including Quartz and New York magazine, that have moved from free and open content to some version of a meter. As the list of online publications asking readers to pay up keeps getting longer, however, the appetite for a third or fourth subscription remains unclear for even the most voracious newshound.

This isn’t Slate’s first bite at the paywall apple — even the metered variety. Back in 2015, it put up a paywall for readers outside the United States which limited them to five articles a month unless they signed up for Slate Plus (or a separate deal called Slate Unlimited).

And long before that, Slate was famously one of the first of those newfangled “Web sites” to try to charge for access, all the way back in 1998. The price was $19.95 a year. Observers were skeptical; one Forrester analyst worried Slate neither “has a financial purpose or is a game or pornography,” the only things people paid for online in 1998. They proved correct; the paywall came down after less than a year.

Years later, then-editor Jacob Weisberg said he was glad Slate had “got it out of our system early.”

“I think it was the worst year at Slate,” he added. “The problem was — and this was in 1998 — that we had 20,000 paid subscribers to Slate, right away, paying $20 a year. Which for 1998 was pretty impressive…But that meant the maximum readership for anything was 20,000 people. And it was a tough year for the writers, because they went from having a growing audience and starting to feel like the web was working in terms of reaching to people you wanted to reach to suddenly feeling like you’re writing for a very small group of people.”

Of course, 2020 isn’t 1998. Audiences are much bigger; social media lets stories spread well beyond their small subscriber base; people are far more comfortable paying for things online. (And the financial state of journalism is much worse.)

Check said that sort of hard paywall, with no sampling, can work for business-to-business or niche sites but wasn’t the right choice for a general-interest publication like Slate. They also dismissed a subscription model that tries to get a large sum of money from a small number of people. “This is the model we’ve seen work,” Check said of the meter which, at around $3/month for the first year, is less than what the average digital newspaper subscription costs. “We’re large enough — with 20 million uniques this month — to go broad.” (Slate Plus, billed annually, costs $35 for the first year and $59 per year after that.)

In launching the paywall, Moon said she focused on identifying the right set of analytics to gather the data she’ll need to tweak the paywall model in the weeks and months ahead. Slate will look at the conversion rate, pageview losses, how many people are hitting the paywall, what kind of content they’re hitting it on, and how many visits to the site it tends to take to reach the threshold, among other metrics.

Like many other news organizations, Slate has seen surges in traffic and podcast downloads as the coronavirus pandemic has unfolded in recent weeks. But Slate also reported that the past eight months have all ranked among their top 12 most trafficked months ever and that they’ve seen strong readership across their full range of content: from news analysis (including their excellent court commentary) to human interest and advice to big feature packages like Lines of Code. They’ve also been encouraged by successfully reader-supported projects such as Who Counts?, which has been covering voting, immigration, gerrymandering, and citizenship questions ahead of the 2020 elections.

Check said that Slate’s advertising revenue, as at virtually all publications, has been impacted by coronavirus, including a dip in the hard-hit travel sector. But as a national publication, Slate isn’t reliant on local businesses that might be closed by shelter-in-place orders, and Check said their “broad base” of advertisers in technology and finance haven’t been as affected. Plus, he noted, the direct-to-consumer advertising that podcasts are known for (new Quip toothbrush or Blue Apron meal kit, anyone?) could get a boost from the many newly housebound listeners.

Even with what they’ve described as a rosier-than-many advertising outlook, Slate has clearly seen the need for further shifting its revenue balance away from ads and toward reader-generated revenue.

“We grew our ad business by double digits last year and right now the forecasts are still positive for year-over-year growth,” Check said. “We do think having diversified revenue streams and a greater alliance with our readers is something that would be healthier from a revenue perspective.”

POSTED     March 26, 2020, 2:38 p.m.
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