Digital Publishing
4 mins read

Micropayments can unlock “an entire economy” between ads and subscriptions

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As more publishers put up paywalls and ask readers to subscribe, they are also staring at the possibility of countering “subscription fatigue.” The recurring monthly payments—a lifeline for publishers—can be a drain on their audiences’ finances if they have to subscribe to every other site they visit. According to Reuters’ Journalism, Media and Technology Trends and Predictions 2019 only a small minority of consumers are ready to purchase new digital subscriptions.

The practice of micropayments may have a solution to this problem. Some publishers think that asking readers for 10 or 20 cents per article would be too little to be financially viable. But it can serve as an additional source of revenue that keeps readers on the site and can also help drive revenues from advertising in the process.

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.

Cosmin Ene, Founder and CEO of LaterPay, a payments and technology company

Going for the 95% of readers that do not subscribe

Speaking at Newsrewired earlier this year, Dominic Young, the founder of microtransaction platform Agate, said that subscriptions were a good model but they made a publisher focus on just 5% of its potential readership who would be willing to pay consistently. They were ignoring the 95% who may only see them as one of the several brands they regularly visit.

A legacy publisher that has made “‘fairly good’ progress” with micropayments is Canadian newspaper, the Winnipeg Free Press. It was the first in the country to monetize its content through micropayments in 2015.

By 2018 the newspaper had over 40,000 paying digital readers, which includes over 7,000 digital subscribers (75% increase from 2016) and micropay readers each. Further, it had more than 26,000 activated print subscribers. It was selling about 892,000 articles per month at $0.27 per article.

Micropayment allows people to get into the habit of paying for news, and reinforces the value of the content because we’re saying that every piece of content has value.

Christian Panson, Vice President, Digital and Technology, Winnipeg Free Press

The publisher gets about a million visitors per month, and has a hybrid paywall with micropayments being a “small but important part of the system,” according to INMA.

It’s Vice President of Digital and Technology, Christian Panson comments, “Micropayment isn’t that silver bullet that will suddenly save publishers and keep them alive—but it can help, and as a tool, it’s quite effective.”   

Unlock “an entire economy”

The Free Press gives its readers a 60-day free trial after which they receive an offer based on their reading habits. Readers who consume more than 40 articles a month are presented with a subscription offer.

Those who read less than 40 articles per month are presented with the micropayment model where most articles are priced at  $0.27 each—the figure was reached after “research and deep analysis.”

Panson says, “One model I thought was interesting was variable pricing. But it’s hard to make the judgment of how and what to charge and becomes a lot of effort. Increasing the US$0.27 by a few cents isn’t going to do much to add to our revenue, but it could be a trigger for more people to convert to all-access digital subscriptions.”

Readers who buy articles with micropayments own their purchases forever. They can also ask for a refund if they feel that the article did not provide enough value—however, the “refund rate is very low,” according to Panson.

The purchase process is frictionless, readers add their payment method once and after that, they can smoothly keep reading articles without going through the payment process. The publisher also has a solution for situations where a reader clicks on an article by mistake—it charges six seconds after the click, giving readers time to retract.

There is an entire economy that exists between ads and subscriptions – and micropayments unlock it.

Cosmin Ene, Founder and CEO of LaterPay

“Useful tool in getting new subscribers”

Panson acknowledges that micropayment is not a big revenue generator but he says it does well—“Allows for personalized debundling and is our upsell vehicle. Getting people across and then upselling them has been a very useful tool in getting new subscribers.”

It’s just part of the sales funnel, as we call it. Our focus is really on building the number of full-time online subscribers, using micropayments as the way in the door.

Bob Cox, Publisher of the Winnipeg Free Press

The publisher tracks how readers are using its site, including those who frequently buy single articles. These users get targeted approaches and offers for full subscriptions. For that, the publisher has made significant investments in marketing personnel, including customer service staff. “Oddly, in the online world, the personal sales approach still works,” said Cox.

Recently, the Guardian announced that it had seen profits after 20 years, which included three years of focused effort on generating revenues from its readers. The Guardian’s model is unusual as it does not have a paywall, and asks its readers to support it through subscriptions, memberships, events and one-off payments.

Around 300,000 people made one-off contributions to the publisher in the last year alone. While there were other sources of revenue that came together to help it break even, micropayments played their role. Just like they do at the Free Press, as a “small but important part of the system.”