As the publishing pendulum swings from ad-supported to subscription, publishers need to adapt and innovate — quicker than they did last time.
As has become increasingly obvious to anyone who reads articles online in the past couple of years, many digital publishers are shifting from “free” ad-supported business models to “paid” subscription / paywall business models, asking consumers to pay directly for access to their content. Once lofted venture-backed digital publications like Buzzfeed, Vox Media, Mic, Mashable (along with many others) found that competing with Facebook and Google (who they rely on for distribution) in their core businesses (advertising) was not ideal, and have faced layoffs, consolidation, and fire-sale acquisitions.
This industry shift to subscription models, while positive for the businesses of some individual publishers, risks creating consumer “subscription fatigue” if everything they once read for free is now locked behind hefty monthly or annual subscriptions. This leaves casual readers excluded, and therefore undermonetized. What if consumers had the option to pay-per-article for content they find interesting?
“Micropayments” or “microtransactions” describe very small online transactions, usually for access to some sort of digital content, and typically under one dollar. In the case of digital publishing, micropayments could be deployed to allow consumers to “pay-per-article,” choosing which individual pieces of content they’re willing to pay for instead of subscribing to every article from a publisher, no matter how much or little they read.
The concept of micropayments is nothing new, and has been discussed (and attempted) since the early days of the consumer web. Google even tried and failed to implement a micropayment system for publishers called One Pass in 2011, which was shutdown not long after in 2012, due to a lack of publisher buy-in.
2019 is a radically different world than 2012 — for digital consumers and publishers alike. Publishers have shifted their strategy from free, ad-supported content to paywalls and subscriptions; consumers have increasingly adopted online transactions for e-commerce, food delivery, in-game content, and media subscriptions; and the infrastructure for digital payments / wallets has removed friction from said transactions.
Previous attempts to implement micropayments in the publishing world occurred when almost all written content on the web was completely free — it was therefore foreign (and unnatural) to pay for anything, let alone for one individual article. The mass shift to subscriptions by publishers is proving that consumers value written content and are willing to pay for it, which historically wasn’t the case online. Earlier this week at Code Conference 2019, Ev Williams, the founder of Medium, co-founder of Twitter, and founder of Blogger (and therefore a foremost expert on digital written content and distribution), explained this shift in consumer willingness to pay for high-quality written content:
“For 15 or 20 years, people were saying ‘it’d be great if people paid for information on the internet, but no one does,’… and it’s like asking people if they want to buy a sandwich when they’re sitting in front of a free buffet… but the market is getting retrained, supply and demand are kicking in, people are realizing like in these other media categories that you get better quality and you get a better experience, if you start to pay for it. But I think there are limited slots. So everybody has maybe a few media slots that I think they will allow, but it’s not dozens.” — Ev Williams
If consumers are only willing to pay for a few publishing subscriptions or bundles (e.g. Medium, Apple News+, Scroll), what happens to all of the previously free content that they used to read casually, but aren’t willing to pay a $5–10+ monthly fee to access? On top of many publications shifting quickly to paywalls, there’s been a growth in popularity of paid newsletter products such as Ben Thompson’s Stratechery Daily Update, The Skimm’s Skimm Ahead, The Hustle’s Trends, and over 25,000 other paid newsletters on Substack. Some potentially discouraging data shows that only a few publishers have more than 1 million subscribers, and that The New York Times, Washington Post, and Wall Street Journal command more than half of all digital news subscriptions. Can the long-tail of interest-based and niche publishers and thought-leaders succeed while asking consumers to pay similar subscription rates?
Now that it’s apparent that consumers are willing to pay for high-quality written content, it’s time to give them options for how they pay and consume said content.
For their part, consumers are now used to online and mobile transactions for e-commerce, groceries, coffee, ridesharing, and a litany of media & entertainment related categories such as music, video, and in-game microtransactions for skins, content, and other privileges in games like Fortnite, and yes — written content. Some readers even donate on a monthly basis to their favorite bloggers, such as Wait but Why’s Tim Urban.
Finally, digital payment infrastructure and digital wallets such as Apple Pay, Google Pay, and Pay by Touch are now widely adopted and have removed friction from online transactions, making it as easy as the press of a button to initiate a purchase — which is necessary for micropayments. How many readers would otherwise pull out their credit card to access a $0.25 article?
To be clear, micropayments (or a pay-per-article option) are not a cure-all for digital publishing, and likely only works with a specific type of high-quality content. Consumers are less likely to pay directly for news and general entertainment that they can find elsewhere, while exclusive content, expert analyses on particular topics of interest, and opinion pieces from thought leaders and popular bloggers may be compelling enough to pay for some users and followers.
