The Argument for Registration Before Subscription

Building a subscription business is not about throwing a paywall up in front of readers. The truth is, a paywall is just the tool that prompts users to put their credit card information in. However, if you’re looking to grow your subscription business, it’s important to spend more time thinking about the entire subscription experience holistically.

One area that many publishers can get more innovative with is their registration process. In particular, with free registration as a precursor to the paid subscription.

In Piano’s recent benchmarks report, it said:

Our data shows that a significant number of registered users who later pay for a subscription make that jump quickly, often during the first 24 hours after registering. Even more convert during the first month. But the biggest portion of paid conversions from registered users — over 40% — still happens after that first month.

There are many reasons why this is the case. The biggest, in my opinion, is that users often need time to decide whether they want to pay. Of course, no one wants to pay for one article; however, if they are consistently hitting your paywall, they might realize it’s worth paying the subscription so they can finally access the content.

And so, the first goal of putting a registration in place is to promote more content to them.

But, it does beg the question: why registration versus just getting them to sign up for a newsletter? If the goal is to share more content with them, wouldn’t a newsletter be more accessible than registration?

In many respects, that’s true. But it doesn’t consider the secondary benefits of implementing registration versus just capturing an email address. So let’s dig into those.

First, registration can reduce friction. When you’re subscribing to a site today, you not only have to create an account, but you also have to pay. It’s two significant steps. Friction is a big reason that people bounce on subscription pages. And so, by breaking it up into two stages—first, registration, and second, subscription—you can likely increase conversions on the paid product.

Imagine the experience: a user creates an account and starts perusing the content on the site. Then, they hit a premium piece of content, and it asks them to create a subscription. Since they’re already logged in, they don’t need to create an account, so they can go right to the paid portion. That saves time.

You could argue that registration actually increases friction since you’re forcing users to make accounts when they’re not ultra-loyal. I would say this is necessary friction since most users don’t opt to pay on day one. As the above quote says, “the biggest portion of paid conversions from registered users — over 40% — still happens after the first month.” That means you must stay in contact with these people for over 30 days. After all that time, if they decide to become a paying subscriber, you’ll have spread out the friction over multiple experiences.

Second, you can start to gather high-quality 1st-party data without any concern about cookies. A site that forces registered users to log in to access content has the most robust data set because it doesn’t have to worry about different devices. For example, if I read The New York Times on my desktop, I have to register and log in. If I read it on my phone, I have to do the same thing. CDPs have a more challenging time handling cross-device situations except in cases where the user comes through email. That’s not a problem with registration.

Third, it can help reduce your bounce rate from specific channels. The big complaint about subscriptions that I see on Twitter is that users want to be able to read the random article they find on social media but can’t because of paywalls. Social has, historically, been a horrible channel for conversion rates. And yet, publishers continue trying to force the conversion to happen.

A simple strategy could be to set up a firm registration wall where the user has to create an account when they come from social. If social has a horrible conversion rate, get them signed up for free so you can market to them through email. Will it work? Possibly. Users say they don’t want to pay, but maybe they’ll sign up instead. And then, as a social user becomes an owned user, their propensity to pay will improve.

This brings us back to the beginning: the true goal of registration is to be able to market to people appropriately. And here is where a quick reminder on stoppage rate is required.

The stoppage rate is the number of people that see a paywall. You can’t get someone to pay without actually seeing the offering. Early subscription businesses set their stoppage rates impossibly high. As marketers have become smarter, they’ve tightened that. For example, if you used to allow ten free articles before subscription, cutting it to five would likely increase conversion rates simply because people would see the offer.

The con of registration

That doesn’t mean registration is a panacea for everything. While I argue it spreads out friction for paid subscription businesses, it is still, in effect, a type of friction. Therefore, users coming to your site might hit the reg wall and decide it’s not worth their time to register and bounce.

This can hurt advertising revenue if you’re a diversified media business. Traffic to sites drops when you put up a registration. Any resistance to seeing content can impact traffic.

That’s why it’s essential to really understand the pros and cons here. On the one hand, yes, you’re capturing more data about your audience, and when it comes time to pay for a subscription, there’s less friction. But, on the other hand, you’re seeing a drop in advertising revenue due to a decline in traffic.

Ultimately, you’ve got to do a deeper review of your business and understand where the revenue potential is. If you believe subscriptions will more than offset the lost advertising revenue, do it. But, it’s important to remember that it can take a long time to get a registered user to convert. I say 40% after the first month, but 11% is from the 9th to the 12th month. But you’re in it for the long haul, so be prepared for that.

Ultimately, I believe publishers need to get smarter with their subscription businesses. As I said above, it’s not just a paywall. That’s just a tool. It’s a complete user flow. Thinking about it as a funnel where users register, you collect data, and then target offers to them is explicitly how you build a more mature subscription business. It takes time, but it’s how you ultimately succeed.

Thanks for reading today’s AMO. If you have thoughts, hit reply or join the AMO Slack. Have a great weekend!