What are dynamic paygates and does your news organization need them?
Dynamic paygates are disrupting legacy payment models by using data to monetize readers in increasingly sophisticated ways.
Peter Doucette, a managing director in the telecommunications, media & technology practice at FTI Consulting, spoke exclusively with Reuters about flexible monetization and maximizing paygate potential.
Before joining FTI Consulting, Peter was Chief Consumer Revenue Officer at The Boston Globe, developing the newspaper’s paid subscription model and dual website strategy.
How does an AI-driven, dynamic paywall function?
An AI driven, dynamic paywall is a fundamental shift in paywall technology, moving from a traditional one-size-fits-all, rules-based (number of articles) approach of a meter model to an individualized, experienced-based model driven by consumer data.
The paywall collects browsing or clickstream data from a user and builds an algorithm based on that, and other available data, to predict a consumer’s likelihood to subscribe.
This algorithm, typically called a propensity model, is built using artificial intelligence or machine learning techniques like Random Forest or Neural Networks. Armed with this propensity score, the publisher can create dynamic or individualized experiences.
So, users with higher propensity scores may be given fewer free articles because they are closer to purchase. Ones with lower scores which need more nurturing before subscribing may be given additional free articles or the opportunity to register or sign up for a newsletter.
Any estimates on the predicted returns they can deliver, compared with standard revenue subscription models?
There is a high degree of variability in performance with traditional subscription models, so establishing a benchmark for the current state is challenging.
That said, because of the potential of optimizing the path to purchase for individual users along with minimizing the downside risk on impression-based advertising from rules-based paywalls, some publishers are seeing significant gains in subscriber conversion and revenue in the two to five times range.
Why do dynamic paygates work better when aligned with varied, rich and high quality content that engages users?
All pay models work better when aligned with rich and high quality, engaging content and AI dynamic paywalls are no exception.
The power of these models is amplified when they have richer and more robust data sets to utilize. Having site registration where a user provides some information like an email address is critical. This allows a publisher to move an anonymous visitor into a known user, where they can track browsing behaviour across visits or devices, and greatly increase the effectiveness of the pay model.
Does every news organization require an AI revenue system?
I’m not sure every news organization needs an AI driven revenue system, but for many it makes a lot of sense.
In particular, if your objective is to increase your base of digital subscribers while minimizing the potential impact on impression-based advertising as the subscription model grows, then I think it might be a great fit.
But it also requires a certain level of technological and data sophistication to execute effectively, which may be challenging for smaller publishers.
What’s the future for dynamic paywalls?
I expect the adoption of dynamic paywalls to accelerate significantly in the next few years, particularly as the technology becomes more accessible for publishers. Right now, the technology is the hurdle, not the desire to treat users individually.
Overall, must news organizations continue their disruptive adaptation, and constantly seek new revenue and payment models?
I am a big believer in constant revenue and payment model experimentation. The publishers that can experiment quickly and incorporate these learnings into their specific business models are best poised to succeed. I don’t see the need for experimentation abating any time soon, particularly until a sustainable model for journalism is created.
Does the public truly have an appetite to pay for news content any longer?
Absolutely. In fact, I would say the demand for consumer-paid content is growing, as part of the broader shift of many consumer offerings moving from the product to the subscriber economy.
Subscription services like Spotify and Netflix demonstrate that paying for content online has become the rule and not the exception. It is incumbent on news publishers to evolve their business and operating model to effectively take advantage of this consumer behaviour shift.
Anything else to mention on futurism and this space?
I am bullish on the future of local journalism that is primarily supported by digital subscriptions.
It aligns with the mission of publishers to effectively serve their communities and audience, much better than a business model based on advertising did.
The challenge for news publishers is that they must evolve, learn new skills around running a digital subscription business and do that at a pace that is faster than the decline in the legacy print business.
The time is now to truly embrace the relationship with readers, and create content that is worth paying for and serve readers with great, digital news experiences.