Proof of Concept: Do readers like 'pay-as-you-read'?
Following our whitepaper and discussions with 70+ industry insiders and experts, we built the first components of StreemPay and tested it with readers to validate some initial assumptions. This formed the basis for our proof-of-concept, which served to facilitate a rapid iteration of the reader-facing product.
This report details the test design, outcomes, and potential revenue uplift that media companies could see.
Following our whitepaper and discussions with 70+ industry insiders and experts, we built the first components of StreemPay and tested it with readers to validate some initial assumptions. This formed the basis for our proof-of-concept, which served to facilitate a rapid iteration of the reader-facing product.
This report details the test design, outcomes, and potential revenue uplift that media companies could see.
Download the original report PDF.
Contents
Introduction
Publishers are rightly focusing more on monetizing readers and relying less on advertising.
To-date there has only been one tool to do this - subscriptions - which only monetizes a small proportion of overall readership
Now publishers can also monetize casual readers and recently churned subscribers to capture 100% of your audience by bolting on a 'pay-as-you-read' model using streaming payments
This Executive Briefing note
Details the Proof of Concept for the pay-as-you-read model and streaming payments
Provides background on the test, including design and key takeaways
Sets out the highlights from reader and publisher data
Includes results from a survey of test readers
Offers insights into the future trajectory of the market
Sets potential next steps
Background
Streaming payments open up a new revenue model for digital news and magazine publishers.
Readers can 'pay-as-you-read' for content instead of 'pay-per-article'
How? Readers open articles for free and pay only for the value they consume as they scroll
This alternative payment solution aligns strongly with the needs and preferences of top-of-funnel casual and flyby readers
It also generates granular monetization data on the identity of top-of-funnel readers and the value of content - not otherwise available - and creates a pipeline to conversion
(Read our whitepaper for an in-depth understanding of pay-as-you-read.)
As a new technology, streaming payments raise important questions for publishers around viability and effectiveness - the main one being does it work?
Do readers experience any friction using streaming payments?
Are there positive or negative sentiments from the experience?
Do readers return to read and how frequently?
Are streaming payments a viable source of revenue?
We conducted a 7-month closed beta as a Proof of Concept to test assumptions and answer these questions.
Test design
The closed beta was designed to work within the following parameters.
Readers would access the StreemPay pay-as-you-read experience on desktop/laptop only (not mobile) via a Chrome browser extension
They initially had access to 6 well-known Tier 1 US/UK titles, later expanded to 24 titles based on demand from readers
They would submit credit card details and be charged for content at the end of each month to test ‘willingness to pay’
Test readers would be identified via Twitter based on expressed frustrations with paywalls and invited to join the closed beta. This allowed us to ensure we onboarded the right cohorts of limited testers who had a problem that needed solving
Over the course of 7 months the limited beta test saw:
82 people download the Chrome extension
75 people create a StreemPay account
66 people use StreemPay at least once
30 people use StreemPay at least once every 1-2 months
12 users respond to an extended survey on their experience
There were limitations to the test, suggesting the results have set a floor on which publishers could improve.
The test was available only on laptops, while many readers consume content on mobile (and almost all readers requested mobile access)
Test readers were targeted via Twitter, while publishers will more accurately target readers that have high intent to consume content
Articles were priced based on a basic formula, while publishers would be able to optimize pricing strategies over time
Let's now take a look at the key takeaways from the results.
Key takeaways
Readers expressed positive behaviors and sentiments, indicating a potentially sizable customer segment willing to use pay-as-you-read.
Readers regularly accessed and paid for content seamlessly, without the friction commonly found with micropayments
Readers had positive feedback regarding the simple ease of access to content without any feelings of financial stress or anxiety
Most readers regularly returned to consume articles, with an average 52% cohort retention rate (benchmark: 40% is good, 70% is great)
Readers on average spent $4.26 per month reading 9 articles each from 4 different titles, with max spend by one reader reaching $43
Publisher titles consistently generated revenue from readers without any additional marketing spend.
On average, each title generated $1 per reader per month - this rose to $2.50 for the top performing quartile
Each title saw readers consume on average 3 articles per month, typically scrolling for 53% of the page - rising to 72% for the top quartile
Titles on average attracted 15% of the active readership each month, while the top performing quartile attracted 30%
These test results are under-optimized for 3 main reasons:
There was no mobile access available which readers prefer
There was no proactive marketing to readers to consume content
Article pricing was not optimized based on type, length, popularity, age, or the reader's propensity to pay
An average per reader revenue of $1 represents a solid floor on which publishers could build and maximize their casual readership potential
Let's now take a look at the reader and publisher data from the beta test.
