New research: Micropayments are not the panacea for news media
Readers First | 24 August 2023
In this newsletter, I am reporting insights from a new study about the (lack of) appeal of micropayments and updating the statistics on the top 50 news subscription bundles.
If you have questions or suggestions, e-mail me today at greg.piechota@inma.org or meet in person at the INMA Media Innovation Week in September in Antwerp, Belgium.
Micropayments: Not the panacea for news publishers
A new study from Denmark dispels hopes around micropayments as an easy new revenue source for news publishers and suggests subscriptions remain core.
“Micropayments are hardly a silver bullet,” said professor Aske Kammer of Roskilde University at the 2023 INMA Subscription Growth Master Class.
His in-depth study of Danish audiences, carried together with Thomas Spejlborg Sejersen of Danish School of Media and Journalism, explored micropayments as a way to ease the funding crisis in journalism. It confirmed, though, limited demand among consumers and publishers.
For decades, many in the media and tech have touted the pay-per-unit model as a solution to get masses to pay for online content, including news.
In 2023, Crunchbase listed 72 startups built upon the idea of micropayments, including Axate in the United Kingdom, Fewcents in Singapore, and LaterPay in Germany.
This year alone founders of two new micropayments startups — from Switzerland and from the U.K. — pitched INMA and asked for feedback.
At the same, older startups like Blendle from the Netherlands ditched the idea after years of experiments due to low demand.
Across 46 countries surveyed by Oxford’s Reuters Institute in 2023, less than 3% consumers said they made a one-off payment to access a single article or edition in the past year.
Out of sight, out of mind: Professor Kammer told INMA that people overall don’t have any opinion on payment models. And they like what they know — all-you-can-eat subscriptions for audio, video, and games.
Danes are not familiar with the concept of micropayments and actually found the term confusing during in-depth interviews and focus groups. Researchers got better responses talking about “single payments’ or “pay per item.”
Drilled for the potential upsides of micropayments, the interviewees talked about lower cost and possibilities for personalisation — reading premium articles from multiple sources.
Anyway, in a subsequent survey of 2,720 consumers, two-thirds preferred subscriptions for articles, and three-quarters for podcasts and videos.
“Women, older, and educated audiences were most interested in micropayments, but overall, subscriptions remain the strongly preferred option for most,” said Professor Kammer.
At the same time, Danish media professionals expressed reluctance toward offering micropayments in interviews. They said subscriptions were more predictable for planning the finances and better for building audience relationships.
Netflix is the price reference: Interestingly, past experience with news subscriptions was linked to preferring micropayments over subscriptions.
This may be due to the high prices of online news in Denmark. For example, the national newspaper Politiken charges 299 Danish kroner per month, or the equivalent of US$44, for digital-only access.
Many interviewees made comparisons to the price of Netflix, whose plans cost in Denmark from 79 to 149 kroner (US$11 to US$22) as their reference point. Median price the respondents said was “fair” for subscriptions: US$7-US10 per month for articles and US$7-US11 for podcasts or video.
Past experience with gaming or streaming was linked to preferring subscriptions. This is perhaps because, across Internet and media sectors, subscriptions are common — they generate 81% of consumer revenue, per Activate, Single transactions rule only a few sectors, such as books and cinemas.
When asked about the “fair” price for micropayments, Danes said: US$1.5-US$2 per article and US$1.5-US$3 per podcast or video.
“A narrow appeal of micropayments and limited interest from publishers makes this a hard sell. Good old tried-and-tested subscriptions remain the preferred option, and publishers should focus on scaling them over experimenting with micropayments,” concluded Professor Kammer.
The growth challenge: The findings of the Danish study are broadly confirmed by the Reuters Institute’s surveys: 75% of those who paid for online news in the past year (15% across 46 markets) said they had access as part of a subscription or a membership.
How to grow the total paying audience beyond 15%? In practice, few readers internationally are exposed to any paid news, or offers, so growing awareness, differentiation, and engagement might be the priorities.
