Micropayment Revenue Soars to Tens of Billions

To say that micropayments are “on the rise” is a vast understatement. I can look all the way back to April 28, 2003 when Steve Jobs launched the now-iconic iTunes Music Store. In its first week, more than one million people downloaded songs to their iPods for 99¢ apiece. In short order, iTunes became the nation’s largest music retailer, leaving Walmart, Best Buy and others in the rear view mirror. [1] Micropayments have now been the preferred method for buying music for more than a dozen years.

Today, consumers make micropayments — 20¢ here, 99¢ there — that add up to billions of dollars annually. And they’re buying a lot more than the latest songs.

Let’s take a look at who’s collecting micropayments, how and why.

Freemium Apps

Apps that are free to download and use generated $14 billion worldwide in 2015. These free apps generate revenue when users upgrade or make in-app purchases. Forecasts for 2016 and 2017 have skyrocketed to $23.8 and $36.9 billion, respectively. It’s clear that micropayments are alive and healthy.

As of June 2016, nearly 92 percent of smartphone users have made in-app purchases. Some 42 percent have upgraded from the free app to the paid “pro” edition. Despite nearly half of users upgrading, a full 88 percent of in-app purchases are made from the app’s free edition.

How much do users pay? Japanese users spend just over $3 per download, while those in the U.S., Germany and the UK tally up at a bit more than one dollar.

What kinds of apps generate the most revenue? No surprise — games. The digital card game, Rage of Bahamut, brings an average revenue per download of more than $7, while the ever-popular Candy Crush brings in a respectable $1.14. The Simpsons: Tapped Out averages about $2.10 per download, while TurboTax SnapTax — a standout from the game category — brings in $2.19. With millions of people playing games, doing taxes and the countless things apps can do, it’s no wonder micropayments have generated such massive revenue. [2] Perhaps it’s this micropayment phenomena that’s given rise to 3.977 billion apps available through the IOS and Android stores. [2]

Entertainment

iTunes, Amazon and Google all deliver entertainment via micropayments. Google Play offers movies for as little as $2.99 and many TV shows for $1.99 per episode. Even more “micro,” you can listen to music on Google Play for as little as 10¢ per song. YouTube, as well as Google Play, now offers movies and TV shows for micropayments , and these pay-per-view options can be more appealing than monthly subscriptions on platforms like Hulu and Netflix.

Not to be outdone, Amazon sells its Prime subscription, but also reveals thousands of movies to its members available only with a micropayment. Music from Amazon comes through traditional media — CDs and vinyl at traditional prices — as well as individual songs in MP3 format for a dollar or two per song.

iTunes, the progenitor of micropayments, continues to rake in billions for Apple, the world’s most valuable company.

Micropayments Spread the News

Massive news websites like the New York Times and Wall Street Journal generally sell monthly subscriptions. However, smaller publishers have moved to a combination of subscriptions and micropayments. The Winnipeg Free Press is the first newspaper in North America to launch a micropayment system. [4]

In March 2015 the paper launched a “27¢ solution.” People who read the paper online and consumed a lot of content can opt for a $16.99 monthly subscription. Those who read only certain articles and sections of the paper can pay 27¢ per article and receive a full refund if they don’t enjoy what they’ve read. As of mid-2016, the paper is earning about $8,000 per month from micropayments made by some 4,000 people. [3] Projections for 2016 aim for $100,000 from micropayments alone. [5]

And, Micropayments Spread Across the World

Curation, as it pertains to the written word, is the process of pulling together, sifting through and selecting news, opinion and other stories, then presenting them in a value-added fashion. Blendle.com, a company based in Utrecht, The Netherlands, launched its news curation service in 2014 and has now surpassed one million users. [6] It’s been called the “iTunes for news.” Initially covering news published in Dutch newspapers, it gives users easy access via the web or a mobile app to articles ranging from 13¢ to 38¢ each. The company opened the U.S. market [4] in March 2016, curating stories from 20 publishers.

Why Micropayments Are So Popular

Three reasons.

  1. Most people like to be in control of their lives, and that includes choosing their online digital content. You don’t want to be forced to buy an entire music CD when you only want a couple of songs. Micropayments leave you in control.
  2. You probably don’t want to sign up for subscriptions to Wall Street Journal ($87 for six months), New York Times ($6.25 per week) and TIME magazine ($30 per year) just to stay in touch with the news. Face it: No one wants to sign up, pay for, and manage monthly subscriptions to multiple publications. Nor do we want to keep track of multiple passwords, to repeatedly give out our credit card numbers, only to get reruns of the same tired news from each publisher. Micropayments let you pick and choose the articles you want to read from sites where you’re not subscribed.
  3. No one really wants to be interrupted with advertising. Therefore, app developers are increasingly choosing to provide in-app purchases and other micropayments in lieu of littering a mobile screen with ads. Allowing low friction micropayments generates revenue without annoying users.

Add Micropayments to Your Site

Adding micropayments to your website or blog is easy with Drizzle. You don’t need any but the most basic technical knowledge. For Wordpress sites, simply install our official plugin and you’ll be up and running. For Drupal websites, start an account and then you can download our module. For any other site, add a small snippet of code to your website. Either way, you’ll be able to monetize your digital assets and join publishers worldwide who have embraced a strategy that puts users in charge, and that puts new revenue in your bank.

You can charge micropayments using Drizzle for most any kind of content — text, video, images, digital downloads and any HTML content. Learn more at GetDrizzle.com.

Sources:

  1. http://www.rollingstone.com/music/news/itunes-10th-anniversary-how-steve-jobs-turned-the-industry-upside-down-20130426
  2. http://www.statisticbrain.com/in-app-purchase-revenue-statistics/
  3. http://www.marketingmag.ca/media/inside-the-winnipeg-free-press-micropayments-experiment-174776
  4. http://www.niemanlab.org/2016/03/testing-its-pay-per-article-model-in-english-blendle-launches-in-the-united-states-with-20-publishers/
  5. http://www.fpnewspapers.com/investor-centre/news-releases/2016/FP-News-Release-Q4-2015-results-March-9-2016.pdf
  6. https://techcrunch.com/2016/08/11/blendle-clocks-up-1m-signups-for-its-pay-per-article-journalism-platform/