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Case studies in perfecting price points for reader revenue

By Newsplexer Projects

Newsplexer Projects

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Readers demonstrate a willingness to pay, three presenters told the audience at the INMA Media Subscription Week 2.0 on Friday morning. Publishers across the world have been experimenting with different pricing points and pricing models to find the sweet spot of each and every reader to charge them for content. 

Case studies shared with media executives in attendance explored micropayment strategies, price increases, and non-news products to answer a few key questions:

How do companies increase the price of digital subscription? How many readers are ready to buy access for a limited time — an hour, a day, or just a week? What other pricing models are there — selling by parts, cross-brand bundles, tipping — and what the West can learn from China?

Annie Zhang Jieping, founder of Matters Lab, discusses three different case studies for pricing models.
Annie Zhang Jieping, founder of Matters Lab, discusses three different case studies for pricing models.

The payment model and product connection

In China, the subscription trend started overnight. Annie Zhang Jieping, founder of Matters Lab, said two major shifts around payments have given content providers solid infrastructure around the model:

  • The influence of payment giants WeChat Pay and Alipay.
  • The rising of new middle class China.

“The three cases I’m showing you have nothing to do with news,” Zhang Jieping said. “Ninety-nine percent of news organisations in China are owned by the country.”

Case study 1: Snail Reading

Snail Reading is an e-book platform that encourages slow, deep reading.

“The most impressive feature of that is you do not pay for books,” Zhang Jieping said. “You do not pay for chapters. You do not pay for articles. You pay for time.”

Readers can buy reading time for one, seven, or 30 days, or pay for year-long access. This model was inspired by the movie In Time, released in 2011, in which time becomes the universal currency.

The Snail Reading platform launched in 2017. It currently has 20,000 e-books on the market and has grown to six million users in one year. The platform gives one free hour to each user per day, and while 100% of users have read a least one book, around 13% of users have paid to read. User can also convert accumulated reading time into points, which gives them access to new books. 

The platform also offers several value-added services, such as professionally written reading guides and recommendations from key opinion leaders. 

Snail Reading was very popular when it first launched, but in 2018 the numbers started going down, Zhang Jieping said. Purchased reading time does not offer voracious readers the best value compared to other options, and entry-level readers care more about trends than actually borrowing a book.

“It’s like the library’s model instead of the bookstore’s model,” Zhang Jieping said.

Case study 2: Spiritual Wealth Club

Spiritual Wealth Club — known as “Fan Deng Reading Club” in China — is a club where participants read 50 books together as a group over the course of a year. 

The concept started as a WeChat group with a very simple infrastructure. Fan Deng, the company’s founder, reads 50 wildly popular self-help, family maintenance, and career-oriented books with his members every year and charges 365 RMB per reader, per year. In five years, the club has reached 10 million members, generating 100 million in revenue every year. There are also apps, physical bookstores, and hundreds of reading clubs across the country.

The model also includes an interesting revenue-sharing aspect, Zhang Jieping said. As an example, suppose that User A joined in 2016 and became a “city agent” of Spiritual Wealth Club. By recommending other users or even starting a bookstore, User A could obtain a share of 50 million RMB at end of 17 years.

“When the whole business spreads fast, every agency gets many, many rewards,” Zhang Jieping said. “It’s more like a financial game than a reading club.”

Case study 3: Fen Da

In her third case study, Zhang Jieping shared the story of a company that monetised its product.

“When it failed, it was a very Chinese type of failure,” she said.

The concept was that a user could pay 3,000 RMB to ask a well-known, wealthy man a question. The man would record an answer shorter than one minute, and other users could pay one RMB to access the answer. The original person asking the question would receive a percentage of the revenue generated from those “eavesdroppers” listening to the answer as well.

It was a triple win, Zhang Jieping told the audience. The original user/question poser could sell time and prove their influence, and the larger audience could satisfy their curiosity about the question. The original interviewer would also get to interact with a celebrity and could potentially earn a lot of money.

