Unlocking the Paywall Puzzle: Understanding the Psychology Behind Reader Decisions

Spend less than 6 minutes of your life talking with me about reader psychology, newsletter monetization and keeping your sanity intact

A nice lady sitting in the park. She’s smiling because she’s writing in a sunny meadow, her laptop is also a hoverboard and she’s probably not thinking about paywalls.

Ah, the paywall. It’s that touchy topic that seems to get everyone all worked up in their fee-fees. I’ve intentionally avoided talking about it for a while. But now feels like the right time to dive in — for the whole month of October. (Hang on, it’s a money party all month.)

If you’ve put even a toe into the land of Substack advice, you’ve probably heard every side of the debate: “Paywalls will scare off your readers!” or “You’ll never make a dime without one!” Or perhaps you put a paywall up and it created so much extra work to manage that you threw your hands up and assumed the paywall was the cause of your creative block.

Paywalls can be a lot of unnecessary drama. 

Here’s the thing, though — figuring out whether to use a paywall and how to do it right really comes down to knowing two things: who your readers are and what you’re giving them. And I would know.

In my pre-Substack days, I was working editorial strategy and copywriting to help sell $500k homes. I even took a voluntary stint as an ecommerce business owner where I learned about the horrors of buying candles and calendars wholesale, 200% markups, minimum sale prices and the outrageous scams just waiting for a gullible gal on the internet. But you know what? The principle stayed the same. Understanding your audience and their motivations is the key to selling the stationery you can’t quite get off the shelf. (Any takers?) And that’s why I’m finally ready to tackle this topic.

I’m hosting a conversation today about what we know (or don’t know) about our readers and how they respond to some key psychological factors that drive buying decisions. I think that these factors could be the difference between a successful paywall strategy and one that leaves your readers wondering, “Why bother?”

So, let’s break it down.

1. Reciprocity: Readers Need to Feel They’ve Received First
   One of the most significant psychological barriers to upgrading is the lack of perceived reciprocity. Readers need to feel they’ve gained something valuable before they’re willing to give back financially. This principle is widely recognized in social psychology, particularly through the work of Robert Cialdini in Influence: The Psychology of Persuasion. You can read more about reciprocity here.

2. Scarcity: The Fear of Missing Out Drives Action
   Can I be captain obvious for a minute? People hate missing out, even the ethical, anti-capitalist readers in your audience will eventually buy something. And if everything you create is free, there’s no sense of urgency for readers to upgrade. No one feels the need to take action because, hey, they’re already getting everything. The scarcity principle highlights how exclusivity drives decisions. Learn more about scarcity here or just observe yourself the next time you’re told “No, you can’t have that,” like I did when I upgraded to

   Lauren Hough
   ’s newsletter just so I could leave a comment on this post.¹

3. Consistency: Building Trust Takes Time
   Readers are all about trust. If they don’t see a clear, consistent pattern in what paying subscribers get, they’re going to hesitate. No one wants to subscribe and wonder if they’ll actually get what they’re paying for. The principle of consistency, which emphasizes the importance of aligning future behavior with past commitments, is key in building trust. More on how consistency impacts decision-making can be found here.

4. Loss Aversion: What Do Readers Risk by Not Subscribing?
   People are wired to avoid loss. If readers don’t feel like they’re missing out by not subscribing, they’re happy to stay in the free lane. This is where loss aversion comes into play. Daniel Kahneman and Amos Tversky’s work on loss aversion suggests that the fear of losing out can be a stronger motivator than the promise of gaining something. Dive into the research on loss aversion here.

Why Readers Don’t Upgrade: The Missing Piece

A lot of readers don’t upgrade because they don’t see the need. They’re content with the free posts and essays and don’t see what more they could get from subscribing. It’s (usually) not that they don’t value your work—it’s just that they haven’t been convinced that upgrading brings anything new to the table. This is where understanding your readers’ motivations becomes crucial. It’s often the missing piece in the paywall conversation.

Of course, I recognize that I’m exploring psychological concepts after I teased you with the hope of a paywall strategy that doesn’t make you lose your mind. So I’ll admit that while reciprocity, scarcity, consistency and loss aversion can be fun special interests if you’re into that sort of thing, they’re not altogether high priorities for the writers who need to write my next summer read. (Looking again at you, Lauren.)

I’m sure a lot of you are thinking: What if I just don’t want to be bothered with all these complex factors? What if I came to Substack just to write about the things I love and share my passion with the world?

The good news is, you don’t have to become an expert in sales psychology to build a successful newsletter. Yes, these principles help shape decisions, but at the core of it all is your writing. That’s what keeps readers coming back, and that’s where your energy should ultimately be as much as humanly possible.

A Flexible Paywall Model for Newsletters of All Shapes and Sizes

So, whether you’re a first-time paywalling creator or a seasoned newsletter writer, I’m here to tell you that your paywall strategy doesn’t need to be rigid. A flexible model can work for newsletters of all shapes and sizes — one that employs certain buying factors through an authentic, honest, boundary-honoring lens. Because at the end of the day, the writing really is what keeps readers coming back. And a paywall strategy should be serving your voice, not dictating it.

A flexible paywall model should let you showcase your best work, keep the door open for new readers and still offer enough exclusivity to make paying subscribers feel like they’re getting something special. It’s about understanding your readers and building a model that grows with your newsletter—without burning you out.

Next week, I’ll be sharing a paid newsletter model I’ve been tinkering with in my editorial science lab (not a real thing) for possibly the entirety of my Substack life (about 2 years). It includes a launch sequence that keeps community and your writing at the heart of the matter and suggests pricing based on the Substack Reader Behavior Survey I conducted this summer. (Because a little data can make up for a lot of missing context.) I’ll be sharing more insights on how to craft a paywall strategy that centers around your writing, helping you grow your audience and make money sustainably, no matter what stage you’re at. And I bet we’ll even have some fun along the way.

If you’ve enjoyed this dive into the world of paywalls and how they intersect with the psychology of your readers, I’ve got something special for you. For this month only, when you upgrade to a paid subscription, you’ll receive my copy of my newest digital guide, Speak from the Ground You Stand On. It’s a deep, practical resource designed to help you write with confidence and clarity, ensuring your voice resonates with readers while staying true to yourself. This guide is my gift to you, included with all paid upgrades for October.

1. I will contradict myself on purpose right now and say: SOME readers, in the right newsletter context, can be extremely motivated by the right “no paywall” strategy (I’m working on one right now with a client). But the vast majority of everybody else on Substack? Your readers need some familiar buying barriers to help them decide if/when they’re ready to upgrade. Sorry.

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