Much of what you read about charging for online content is ill informed. All too often the question is put as if the only choices were to charge everybody or nobody at all, for all content or for none of it. And although some coverage is more nuanced, it rarely sheds any light on how the people who are working on this problem are going about it. If you are trying to get to grips with the real issues, this post might help.
A recent survey claimed that somewhere between 5% and 10% of an average paper's online audience may be willing to pay for the right to access the newspaper's site. This is not an insignificant amount of people – for many papers, 10% of monthly online reach is comparable to the entire print circulation. So clearly there is some money to be made. The question is how.
Dumb models need not apply. If you just drop a big pay wall and force everybody to pay you will lose up to 95% of your audience, and a similar (although somewhat smaller) percentage of your ad revenues. For most papers the new subscription revenue would not be enough to make up for this. So, clearly, a big pay-wall that charges everybody for everything is not a good idea. Everybody knows this, and almost nobody is considering this approach.
A better idea is to come up with a clever pay-wall that only charges those readers who are willing to pay and leaves the rest undisturbed. If you can pull this off, you have a win-win: you keep all your readers, page-views and ad revenues, and on top of that you get 5%-10% of your readers to pay.
The trick is how to do this, and in this there are two difficult challenges: targeting the right people, and deciding what to charge for (and how much).
About targeting: Try to charge too many people and you lose readers and ad revenue. And if the people you lose are among your frequent readers, you could lose quite a bit of revenue: each of them may account for ten times the number of page-views that other readers do (or more). So, play it safe: err on the side of caution and show the pay-wall only to a very small group that you are confident will pay. You may not get it quite right, but that's OK. You may end up not charging some people who might have paid, but at least you keep their ad revenues. And if you end up charging some people who are not willing to pay, at least you were not charging that many people to begin with so the loss of ad revenue is small.
About what to charge for: the typical way of dealing with this is to identify (or develop) some content within your site that is particularly valued by your targeted segment, call it "premium" and put it behind a pay-wall – while keeping the rest of your site free. The problem with this is that your targeted readers will only pay according to how much they value the premium bits, not according to how much they value your entire site – and this may not amount to much. A different approach is the one used by the Financial Times, which charges anyone who reads more than ten articles per month. The idea there is that people who value the FT enough are also frequent readers of it; the downside is that not all (potential) frequent readers are willing to pay, and you lose the ad revenues you could get from them. There are many other ways to target people who value your site. For example, you could charge people who visit before 9am, or who access it via their iPhones.
And then there's the PR. You don't want your pricing policy to come across as too arbitrary. You can't just say "we think you fall in a segment that values our content and therefore you should pay us $50 per annum". You need to be upfront about which ways of using your site (e.g. frequency, device, etc) are free and which ones are not, so nobody feels singled out.
All of this calls for a lot of research, analytics and technology. The devil is in the details and there are many of them. But it can be done. And as you can see, the idea is simple.