Micropayments have the potential to align the incentives and benefits for consumers and publishers alike. Publishers are incentivized to create high-quality content that consumers are willing to pay for directly, and punished for writing “click-bait,” while at the same time monetizing users who want to read a few articles a month, but can’t afford or don’t want to pay a hefty monthly or annual subscription. This can even be used as part of the customer acquisition funnel — instead of a consumer not being able to access (and properly value) content locked behind a paywall, perhaps they realize that they’d rather have access to all of the content and are therefore willing to pay for the annual subscription. At the same time, casual readers don’t get away with reading “X” number of articles per month completely free.
Perhaps best of all for publishers, micropayment rates would be well above typical display ad CPMs (the price charged for advertisers to reach 1,000 viewers). Depending on the quality of publisher and traffic, digital display CPMs can range from less than $0.50-$10.00+, with the vast majority of CPMs on the lower end. This reveals that readers are monetized around $0.0005 — $0.01 per display ad. While publishers often include multiple ad spots in each article, this has a negative effect on the consumer experience, and some readers even utilize ad-blocking plugins, effectively demonetizing their visits. Charging $0.25-$1.00 for an article may result in fewer readers, but each individual consumer will be monetized at a much higher rate than an ad-supported article — and they’ll have a more positive reading experience.
How should micropayments in digital publishing work?
Today, there are more than a few companies working on building a platform for publishers to charge readers per-article, despite the past failures of companies like FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See, Beenz, BitPass, Peppercoin, and CoinTent.
Blendle, a Netherlands-based company originally launched in 2014, counts publishers including The New York Times and Axel Springer as investors. After launching in The Netherlands and Germany, Blendle launched it’s U.S. beta in March 2016 with publishing partners such as The New York Times, The Wall Street Journal, and The Economist, among others. Other companies deploying micropayment infrastructure solutions for publishers include Jamatto, Agate, Wallit, LaterPay, SatoshiPay, and Portico. Of course, there’s always the possibility that Google resurrects One Pass, that Apple jumps into the pay-per-article game in addition to News+, that Amazon creates a publisher solution akin to Amazon Channels, or that micropayments for publishers is a use-case for Facebook’s recently announced Libra cryptocurrency.
While there’s no clear leader in micropayment infrastructure for publishers today, ideally, a win-win micropayment proposition for publishers and consumers would include:
A cross-publisher solution that allows consumers to use the same account on many different sites, instead of registering / signing up individually. While there may be an aggregated homepage, anyone can also sign-up, pay, and read articles on any participating publisher’s site, without the need to download an app or visit another website.
The ability for publishers to set rates for each article (including free), and an engine utilizing machine learning to find optimal prices for different desired outcomes (total spend; as many paying readers as possible; incentivize upgrading to subscription, etc.). Publishers could give readers the choice: Subscribe, Pay-Per-Article, or Read X articles per month with ads.
Frictionless payments with ApplePay / GooglePay or saved credit cards, so users don’t need to enter credit card info to read an article, even once.
Reviews / refunds by paying consumers that rate “Was this article worth $0.XY?” Ideally, this info is used by both the publishers and consumers considering whether or not they’re intrigued enough to purchase a piece. The ability for consumers to refund a certain number of articles per month will be necessary to dissuade publishers from writing clickbait headlines with little to no substance or value in the article.
An article archive, in which consumers can forever access every article they’ve ever purchased. Search, note taking, and recommending articles to friends are additional desirable features.
Personalized discovery / recommendation engine driven by individual consumption and ratings. As Spotify did for music discovery, a cross-publisher micropayment layer can do for written content.
Absorbing transaction fees using digital wallets / a minimum wallet loading amount (or digital currency). One of the biggest hurdles for micropayments remains transaction fees — which, for example, runs 2.9% plus $0.30 per transaction on Square. Obviously, a $0.30+ transaction fee is unsustainable for a business that enables micropayments, typically under $1.00.
There are conflicts and trade-offs for publishers with some of the above proposed features: recommending content from other publishers, and delaying payment (to minimize transaction fees) to name a few. But if publishers have learned anything over the past twenty years, it should be the necessity to adapt and evolve, especially as we rapidly approach consumer subscription fatigue.
A micropayment layer that accomplishes these feats would seem to meet the equilibrium of the market — empowering consumers to choose if and how they value and pay for content they want to read, while ensuring that casual readers are monetized directly, rather than being given “X free articles,” or annoying them with pesky ads.
A micropayment solution will likely only work on a subset of unique and high quality written content, which could span niche publications, newsletters, and content from prolific thought leaders. However, digital payment technology, shifts in publisher business models, and consumer adoption of digital commerce demonstrate that it’s finally time for micropayments in digital publishing.