Data: Beta readers
Top-line metrics for readers from the 7-month beta test.
Over time, average article consumption and average monthly payment per reader remained steady.
Data: Publishers
Top-line average metrics for all 24 titles.
What does the monthly average of the top-performing quartile look like for each metric?
Over time, average revenue per reader per title remained steady at around $1 for all 24 titles.
Let's now take a look at the survey data both before and after readers started using StreemPay.
Survey data: Before using StreemPay
*The survey received responses from 40% of regular beta readers.
How many different online news and magazine sites a week do you visit?
How many news and magazine articles do you read a week?
Where do you mostly find the articles that you read?
How would you describe your experience paying for online news and magazines before StreemPay? (free form answer)
Survey data: After using StreemPay
Check the top things you liked most about StreemPay
In your own words, what else did you like about StreemPay?
Users suggested the following descriptions:
Really convenient
Allows for more breadth of reading
Saves on password admin
Not forced into subscribing
Contributes to the news industry
If any, what didn't you like about StreemPay?
What features would you want to see next?
Users suggested the following features:
Access to local news (10%)
Access via mobile (7%)
More variety of titles (7%)
Access via an app (3%)
Out of 10, would you recommend StreemPay to your friends or family? (1 = absolutely not, 10 = absolutely yes)
Average = 9.25
Median = 10
Out of 10, how disappointed would you be if you no longer had access to StreemPay? (1 = not at all, 10 = extremely)
Average = 7.25
Median = 8
Closing thoughts
This proof-of-concept demonstrated there is a potentially sizable customer segment willing to pay-as-you-read.
Top-of-funnel casual readers and recently churned subscribers represent significant sources of revenue potential for publishers
Micropayments have not proven to be viable solutions because the reader experience is so negative due to high friction
Checkout flows are the highest point of friction on any site and micropayments require readers to go through one for every article
Other friction points include pre-paying into e-wallets and not knowing whether the article is worth the price (i.e. clickbait stress)
Streaming payments are now a proven viable solution, offering a positive reading experience, seamless access to articles, and near-zero friction
Insight: One reason readers respond so positively is the alignment of 'jobs to be done'. With micropayments, the publisher's JTBD is to have the reader click 'buy', whereas the reader's JTBD is to read. With streaming payments, the publisher's JTBD is to have readers scroll, which is also the JTBD of the reader
For the reader, this way of consuming and paying for content is fair, flexible, and affordable - just how they always wanted it to be
The subscription economy isn't going anywhere, but it also isn't enough - customers need more than one way to pay.
Even the most successful publishers with 7-digit digital subscriber bases leave 80-90% of their overall readership un-monetized
On average, readers max out at 2-3 subscriptions, yet are willing to pay for content across dozens of titles, if they had another way to pay
There is significant customer demand for a non-subscription solution, which until now has not been viable
Pay-as-you-read, enabled by streaming payments, is a model that works for both readers and publishers, creating enormous potential for new sources of revenue and data from casual readers
Next steps
The pay-as-you-read model is a low-risk, bolt-on, tactical solution that can be rolled out and tested incrementally.
Unlike paywalls for subscriptions, which involve a significant amount of time, investment, and risk to implement, streaming payments are designed to be low burden to test
Installation and integration require minimal technical skills, and test cohorts can start as small as 1 reader and scale as large as needed
Preview what streaming payments could do for your business before making any commitment.
Use a streaming payments revenue calculator to explore different scenarios and the potential uplift to your bottom line - find ours at streempay.com/calculator
Simulate what a pay-as-you-read model would look like on your site - no coding needed - through a Chrome browser extension; learn more at streempay.com/simulator
Whitepaper: Enter Streaming Payments
The StreemPay whitepaper was developed following deep research and discussions with 70+ insiders and experts from across the news media publishing industry, as well as many consumers and habitual news readers.
It offers our perspective on how to solve a number of key issues facing publishers when it comes to generating reader revenue from casual readers, and with that identifies a number of competitive advantages for publishers willing to explore adopting our unique solution.
The StreemPay whitepaper was developed following deep research and discussions with 70+ insiders and experts from across the news media publishing industry, as well as many consumers and habitual news readers.
It offers our perspective on how to solve a number of key issues facing publishers when it comes to generating reader revenue from casual readers, and with that identifies a number of competitive advantages for publishers willing to explore adopting our unique solution.
Download the original PDF version.
Contents
Introduction
Every digital news and magazine publication underperforms when it comes to generating reader revenue.
The root cause is that publishers do not have the right customer-centric tools to ‘cross the chasm’ and tap into the largest segment of the market: casual readers.
