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Politico to Test Paywall

Politico is testing out a paywall to see what the reception is. The testing phase will last for at least six months and will affect a small number of states scattered across America. Washington, D.C. residents, however, don’t need to fret. The memo says it won’t likely ever affect them.

“We are a unique publication – with unique opportunities in this area. The most unique aspect of POLITICO is that unlike other media companies, we often sell out our ad inventory in the Washington, D.C., market because demand for our ad space is so high. This means it’s highly unlikely we would ever institute a metered system in the D.C. area.”

See the full memo:

POLITICO staff,

We promised a series of changes, big and small, in coming weeks. So please consider this the first of many updates on things to come. The change we outline below would fall into the small category but one worth understanding in full. We want to be very transparent with each move we make, and explain in some detail the business and journalistic logic behind it. We think it’s important for everyone at this company to understand the big trends shaping our industry, so there is probably more in this memo and others to come than you might care to know.

Starting this week, we are going to test a metered system for subscriptions in a half-dozen states and internationally. We see this as an experiment in the truest sense, it’s something we do not have to do but want to do to get a better feel for readers’ willingness to pay for our journalism. We believe that every successful media company will ultimately charge for its content, using a variety of price points and methods, so it is very important we build real metrics to see how this trend will play out on POLITICO. The result will also help inform future decisions on other investments the company hopes to make in the media space.

Here is how the experiment will work: Readers overseas and in six states will be required to pay for our content after consuming a set number of pages of it, much like they do when visiting The New York Times, The Boston Globe and scores of other news sources. We will experiment with a few different price points and page limits to find the sweet spot for our readership. We chose smaller states, spread across the country, so our experiment captures any regional trends and also limits any potential loss of traffic to the site. This will last at least six months, so we have a large enough sample to appraise the results.

The decision to test a broader subscription model represents a shift in our thinking. As recently as a few months ago, we thought it was premature for POLITICO to start asking readers to pay for content, outside of Pro. But, it is increasingly clear that readers are more willing than we once thought to pay for content they value and enjoy. With more than 300 media companies now charging for online content in the U.S., the notion of paying to read expensive-to-produce journalism is no longer that exotic for sophisticated consumers. This is a very promising, if uncertain, trend in our country. The collective decision by media companies to give away for free a product of high value and high cost will go down as one of the worst, self-defeating moves in the history of industry. Thankfully, there are some signs this is changing.

We need to emphasize that this is an experiment, and one that might not work. While some publications, such as The New York Times and The Financial Times, have seen great success in getting readers to pay, many others have not. It is clear smaller media companies are struggling to get enough readers to pay enough money to make an appreciable difference to the bottom line. It is also not clear to us that the metered system, while dominant today, is the best model for subscriptions in the long run. We chose it because it’s the most popular one in the market today and one quite familiar to most of our loyal readers.

We are a unique publication – with unique opportunities in this area. The most unique aspect of POLITICO is that unlike other media companies, we often sell out our ad inventory in the Washington, D.C., market because demand for our ad space is so high. This means it’s highly unlikely we would ever institute a metered system in the D.C. area. The economics wouldn’t work because every company that has put a subscription system in place has seen some decrease in traffic, as you might expect. We want and need that traffic in D.C. because the desire of advertisers to reach our elite audience here is exceptionally strong. For you non-business folks, that is a very good problem to face.

Outside of Washington, what we will look for with this experiment is whether or not we can bring in more revenue through paying subscribers than we lose as a result of any decline in traffic. This is a fairly straightforward calculation – and one that will instruct our future thinking in this area.

 

This experiment will affect a tiny sliver of our readers, but enough to help guide decisions. To make it fair to readers, we will spread future experiments on subscriptions around to other states, so readers don’t feel treated unfairly by our market tests. It is our hope that by the end of the year we will have enough data to inform our next steps in the subscription space.

Thanks, as always, for reading and for making POLITICO a thrilling journalistic adventure.

Jim, John, Kim

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