In the richest 33 markets, casual readers enjoy free alternatives — from aggregators to broadcasters and social networks. My review in 2022 found paywalls on just 41% of the most popular sites.
Even if people head to paid Web sites, most visit only once: In 2Q 2023, across 178 brands benchmarking with INMA, the median proportion of users who did only one session in a month was 71%.
As a result, most consumers don’t see any paywall: In 2Q 2023, the median proportion of users stopped by a paywall at an INMA member Web site was 25%.
INMA studies showed the fast growing ones had tighter paywalls but offered inexpensive and long trials to lower the barrier for casual readers to sample content and become subscribers.
Looking for more growth tactics? Read about how the top 50 news subscription brands grow.
Leading news brands beef up subscription bundles with more benefits
Subscription offers get richer and prices get increasingly attractive as the leading news brands fight for market share and revenue growth at the same time, an INMA study finds.
Every year, INMA tracks the subscription offers of the top 50 news subscription brands ranked by the number of digital-only subscriptions, with The New York Times topping the list.
In 2Q 2023, 96%, or 48 out of 50 brands, offered additional benefits beyond news articles, a slight increase from 94% in the previous year.
For example, the Times was offering an All Access bundle that included News, Games, Cooking, Wirecutter, and The Athletic for US$1 per week for the first year. It’s a great deal, as these services bought separately would cost about US$5 per week (80% discount!).
Richer packages: What is new?
We observed more frequent price bundles, in which publishers sell standalone products together as a package at a discount like in The New York Times example; 37% of brands bundled this way vs. 32% in the previous year.
The most popular benefit of such bundles was an extra subscription to another brand, e.g., another news site or a magazine, present in half of the reviewed bundles.
Popular were also gift subscriptions (extra sub for sharing with others) and access to separately marketed non-editorial products, e.g., games.
The consumer benefit from buying a bundle increased? The average discount for the package vs. the components was 52% in 2Q 2023, a much bigger saving than 27% observed last year.
Richer products: What has not changed that much?
Almost all publishers — 96% vs. 90% in the previous year — continued to integrate new benefits into their main products (product bundling). For example, they added new apps, podcasts, or features such as article gifting.
Among the top brands, 63% added content and benefits to their main products only, without packaging any external products. Another 33% did a mix of product and price bundling.
The most popular benefits integrated into the main products were mobile and tablet apps.
Popular were also e-replicas of the printed paper and premium newsletters (available for the subscribers only).
More flexibility: An increasing proportion of publishers — 25% vs. 21% in the previous year — allow customers to buy extra products both as a package and separately (mixed bundling). This is because more brands bundle standalone products.
Most publishers though — 75% — sell the extra benefits only as a package (pure bundling). This is because most continue to integrate features into their main products.
Some context: While 51% consumers internationally pay for online news to get access to better quality and exclusive content, and 45% identify with the brand and want to support good journalism, a large proportion pays for other reasons.
Based on the 2023 surveys of the Reuters Institute, 20% pay specifically to get access to non-news features, such as cooking or games; 27% simply liked the deal.
Adding features and flexibility to bundles emerges as a key strategy for subscriber growth. It allows publishers to:
Make their offers stand out in a competitive market.
Generate more revenue per customer by selling multiple products together.
Lower acquisition costs for less popular services by piggybacking on the more popular ones.
And reduce churn by engaging customers more and locking them in the publishers’ portfolio.
Interested in bundling? Check this explainer by Matt Lindsay of Mather Economics.
About this newsletter
Today’s newsletter is written by Grzegorz “Greg” Piechota, INMA’s researcher-in-residence and lead for the Readers First Initiative. In his letters, Greg shares original research, analysis, and best practices in growing reader revenue.
E-mail Greg at greg.piechota@inma.org, message him on Slack, meet him at the next online meet-up or in person at the INMA Media Innovation Week in September in Antwerp, Belgium.
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