This Executive Briefing note
Explains the context and cost to businesses
Analyzes the underlying drivers
Describes the potential solution
Offers a range of uses cases
Outlines the potential opportunities and upsides
Sets out options and potential next steps
Section A: Context and cost
The online news and magazine publishing industry has been pivoting from an ad revenue model to a reader revenue model based on subscriptions for the last 10+ years.
71% decline in ad revenues since 2005 (Pew, 2019)
~70% of US digital news & magazine sites now use paywalls (Nieman Lab, 2019)
As a sector, digital news and magazines are poor performers compared to other subscription-based businesses.
Against 21 other types of subscriptions services (e.g., Netflix, Amazon Prime, wi-fi, meal plans, gym memberships, etc.) digital news and magazines are in the middle of the pack with only 9% of consumers subscribing (West Monroe, 2021)
While this is up from 7% since 2018, average spend is down from $20 to $10 per month
Worse, they rank as 2nd least popular of all the categories listed (1st place went to fashion subscription boxes) and the number of people ‘happy and hooked’ on their digital news subscription went down 20% (again, second worst performer)
Growth prospects will continue to be difficult as many consumers have already reached ‘subscription saturation’.
~50% of US consumers are frustrated over the sheer number of paywalls and pay for just one online news subscription (World Economic Forum, 2019)
~80% of people only want 1-2 digital news and magazine subscriptions (Reuters Institute, 2019)
40% of Millennials feel "overwhelmed" by their subscriptions and 43% intend to cut back (Deloitte Media Survey, 2020)
Yet interestingly, 53% of global consumers are willing to pay for news in the future, compared to 16% who currently pay (What’s New In Publishing, 2020)
The shift to a ‘subscription economy’ will likely not meet the revenue needs of the majority of publishers.
In 2021 subscriptions were considered more important for revenue than ads for the first time, yet 41% of media leaders believe it will only work for a small minority of publishers (Reuters Institute, 2021)
30-50% of new subscriptions go to a few national brands (Reuters Institute, 2019)
The Reuters Institute projects digital subscriptions for many publishers won’t be nearly enough to compensate for the substantial falls in print circulation – as well as print and digital advertising revenue
The inability of subscriptions to bring in enough reader revenue to fully balance the loss in ad revenue results in ongoing costs measured in dollars, jobs, and ownership.
57% fall in industry revenues since 2004 (News Media Alliance, 2019)
47% drop in employment at US newspapers from 2008 to 2018, even before the impact of Covid-19 (Pew Research Center, 2019)
50% of all US newspapers are controlled by private equity, hedge funds, and other investment groups (Financial Times, 2021)
Section B: Underlying drivers
The adoption of a reader revenue model displays all the characteristics of a new product adoption lifecycle where early solutions work well for early adopters, but less well for the mainstream market
In the early market, growth in reader revenue was characterized by a core customer base purchasing subscriptions - these were the low hanging fruits of loyal and heavy readers
Loyal readers purchased subscriptions because of their affinity to the brand, whereas heavy readers did so for the value for money
Then the chasm – here almost every publisher struggles to break into the ‘massive missing middle’ of consumers known as casual readers who are engaged with your content and want to pay but not make any new subscription commitments
At the end of the cycle are the late adopters who might pay something once they see the value and have built up enough engagement with the publisher, but again are unlikely to commit to a subscription
The reason subscriptions are unable to cross the chasm is that they are a ‘payment first, value second’ access model.
A reader pays for a subscription in advance to access content, trusting that they will receive fair value once they start to consume it
However, the reader must work to claw back the value to justify the first payment, and do it quickly enough before the next payment hits their credit card and they have to start over again
A reader will remain a subscriber if they consistently feel they are getting value for money (VFM) before the next subscription payment charge; if they do not then the likelihood they churn increases over time
The more subscriptions a person has, the harder it becomes for them to achieve VFM for all of them before being charged the next payment
This is the key driver behind why ~80% of readers max out at 2 subscriptions for digital news and magazines
Subscriptions, therefore, function as ‘high trust-high VFM’ systems, perfect for loyal audiences and heavy readers who know it is worth it, but not effective for casual readers.
Pushing a high-trust solution, such as subscriptions, onto low VFM customers like casual readers forces publishers into a ‘dead zone’ of low reader revenue and high customer acquisition costs
The failure to cross the chasm is therefore due to the limitations of subscriptions as a tool to provide casual readers with value for money.
