How Micropayments Can Move Readers Through the Subscription Funnel
This year – and perhaps for the first time – the topic of micropayments was front and center at the 2019 INMA Media Subscription Summit, where publishers discussed best practices for growing digital subscriptions. It was a direct reflection of the industry’s shift in focus toward tools and solutions that can extend current business models.
For the past decade, methods of generating revenue from readers have veered from metered models to subscriptions, and most recently to memberships. But these are all centered on the notion that a user is willing to pay multiple publishers for ongoing access to content. That’s simply not going to happen.
With subscription numbers in the U.S. and Europe plateauing, publishers are now forced to explore alternative ways to grow revenue. Micropayments open up new revenue inroads and enable publishers to establish value with engaged users, creating a path to onboarding readers and converting them into paying subscribers.
The Reality of Subscriptions
Research from Reuters Institute and the University of Oxford indicates that only a small minority of consumers are prepared to take out new digital subscriptions. In 2019 this will challenge publishers, the majority of whom rely on subscription models to generate revenue as ad profits decline.
Publishers like the idea of consuming content through a subscription because subscriptions come with a certain amount of predictability in performance and revenue. But to consumers, subscriptions represent an added monthly cost. If users have one or two subscriptions to news websites, they won't be willing to spend more money on news content. That is fine for the publications they already subscribe to, but it’s bad news for other publishers who are looking to engage those same readers but are only offering a subscription-based model.
When it comes to consuming content, readers are far more interested in choice than in a single fixed model. Giving readers real choice means offering content beyond subscriptions in ways that accurately reflect their consumption behavior.
The Economy Between Ads and Subscriptions
While readers who occasionally browse a site are unlikely to subscribe, they may buy a few articles if the process is effortless. More frequent users may not subscribe for a year, but they may buy a day or a week of access. There is an entire economy that exists between ads and subscriptions – and micropayments unlock it.
Micropayments enable publishers to capture the interest of users who are not yet ready to become subscribers, but are willing to pay for quality content. Micropayments aren’t a business model, but they are a set of tools that can be used to solve the current subscription model problem. They give readers more choice and allow them to spread their money across more news outlets.
How Micropayments Increase Perceived Value of Content
A metered paywall is little more than a “voucher” with value that depreciates over time as readers use up their allotment of free articles. When the meter first starts, it is perceived as valuable because the readers have, say, 10 articles left to read. By the time a publisher looks to convert those readers – when they have used up their allotment – the perceived value has dwindled to nothing.
In contrast, micropayments establish value to the reader with every interaction. Every time a reader makes a micropayment, the cost is small, but the perceived value is much higher, and it increases over time as the user grows accustomed to paying for content. By the time a publisher pushes the offer to subscribe, the reader’s perceived value of the publication is considerably higher and the reader is more likely to pay for increased access to content.
This is a process, however, not a one-off action, and expectation management is essential. Markets grow at their own speed, and so do users. There is no magic bullet that gets you there in one step. Instead, it is important to realize that micropayments, like all tools, require an important component: time. The more paid content a publication creates, the more sales will be made, but the publication must have a thought-out strategy and invest time in driving that strategy to see success.
Publishers must leverage the advantages offered by micropayments to develop a content monetization strategy that gives people a choice for purchasing the content they want. If publications focus on trying to mitigate risk by limiting the amount of content available, they will fail. If, however, they produce great content and focus on an a-la-carte model – together with subscriptions – they will have the opportunity to monetize readers at every level of the conversion funnel.
Cosmin Ene is the founder and CEO of LaterPay, a payments and technology company with offices in the US and Germany. Under Cosmin’s leadership, LaterPay has become the monetization standard for local publishers in Germany with over 200 clients, and has expanded to the US market.