freemium model

Is the Freemium Model Right For Your Publication?

How to decide whether the freemium model is a good fit for your publication and implement this strategy to increase revenue and profits in the New Year

Paywalls, subscriptions, micropayments, memberships. When it comes to monetization strategies, publishers are feeling like they’ve tried it all.

Ever since the financial viability of advertising-based revenue came into question, digital publishers have been trying out newer strategies for monetization. Some publishers have pushed full throttle into subscription programs, placing all of their content behind hard paywalls and making it so readers can’t access content until they sign up for monthly subscription packages. Other publishers have taken a milder approach, continuing to give away content for free and relying on display advertising as a primary revenue source.

Somewhere between these two approaches is a middle ground that we’re calling the freemium model. It’s a strategy that’s picking up steam at online magazines and other niche publications, as publishers search for a plan to maximize profits.

Understanding the Freemium Model

When we talk about the freemium model for publishing, we’re describing a model that relies on a mix of free and premium (paid) content. Publishers who adopt the freemium model will often post the majority of articles for free on their websites, while keeping their best content hidden behind paywalls. Another strategy that falls under the freemium model is to run display ads alongside free content, while giving paying subscribers access to the same content without ads. This is a strategy that’s especially common among podcasters.

Mobile app developers are regular users of the freemium model, as well. Any developer with an app that’s free to download, but costs money to access upgraded features, is utilizing this strategy.

The benefits of the freemium model are clear. Readers get a taste of what’s being offered by the publication, and based on what they see, they’re incentivized to want to upgrade to a paid subscription. Publishers who lock all of their content behind hard paywalls are missing out on the chance to entice readers, while publishers who offer all of their content for free aren’t giving readers any incentive to pay.

What’s Behind Freemium’s Popularity?

Much of the recent push toward using the freemium model is due to the workarounds that readers have found in standard browsers. For example, many readers have discovered that they can get around paywalls by looking at publishers’ websites in Incognito or Private mode. This makes the paywall less effective, and it can hurt a publisher’s ability to generate sustainable revenue.

Recent updates to Chrome and Safari are hurting the premium publishing strategy even more. Although some publishers had found ways to identify readers browsing their sites in Incognito mode, newer releases of Chrome and Safari removed that capability. The result is that many digital publishers are pulling back on their premium subscription programs and focusing more heavily on the freemium publishing model.

Maximizing Profits with the Freemium Model

Should your publication adopt a freemium model or keep its doors open to everyone? To maximize the benefits of this strategy, keep these best practices in mind.

  • Test multiple variables in your metered paywall—such as the number of free articles, cost, and type of content—to find the optimal balance of free and paid content based on your reader demographic.
  • Use free content offerings as a way to educate visitors about what your publication stands for and the kind of content you produce.
  • Avoid providing too much value in your free offerings, and make sure to give your readers a reason to want to upgrade.
  • Consider joining an industry group or working with a web developer who has experience with digital publishers using different monetization strategies.
  • Use A/B testing to learn where people are dropping out of the purchase process and how you can keep those readers on your website for longer.
  • Continue to diversify your revenue mix, even if subscriptions under the freemium model are taking off.

At Web Publisher PRO, we guide online publishers through the process of developing effective business strategies. Learn more about how we can work together to create your ideal revenue mix by scheduling a consultation.