However, after three months, Fen Da was removed by the government due to censorship concerns and its potential political risk. It was frozen for 48 days, and by the time it returned to the market copycat platforms had cornered the market. The company has since shifted into an online education platform.

Lessons learned

Reviewing all of the case studies, Zhang Jieping said there is a clear connection between the product and payment model.

The Spiritual Wealth Club was “must-have” content for readers, and a hard paywall model. Snail Read was a “nice to have” product for readers where readers pay for value instead of content in a dynamic subscription plan. Fen Da was an interactive subscription model where users pay for interaction, not content.

“To me, a subscription model cannot be reviewed separately from the service it is corresponding to,” Zhang Jieping said.

Cosmin Ene, CEO and founder of LaterPay, discusses using micropayments as subscription drivers.
Cosmin Ene, CEO and founder of LaterPay, discusses using micropayments as subscription drivers.

Micropayments as subscription drivers

Micropayments open up transactional revenues, Cosmin Ene, CEO and founder of LaterPay, said.

“I know many of you are against selling individual articles,” he said. “Look at selling individual articles as a way to extend your user acquisition funnel.”

Beyond micropayments on articles, publishers could consider giving access to content by allowing readers to buy certain amounts of time on the Web site, Ene added.

Micropayments work because you blend choice and trust. Publishers must trust that once users have access to valued content, they will decide to pay for more. When you give people choice between payment options, he said, you give them control.

“Don’t leave it to them to guess what your content is worth,” Ene said. “People are very bad at that. If you’re making them guess what your content is worth, you’re essentially losing them.”

Using the example of a local German publisher, Ene said the combination of subscription and micropayment options drives revenue. If even one option is removed, all revenue drops.

“There’s some magic that happens between articles five and seven for the reader, where readers either go for the Time Pass or the subscription,” he said.

Micropayments complement subscription offers because they enlarge the user acquisition funnel by reaching new potential customers.

“It’s all about converting the mid-funnel readers who are kind of hovering,” Ene said.

Tobias Henning, general manager of premium at BILDplus and WELTplus, spoke to the INMA audience about building revenue through price increases.
Tobias Henning, general manager of premium at BILDplus and WELTplus, spoke to the INMA audience about building revenue through price increases.

Building revenue with price increases

For BILDplus and WELTplus, removing day pass options was crucial to growing its digital subscriber revenue, Tobias Henning, general manager of premium, said. For the German-language publications — which have a smaller audience base — the majority of potential customers are already current customers. The answer to growing revenue was to increase the price of its products.

“Sometimes people say, ‘Oh, that’s hard,’” Henning said. “Well, no, it’s not.”

Henning shared price increase strategies for three products.

BILDplus premium

The team both increased the product price and eliminated the first month free option, Henning said. It was important that the price increase was applied to existing customers as well as new.

BILDplus informed subscribers in an e-mail of the change while emphasising the great content it provides. Henning said there was no significant loss of customers beyond standard churn, and only 500 customers called in with questions about the change. Reiterating the value of its content was an important factor.

“In the end, it’s all about the content,” he said.

BILDPlus digital

For this product, the company tested price promotions. After experimenting with multiple options, Henning said offering 50% off the first year retained 63% of its customers, far outpacing other offers in terms of customer lifetime value. Sales per day are also 30% higher than expected.

The biggest challenge to the price increase for this product was the internal culture at the company — getting editorial and marketing teams on the same page and encouraging them to take ownership.

“The price increase, we learned, is not really responsible for bad sales figures,” Henning said. “It’s still about the content. It’s still about the marketing measures.”

BILD app

Previously, the BILD app had dynamic pricing. Those with no previous relationship to the product were presented with the cheapest offers, while those with recently expired trials saw a higher price.

“Although we increased the price by 30%, the sales figures per month did not go down,” Henning said. The price increase provided a boost in revenue without subscriber loss. The success of these shifts comes down to clear communication and testing. “Price increases are possible if, let’s say, you do them in a sophisticated way.” 

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