Micropayment: Why media should also sell individual content online

Users want to have a choice about what media content they consume and how they consume it. This has long been suspected and was also proven in February 2017 by a study conducted by the American Press Institute. If users are given a choice, they will always adapt their media consumption to current needs. For example, when construction is underway on mass transit in a major city, residents will increasingly demand news about the status of construction and closures. Single-tier payment models for content on the Internet never fully meet these user needs - regardless of whether they are subscriptions or exclusively micropayments.

However, the same study shows that user needs are not usually taken into account. 85 percent of publishers consult each other when introducing payment models - not users or the market. In doing so, they neglect a fundamental truth of the economy: If the supply side agrees on a sales model without asking the demand side about its needs, then it is developing past the market. In the case of media, that means the demand side wants multi-level payment and consumption options, while the supply side delivers one-size-fits-all. It distills the "content for money" business model down to a single sales form.

The demand side wants multi-step payment and consumption options, while the supply side delivers one-size-fits-all.

Most of these are subscriptions, a form of selling that loses a large proportion of readers online. But micropayment, i.e., the sale of individual articles for small amounts, is not a business model on its own. Rather, it is one of several tools in the toolbox of content monetization and customer retention. Micropayment can be the spearhead of content monetization. That's because the payment model breaks through the resistance that comes with registration and upfront payment. Micropayment creates the basis for the user-centric business model of "content for money" with the motto: Give users the content they want, in the way they want it, and they will gladly pay for it.

There used to be subscription and newsstand sales

If you look back a few decades, content in the print medium was tied to the overall publication. Buying a newspaper was one of the few ways to get daily political and economic information, along with radio and TV coverage. Offline, there were two sales channels for the "content for money" business model - cross-subsidized by advertising, of course - that a publisher's sales team had in its toolbox: subscription and newsstand sales. Readers could choose between a fixed-term contract with a discount or the more flexible single-issue purchase - depending on how regularly they wanted to use a medium. Even then, a single sales model was only panacea in a few exceptions. In today's online media landscape, the assumption is downright utopian.

Online, there are further options due to the technical decoupling of the individual pieces of content from the newspaper as a whole. Micropayment is one such option. But only as a sales channel that is perfectly suited to just one group of readers. Casual readers, for example, want to consume small units. The probability that a casual reader will decide to subscribe is probably about as high as the probability that two Tinder users will get engaged on their first date.

Other groups, such as the occasion-driven, who want to read many articles in a short time on an exciting topic, or loyal users, want various flat rate models, for example the time pass or subscription. The great thing is that the Internet enables media to give all these target groups exactly what they want, the way they want it. It makes it possible to introduce users to payment and prepare them for further monetization models. And micropayment as a tool for sales is indispensable for this.

Micropayment as a tool for customer qualification

While subscriptions are regarded by publishers as the epitome of customer loyalty (literally, because readers and media are contractually bound to each other over a longer period of time), micropayment can also be seen as a tool for customer qualification. Providers of subscription models sooner or later reach a saturation point, above which customer development stagnates considerably. When they reach this plateau, they have to think about concrete measures to convert more users into customers and thus increase their revenues. Micropayments and smaller paid content bundles such as time or theme passes are ideal for generating additional revenue and attracting more users to the subscription business.

Micropayment first conveys the value and quality of a content to user groups before leading them into a short- or long-term commitment. Here, too, there are already familiar counterparts from the print sector, such as promotions or the purchase of individual issues. Online, micropayment is just one more option for customer acquisition.

Providers generate additional revenue by activating user groups that would have bounced off the subscription paywall.

For providers, micropayment makes access to individual content economical when amounts are aggregated into a larger payment. Providers generate additional revenue by activating user groups that would have bounced off the subscription paywall. Last but not least, micropayment recruits users to the sacred cow of subscription and extends subscription to user-friendly entry models for paid content. You could say selling single content via micropayment is the best subscription generator. Today, less than ever, a single payment model works for everyone. That's why subscription as a model for monetizing loyal userbase needs other tools like micropayments on its side to generate more revenue and customers.

The article is a guest post by Cosmin Ene, founder and CEO of Laterpay.