Poynter posted a misleading headline this week, stating that “Half of first year’s paywall revenue comes in first three months.”The story was based on a study conducted by Our Hometown, a Web publishing company that specializes in small community news sites. And technically, it’s true: the case study shows how one news site got 49% of its first-year cumulative revenues within the first three months of launching a paywall.But the Poynter article doesn’t seem to understand the nature of paywalls and subscription revenues. Initial sales always have to be compared to lifetime values of accounts, and retention is more important to a sustainable business Model than what happens in the first few months.
So don’t be fooled by the hype. Yes, launching a paywall will lead to an influx of revenues, and your initial sales are a good indicator of your viability. But retention and renewal rates are much better indicators of the healthiness of your bottom line. Plus, having more monthly or annual subscribers will also affect your perceived revenue growth on a quarterly basis.Luckily, our sister site Subscription Site Insider will be publishing a Subscription Retention Handbook very soon that will help you increase your renewal rates. Subscribe to our free newsletter (just enter your email in the blue box up top) to hear more!