What are they good for?
Micropayments – single, one-time costs for viewing single articles – have been lauded by many as the future of digital journalism and derided by others as a waste of time and effort. So, does it work? Is it a viable alternative to ad revenue or a premium subscription model? And will it stand the test of time?
There has been a lot of buzz in the industry around this method, as news publishers scramble to find “the right way” to be profitable in the current landscape. Research from the Reuters Institute and the University of Oxford suggests only a small number of news consumers are willing to pass the high barrier of signing up to a month-long or annual subscription. Only 5% of online content consumers are paying subscribers, so micropayments may be the answer to unlocking a larger audience by offering them a lower entry point.
“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.”
Research suggests people are becoming more accustomed to spending money online, which could be a big boost for the micropayment model. As it becomes more normal to pay for news content, offering users the opportunity to pay as they read may become more fruitful. Coupled with the lack of long-term commitment, micropayments could be the key to monetizing the subscription-shy sectors of your audience. Fears of micropayments cannibalizing other revenue streams are largely unfounded. Premium users are likely to continue subscribing, rather than deleting their standing order and switching to micropayments, so you’re unlocking an extra source of revenue rather than diluting the one you already have.
Microtransactions may present an opportunity to drive readers further down your conversion funnel – once they have paid for a few articles, if they have a positive experience and find value in the content, your casual readers could become more invested. It’s part of the long game of converting your users – you wouldn’t ask a Tinder date to marry you on the first date, so why would you expect a first-time user to sign up for an annual plan? As your casual readers become more invested in your content, you can slowly start to encourage them to subscribe to your premium model, or find other ways to cement their commitment to your brand.
Hard paywalls, like those we see on The Times or Washington Post, can serve to highlight how valuable all of your content is, but they vastly limit your reach, particularly for casual users. Incorporating micropayments will provide a multi-tiered revenue model where you can combine ad revenue, microtransactions and subscription fees to reach and monetize a wider audience.
One of the core benefits of this model is seeing exactly which articles people are willing to pay for, and which ones they consider unworthy of a few cents or pennies. This can allow you interesting insight into the value you’re providing to your audience. Many microtransaction systems offer users the ability to get refunds if they believe the content wasn’t worth the cost, which may deter low quality clickbait content.
Many publishers have previously been turned off by the excessive workload of implementing the necessary systems, but there are enough start-ups around the globe now focusing on this issue to shop around and make the process a breeze. Likewise, users don’t want a lengthy process of registration, credit card information, and verification emails before they can read the content. There are companies tackling this, offering “Read now, pay later” models or lowering the barrier to as few as two clicks for the user.
If your content offering is more niche or caters to casual users, micropayments are an effective opportunity to monetize an irregular audience. If the majority of your readers only visit the site once in a blue moon, they’re unlikely to want a recurring membership. A micropayment model could be the answer.
“With micropayments, the masthead is a mark of quality assurance which will be tested by the reader each and every time they consume an article. By having a transaction accompany every article, you’re effectively reminding your readers to value what they read. Yes, this could be seen as a problem. But, it could – and perhaps should – be viewed as a learning opportunity.”
One of the biggest limits to a pure microtransaction model is the lack of insight. When you have a regular subscriber, you know a lot about them and you can easily track their regular use of your site to tailor your service. With micropayments, things become murky. You don’t get as much insight into your users as you do with traditional SaaS models.
While they enjoy the additional revenue, most publishers seem to report micropayments being only a small amount of their income. This is certainly more of a slow-and-steady option, and is unlikely to be the singular savior of the publishing industry. Even Blendle, a premium content aggregator which was originally based around micropayments, admits subscription models are a more viable source of revenue. “Premium members turn out to be much more active and read or listen to considerably more pieces,” co-founder Alexander Klöpping said. “On average, they spend 22 minutes a day on Blendle, three times as many as users who pay per item.”
User experience is one of the most vital things to consider when asking your audience to pay for your product, and the same goes for microtransactions. If the user simply wants to read an article, it’s likely that a long registration process will turn them off. It’s vital to ensure your users can pay for the content in as few clicks as possible, preferably never having to leave your page to do so.
If a reader pays for it, the content should be something they can’t get anywhere else for free, and it should feel like a premium experience. If a user pays for an article for the first time and feels like it was a waste, they’re very unlikely to pay again, and they may even stop using your site altogether.
You’ll need to think about things in the long term. Micropayments have been around on the internet since the 90s, but users are only now becoming accustomed to using them on a regular basis. That means your existing audience may need time to adjust from free articles to a pay-per-article model.
“People apparently don’t want to spend money on something they can get everywhere for free now. People do spend money on background pieces. Great analysis. Opinion pieces. Long interviews. Stuff like that. In other words: people don’t want to spend money on the ‘what’, they want to spend money on the ‘why’.”
Every website is different, so take this information and adjust it to your situation. However, due to the shortfalls of the micropayment method and the benefits of other systems, a diversified approach will likely yield the best results for the majority of publishers. By combining the simplicity of microtransactions with a SaaS model and a selection of free content, you’ll be able to have multiple streams of revenue and reach a wider audience. The most important part is ensuring your content is actually good enough to pay for, and the experience is beneficial to the users so they keep coming back for more.