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Politico Testing Paywall Model In 6 States

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Politico Chief White House Correspondent Mike Allen talks during the Politico Playbook Breakfast at the Newseum in Washington, DC, November 28, 2012. (JIM WATSON/AFP/Getty Images)
Politico Chief White House Correspondent Mike Allen talks during the Politico Playbook Breakfast at the Newseum in Washington, DC, November 28, 2012. (JIM WATSON/AFP/Getty Images)

NEW YORK –- Politico announced Thursday that the Beltway-based political news site is going to experiment with a metered subscription model in a half-dozen states and abroad to find out if readers will pay for the online publication.

Politico already has a subscription service focused on more wonky policy issues, Politico Pro, but this will be the first time the publication has asked readers to pay for content splashed atop the Politico.com homepage and throughout the site.

In a staff memo, Politico’s top brass -– editor-in-chief John Harris, executive editor Jim VandeHei and chief operating officer Kim Kingsley –- said they “see this as an experiment in the truest sense” and that “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.” They argued that “every successful media company will ultimately charge for its content,” and so Politico needs metrics to determine its best pricing model.

In the experiment, Politico will not be charging for its email newsletters, such as the influential Playbook, published each morning by chief White House correspondent Mike Allen. While the emailed version of Playbook, and other newsletters, will not be affected, the web version will be blocked to non-subscribers once they reach a set number of articles and the meter kicks in, according to a spokesperson. Politico's blogs will also be behind the paywall.

Several news outlets, such as The New York Times, have successfully launched metered paywalls in recent years and the Washington Post is unveiling a pay model this summer. Readers have long paid for online access to the Wall Street Journal, which provides information considered by many to be essential in the financial world.

But it remains to be seen if readers will pay for political news and commentary given the sheer volume of such content available for free online. It's also unclear how data gained in a handful of states would indicate to the Washington-focused outlet whether or not to charge for content on a wider scale.

The six states where the experiment will go into effect next week are Iowa, North Dakota, Vermont, Mississippi, New Mexico and Wyoming, according to Politico.

The publication 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,” according to the memo obtained by The Huffington Post. One location where Politico won’t be testing the pay model is in the nation's capital.

Last June, The Huffington Post reported that Politico has a two-tiered system for selling ads, with a significant premium paid for readers in and around Washington. A traffic drop in Washington resulting from a metered paywall would likely make a dent in the company's ad revenue.

Indeed, VandeHei suggested to The Huffington Post at the time that "Politico is geared toward a niche audience and doesn’t have to continuously grow traffic as do more general-interest sites that don’t command premium ad rates."

“We’re not reliant on big traffic,” VandeHei said. “Our whole business model is being indispensable to this city, to people who do this stuff professionally, to people who are addicted to it.”

In Thursday's memo, Politico’s top editors said, “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,” they continued. “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."

The paywall experiment comes on the heels of publisher Robert Allbritton exploring the sale of several TV stations that have long been part of his family’s company, Allbritton Communications, a move that could lend additional resources to Politico. Allbritton said he would not sell the news site, which he launched in 2007 (and where this reporter worked from that late that year until March 2010).

But a subscription model isn't the only way Politico is looking to generate revenue. On Thursday, the site began publishing sponsored content, something numerous outlets are exploring in hopes of bringing in revenue beyond subscriptions and traditional ads.

The full Politico staff memo is below:

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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