December 23, 2022 | By Sara Guaglione
The Atlantic will roll out out in early January a new dynamic paywall that offers varying subscription prices as it hopes to meet its next benchmark to attract 1 million print and digital subscribers by the end of 2024.
The Atlantic currently has about 860,000 total subscribers (including those subscribed to The Atlantic on Apple News+). Of which, 42% of those subscribers are digital-only and 58% are print and digital subscribers. The company is on track to add a total of 30,000 subscribers by the end of this year, said Atlantic CEO Nick Thompson. The aim is to gain about 125,000 subscribers split across the next two years by implementing a “smart meter,” Thompson told Digiday.
The new paywall, which was built in-house and tested on The Atlantic’s site since the summer, will hit readers based on how likely they are to subscribe, determined by their behavior on the site. The variable pricing model means different cohorts of readers will see different prices, ranging from $60-$100. It’s an effort by The Atlantic to see if they can make more revenue per reader. Its regular rate is $60 for a digital subscription, $70 for a print and digital subscription and $100 for a premium subscription (which includes ad-free access and a gift subscription).
Thompson said the tests have gained subscribers and increased The Atlantic’s ARPU, though he declined to give exact figures. In The Atlantic’s tests, these efforts have not impacted churn or bounce rates, he said. Thompson declined to share the conversion rate at The Atlantic.
Getting to 1 million subscribers in the next two years for The Atlantic is “certainly achievable,” said Matt Lindsay, president of subscription management and customer data analytics firm Mather Economics which works with publishers, though he declined to say which ones. Mather Economics has worked with The Atlantic in the past, but is not currently a client of theirs.
The ‘dance’ of the ‘smart meter‘
The Atlantic’s dynamic paywall signals a maturation of its digital subscription business and metered paywall, which launched in September 2019, at which point The Atlantic had roughly 400,000 print subscribers, Thompson said.
Even three years ago was a different era for digital subscriptions — publishers have locked down too much of their coverage and potentially missed out on advertising revenue, conceded Lindsay.
“The pendulum had swung too far towards subscriptions, and I think now people are taking a more balanced look at this,” he added.
If The Atlantic has a period of time with “good [direct-sold] ad inventory,” a dynamic paywall gives them the flexibility to loosen that meter so more readers can move around the site, Thompson said. For example, if The Atlantic sold ads on 30 million impressions, it can lower the meter until they are “confident” they will get those impressions that month, and then tighten up the meter again.
“It’s almost like a dance” between balancing out advertising and consumer revenue, said The Atlantic’s chief growth officer Megha Garibaldi.
The Atlantic’s model also means the paywall can be shown to readers who are more likely to subscribe (and not so often for those unlikely to open their wallets), as opposed to its previous metered paywall which readers hit after a few articles, regardless of who they are. Many factors go into that calculation, such as referral source, time of day, reader history, what type of content (and how much content) they’re consuming and ad inventory sold at that time. The Atlantic has found that people who read across verticals are more likely to subscribe, for example, Thompson said.
Different prices for different readers
The Atlantic’s dynamic paywall has also built in variable pricing options, meaning different prices can be offered to different cohorts of readers to “figure out what the optimal price is for the publication” and to find the “cap,” Thompson said.
“Targeted pricing enables companies to better match their customers’ value perception with their relationship,” Lindsay said. “If you have a one size fits all price, you’re going to undercharge some people and unfortunately you’ll probably overcharge other people and they’re going to churn. Ideally, you’d like to come up with some equitable price for different segments of the market.”
There are two price buckets The Atlantic is testing: its entry-level price for a subscription and its renewal price.
“You don’t want there to be huge variability in pricing,” Thompson said. “It’s a little unfair.”
When asked about the issue of potential discriminatory practices around variable pricing, Thompson was quick to say the model is based on actions on the site and not on other data such as demographics or zip code. The team manually analyzes cohorts to see if “any biases have slipped in” and to check if “demographics of readership have changed because of this meter.”
Another challenge is if readers return to the site and a new price is offered. However, The Atlantic has received “no complaints” from readers in its dynamic paywall tests, said Garibaldi.
The Atlantic also hopes the wall can help with renewal rates by targeting readers with different prices based on their likelihood to churn. If the data shows a reader is more likely to churn, the publisher can offer the reader a renewal rate close to their introductory offer. If there’s a lower likelihood, they can raise the renewal price to a higher tier. (The Atlantic does not offer discounts or sales for its subscription, other than to teachers and students.)
Piano, one of the largest paywall tech companies in media, is beta testing a similar dynamic pricing feature with five clients that will allow publishers to “create more complex subscription pricing models,” said Michael Silberman, Piano’s evp of strategy and social. [Editor’s note: Piano is a contracted vendor with Digiday.] He argued it’s not that different from a “classic magazine or newspaper strategy of step-up pricing” where readers start at a lower introductory price and then the price increases over time.
Piano data shows “different users are willing to pay different prices,” Silberman said. “By making it possible to take price sensitivity into account and to have different prices for different users with more complex rule sets, you’re going to maximize revenue over time.”