Micropayments Lower Barriers to Entry, Helping Publishers Reach New Audiences
We live in a culture of sharing: You don’t have to own a car to get around, or buy property to live well. This same effect has trickled into consumption of entertainment and even news. Why buy a DVD if you’ve got Netflix, or order a one-year print subscription if you’re subscribed to a newsletter that curates all the relevant news?
Faced with this sea change, it’s easy for publishers and content purveyors to despair over subscription losses. But people understand that the content they love consuming costs money, and they’re still willing to pay for it. The only difference is, how they’re willing to pay for it has changed.
Millennials Will Pay for Content, But in New Ways
Milliennials consume massive amounts of online media, and are driving major online trends—like the increase in mobile traffic and growth of streaming video. The good news is that millennials—contrary to popular opinion—do consume news—and plenty. 85% say keeping up with the news is important to them, and 69% consume news daily, per a study from the Media Insight Project.
More importantly, they’re paying for it—40% of millennials have personally paid for the news out-of-pocket. The question is, how do they prefer to pay for it?
For the answer, look to micropayments, which play a growing role in publishing. You may recognize micropayments from the entertainment industry: Why pay extra for all those channels you don’t like on cable when you can watch just the episode of a show you want for $2.99 via Apple or Amazon?
Micropayments are a clever way to target non-subscribers who are interested in your content but may not want a long-term subscription today. To determine whether micropayments suit your business, it’s key to analyze your user base. If your own all-access subscribers make up a less-than-desirable total of your earnings, you probably have a strong potential prospect base for micropayments. The non-subscribers or lower-tier subscribers can be targeted with a lower point of entry: Like a per-article rate.
But to make this work, it’s key to offer a certain degree of flexibility, as well as consider how you’ll position this new offering in your articles or on your website. The process should be simple, a couple of clicks at most to conduct the transaction and gain access; some publishers even let customers refund themselves, which cultivates trust.
How Publishers Can Use Micropayments
Another harbinger of change is Blendle, a Dutch online news platform that is currently in beta in the U.S. (with a full U.S. launch likely within the year). It works with over 56 publishers, including Time, The Wall Street Journal, Mother Jones, the Washington Post and Financial Times. Costs range from around $0.15 for snippets of a story and $2.50 for feature stories, with an ease of use comparable to Spotify. Blendle also permits readers to refund a purchase within 24 hours if they decide they don’t like an article.
Micropayments may resonate as a surprising solution in struggling sectors … but it isn’t surprising when you consider the direction of the market. Users increasingly prefer content à la carte, from movies to music. Spotify has benefited enormously from this model, growing revenue 80% in 2015 to reach $2 billion. On some level, apps are also a reflection of this trend: The average global user spends the equivalent of $9.60 per month, per app. Well known player in the micropayments space iTunes has succeeded where others have fallen short, leveraging micropayments through eWallet and within their app – reaching over 800 million accounts in 2014.
Many decry that news has become a commodity, and can be found for free anywhere … but if this election year has proven anything, it’s how important people consider news to be. Since November, The New York Times added 132,000 new subscribers. It’s also experimenting in its own form of micropayments. Users can subscribe just to the crossword puzzle, which still boasts strong revenue numbers.
For those worried it may undercut subscription revenue, there’s good news on that front, too: Micropayments are a route to more subscribers, enabling users to try before they commit to something long-term. If someone regularly consumes via micropayments, they’re more likely to see the benefit in converting (especially if the deal is sweetened with an exclusive offer and discount).
Of course, there will always be casual users who will never see the value in an all-you-can-eat monthly subscription. Micropayments, far from replacing subscriptions, provide a way to monetize these users without cannibalizing full-subscription customers.
We have nothing to fear from opening the door to micropayments. Those who believe in the value of their content, and trust readers to recognize it, will find value in this model. It makes less and less sense to ask people to pay a bulk rate in which they underwrite mostly things they’ll never read; trust them instead to fund what they believe in, because they will.
Scott is a strategic and media technology professional with over ten years of U.S. & U.K. client service and leadership experience. As Senior Vice President of North America for MPP Global, Scott is responsible for leading a cross vertical organization by assisting media and entertainment companies with identity management, CRM, and eCommerce solutions. Over the past three years, Scott has worked at the executive level for MPP Global's U.S. headquarters in New York and is influential in developing long-term relationships with strategic partners.