Magazine publisher Condé Nast said it would put all its titles behind paywalls by the end of the year, a move that underscores how critical it has become for major publishers to generate revenue beyond advertising.
Condé Nast, which publishes magazines including Vogue, GQ and Bon Appétit, lost $120 million in 2017. The company, a unit of closely held Advance Publications Inc., expects to return to profitability by 2020. It also expects to rely on advertising for only half of its revenue by end-2022, down from 70% last year, Chief Executive Bob Sauerberg said last summer.
Last November, Condé Nast said Mr. Sauerberg would step down from his position after a new global CEO is named to oversee both Condé Nast and Condé Nast International. A search is under way.
Condé Nast currently has three titles behind metered paywalls that allow access to four free articles each month: The New Yorker, Vanity Fair and Wired.
“When you put a price tag on something, that must mean you have confidence in the product,” said Pamela Drucker Mann, Condé Nast’s chief revenue and marketing officer, who pushed for the paywalls. She said she didn’t expect any of the titles going behind a paywall to lose digital audiences.
Monica Ray, Condé Nast’s executive vice president of consumer marketing, said she expected subscription revenues to significantly increase over the next few years. She said the advantage of a metered paywall is that it enables casual readers to access up to a certain number of articles and post them to social media, building digital audience.
“In a sense, everything is free and nothing is free, depending on your consumption during a defined time period,” Ms. Ray said.
The New Yorker, which debuted a metered paywall in November 2014, generated about $115 million in paid subscription revenue in 2018, up 69% from $68 million in 2015, people familiar with the matter said. That revenue includes consumers who subscribed to the digital and print editions, although subscribers today no longer have the option of subscribing solely to the print magazine. The New Yorker’s regular renewal price for a print and digital bundle is currently moving to $149 a year from $119 a year. The magazine will publish 47 issues this year.
Wired, a tech magazine, followed with a metered paywall in February 2018, and Vanity Fair in April. Both titles have a regular renewal rate for print and digital of $30 a year, although both are rolling out a new regular renewal rate of $49 annually. Wired promises advertisers a paid audience of 900,000, while Vanity Fair promises a paid audience of 1.2 million.
Ms. Ray said it wasn’t clear what form the paywalls would take for each of the other titles, which include Glamour, Self, Teen Vogue, the tech website Ars Technica, and Them, which serves the LGBTQ community.
Bon Appétit’s website, for example, has a lot of recipes. “We may take a different approach with recipes,” Ms. Ray said. “And Architectural Digest has an incredible archive of photos. If you’re decorating your apartment, maybe that archive is desirable to you.”
Matt Lindsay, president of the consulting firm Mather Economics LLC, said that approximately 91% of digital readers consume four or fewer articles each month from the same magazine, and that this group accounts for 55% of all digital article pages read.
The cases of the New Yorker, Vanity Fair and Wired have shown metered paywalls don’t necessarily affect traffic negatively. The New Yorker’s online audience last month was up 12% from December 2015, about a year after the paywall was first installed, according to measurement firm Comscore Inc. Wired and Vanity Fair, which both launched a paywall less than a year ago, saw their online audience grow by 12% and shrink by 3% respectively compared with the month before the launch.
“The concern with a metered paywall is that you’ll lose advertising revenue,” said Mr. Lindsay. He noted, however, that paid subscribers may be worth more to advertisers because it’s an engaged audience.
Condé Nast is considering charging advertisers a premium for access to those subscribers, said Chris Mitchell, chief business officer for Condé Nast’s culture division, which includes the New Yorker, Wired and Vanity Fair.
Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com