Back when the World Wide Web was first being created, Tim Berners-Lee and his team were responsible for listing the error codes for when things would go wrong, such as error code 404 when a page was not found. Back then it seemed logical that it would be common to require payment for digital content, so they also created error 402: payment required. Nearly 30 years have passed since then and it seems we have only just recently made progress in convincing people to pay for digital content.
Some specific markets and publishers have made more progress on this front, and we’ve been helped by the growth of Netflix and Spotify, both of which accustom people to paying for digital content. This has been ever more important in recent months, as we see publishers with strong subscription models have been able to better weather the Coronavirus crisis than publishers who rely heavily on advertising revenue. Still, research finds that only about 5% of a publisher’s digital audience will pay for a full subscription, so how can publishers monetize the other 95%?
Micropayments – an experiment yet to succeed
The buzz around micropayments comes and goes in the news industry, but we have yet to see a micropayment model truly succeed. On face value the idea is interesting: pay just for what you read. But when you dig into the concept further, you find that there is actually limited benefit for both readers and publishers. This system punishes the most engaged readers, rather than rewarding them – the more they read, the more they pay. Furthermore, the full product that has been tirelessly designed to be consumed as a whole is now disaggregated into individual articles.
That’s why it’s perhaps more interesting to explore how news edition readers are using micropayments, as paying for a single digital edition from a newspaper allows both the freedom from commitment that micropayments offer while also giving readers the fuller reading experience that a subscription offers. On our own digital edition platform, we see publishers with anything from 7,000 to over 30,000 in-app single edition downloads yearly. This form of micropayment, however, comes with a much higher service fee than others, with both Google and Apple taking a 30% cut.
Elsewhere the idea of micropayments has been on the decline, with news aggregator Blendle leaving behind their micropayment model last year in favour of a subscription focus. Perhaps this comment from cofounder Alexander Klöpping at the time is most telling about the future of micropayments:
We have 60,000 subscribers in the Netherlands and hundreds of thousands of users who pay per article. But I have to be honest: We are still not making a profit.Alexander Klöpping, Blendle cofounder
Still, there might be some new innovations to come in the world of micropayments, as Cafeyn has recently acquired Blendle.
Beyond the organisational change needed to make a subscription model work, there is the concern of some that as high-quality journalism outlets increasingly put their content behind paywalls, there will be a growing divide between those that subscribe and those that don’t. This week Nathan J. Robinson put it succinctly: The Truth Is Paywalled But The Lies Are Free.
Some publishers have attempted to balance a reader revenue model with free access to their journalism, with The Guardian being one of the most prominent. With no paywall on their website, instead they solicit reader donations. So not only do they have to convince people to pay for digital content, they have to convince them to pay even though they can get that exact content for free.
This is not just a paywall under another name. People that become members don’t get extra or exclusive content; they sign up because they fundamentally agree and think it important that the Guardian’s journalism remains open.David Magliano, former MD of Membership at The Guardian
While it might have seemed like an uphill battle when they first launched this strategy in 2016, they have had tremendous success, with more than one million individual contributors. This helped The Guardian record an operational profit for the first time in many years in 2018.
What makes this approach unique is that it is a sort of membership-lite. By contributing, readers feel they are helping to keep The Guardian’s journalism free for all. This framing didn’t happen by accident, they took an active approach to educating their readers about the financial hardship the news industry has faced and how the donation model helps support their journalism.
What distinguishes this model from a micropayment model is that even while the text proposes a €1 contribution, when I click to donate, the selected option is a recurring monthly donation of €10. This makes sense, if I’m already committed to donating, then I’m likely to also commit to donate on a regular basis. While a micropayment model would have a required payment per article, The Guardian instead encourages readers to donate whatever makes sense for their own circumstances.
The Ken, a business news website in India, has also explored this concept, by consciously separating the “payer” from the “subscriber” in their business model. While this originally started out as a way to enable corporate or educational subscriptions, now it has been brought to the personal level: individual readers can pay to offer a subscription to someone else. By becoming a patron, readers are able to offer subscriptions to different reader segments, such as research scholars, non-profits, and pre-seed startups. CEO Rohin Dharmakumar explained why he believes readers will pay for others to have access to the news:
But why do people or companies become patrons? Because they believe in the importance of quality, unbiased journalism in business. Because they’re wise enough to know that giving away quality journalism free of cost only devalues it.Rohin Dharmakumar, CEO The Ken
Tortoise Media takes a similar approach, for every paid membership, they offer a membership to someone from a group that is underrepresented in their membership base.
Ad-free product experience
Not only do publishers have to grapple with 95% of their audience not willing to subscribe, they also have to deal with the over 50% of internet users that employ ad-blockers.
The good news though is that the majority of adblock users (76%) agree that publishers have the right to earn revenue on the content they publish. That’s where Scroll comes in, offering an ad-free reading experience on more than 300 news sites for $5 per month. While it is still too early to see real results, early figures are promising. Founder Tony Haile says that Scroll’s partners are seeing an average of $46 in revenue per thousand pageviews. This solution helps to solve some common reader concerns, but it also brings a value to publishers beyond the first financial results. Users are able to enjoy a faster, cleaner reading experience with Scroll, which in turn helps to develop further reader loyalty. We know how important frictionless experiences are for news products, for example The Telegraph saw a 12% increase in pageviews from subscribers when they optimised their homepage speed (going from 9 seconds to load to 5.5 seconds).
Publishers can also directly offer their own paid, ad-free experiences to readers. We have seen a variety of experiments done in this field in recent years. The Financial Times for example experimented with removing a third of words from articles that ad-blocking users were reading. This portion was chosen as it is roughly equal to the percentage of total digital earnings made up by ad revenue for the Financial Times.
Le Figaro has done something similar, with their experiment taking the shape of articles becoming progressively blurrier as adblocking users read through the website. By the fourth page, the content was completely illegible, with a pop-up saying that the display problem could be solved by turning off the adblocker or paying for a subscription. 5% of these readers then opted to buy a subscription for an ad-free experience.
While our focus here at Twipe is often turned more towards the subscription conversion journey and the all-important effort to retain subscribers, there’s a large audience out there that many publishers today are leaving un-monetized. From micropayments to memberships to ad-free experiences, there are a multitude of business models beyond subscriptions for newspapers to be directly reader-supported.