Why Subscription Retention Rates Slip Over Time for Newer Paywalls

Dan Burkhart of Recurly just posted a great chart showing why it’s dangerous for paywalled publishers to forecast revenues based on their first year’s

Dan Burkhart of Recurly just posted a great chart showing why it’s dangerous for paywalled publishers to forecast revenues based on their first year’s retention rates especially if your content was originally free.Your biggest fans and long-term readers of your free content are not only more likely to convert to paying than any other audience, they are also more likely to pay for a lot longer. Old-time fan paid membership accounts tend to have fabulous lifetime values. The new customers who discovered your site more recently, only after your paywall was erected, don’t have that same sort of brand relationship. Although they were impressed enough to convert at your paywall (although not nearly at as high a conversion rate as your older fans) and they’ll keep paying for months, their overall lifetime probably will be significantly lower than that of the old fans.It’s perfectly normal.Dan’s chart shows an example of a subscription site where the old fans had an average lifetime value of 18 months, whereas the new folks came in at 10 months average. (BTW: 10 months is roughly double the consumer paid content site average according to our research, so it’s still perfectly respectable.)The lesson is that no publisher new to paywalls should run spreadsheet forecasts for 2012 and beyond based on sales and lifetime values of old fans. It’s unrealistic to assume that initial level of success will continue — your numbers will level off after time as a higher and higher percent of your subscriber file is composed of “new” people.

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