It is not due to the quality of content: the top publishers alone drive hundreds of millions of visits per month to their sites
It is not due to a lack of willingness to pay: 53% of global consumers are willing to pay for news in the future, compared to 16% who currently pay (What’s New In Publishing, 2020)
It is rather due to how subscriptions work at their core
The insight is that publishers do not have the right tool to tap into the overwhelming majority of their reader base.
Top publishers on average have a casual reader base 130x their subscriber base – a huge source of potential revenue and data, if it can be unlocked
The right tool for low VFM casual readers must be a low trust or fully trustless solution that avoids the ‘payment first, value second’ dynamic of an access model
In other words, the reader should not need to trust they will get value for money after payment, but get it simultaneously with it
Section C: Solution
An effective ‘trustless’ solution must meet the needs of both publishers and readers.
Publishers: Generates new direct and indirect revenues; grows the subscriber base, not cannibalizes it
Readers: Makes consuming content accessible and affordable; provides flexibility and transparency on cost
Micropayment solutions and aggregators are not the answer.
Micropayments, or ‘pay-per-article’, still require paying first for access, then trusting you will recoup the value after, just on much smaller scales – this is no different to subscriptions as readers will not know if the article is worth the price until they have read it
Compound this problem with the fact that readers must make this decision every time they want to read an article, dramatically increasing friction and churn, evidenced by the many failed attempts at micropayments in the last decade
Aggregators appear attractive for readers as they offer the simplicity of one subscription to multiple outlets, however it is not a solution that works for publishers which see little by way of new revenue, useful data, or subscription conversions from this strategy
Instead, we need a new type of solution: enter ‘streaming payments’ which enables a truly customer-centric “value first, payment second” consumption model.
Streaming payments, or ‘pay-as-you-read’, does not require readers to pay to access an article, but instead opens articles for free and charges them on their consumption patterns
In practice as the reader scrolls the value they consume is recorded
E.g., an article might cost $1.50 but a reader only scrolls halfway, so $0.75 is tallied to their account
At the end of the month the reader pays for all the value consumed in one credit card charge
Streaming payments function as ‘trustless-low VFM’ systems, perfect for casual readers who know they are getting value for money now and do not need to trust that they will get it in the future.
Offering a trustless solution to low VFM customers like casual readers allows publishers to tap into a large source of reader revenue
The consumption model has multiple advantages for casual readers.
Readers are not hampered by friction points such as ‘buy now’ buttons, e-wallets, or micropayment checkout flows. They need only open any article for free and decide whether to scroll a little, scroll a lot, or not scroll at all, which is the job they are there to do anyway
By providing sufficient transparency into costs, readers have the flexibility to run up a monthly bill as little or large as they can afford, matching their own budget preferences
By building in spending notifications readers can set limits on how much they want to spend and retain a sense of control
Publishers can set payment caps so readers can consume without fear of getting a large bill and enjoy reading for free once they reach the cap
Deploying a consumption model opens up two significantly valuable benefits for publishers.
Revenue from a very large audience segment that was previously inaccessible
Data not only on the behavior of casual readers, about which they know very little, but also on the monetization value of their content which was until now not directly available
The result is that publishers can now become truly customer-centric, engaging and earning from both their core audiences using subscriptions and their casual readers using streaming payments
Spotlight: How does it work?
New products are best showcased using demos, but in this instance can we illustrate how streaming payments work?
Streaming payments work at the sub-article level, capturing the value readers consume as they scroll
This functions as a pay-as-you-read model where payment is calculated based on user activity, i.e. how far a reader scrolls
This is distinct from a pay-per-article model which requires pre-payment to access content, which causes friction and drop off
The UX of streaming payments allows for layered levels of transparency for the reader, while the UI has minimal impact on the reading experience when retracted
Section D: Use cases
There are 3 types of use cases for a streaming payments-based consumption model, depending on how widely the solution is distributed to casual readers.
Those based on small data sets
Medium data sets
And large data sets
Small data set use cases: Offer streaming payments to a limited set of casual readers lets you…
Pricing: Collect data on the monetization value of your content from sample sizes of your target audiences to inform your subscription pricing strategy
Consumer behavior: Collect data on the frequency, recency, and interests of certain segments of casual readers and how they interact with your content
Medium data set use cases: Provide a wider audience with streaming payments options to…
Editorial strategy: Gain insights on which content is monetizing strongly so as to inform what to put on your front page, push on social media, or drop into newsletters
Retention strategy: Give churned readers an alternative way to continue paying, mitigating the potential revenue and data losses from former subscribers
Large data set use cases: Open up streaming payments to most or all your readers so that you…
Conversion: Build a pipeline to conversion by allowing your casual readers to engage with you over the long term, build up reader loyalty over time, and become high VFM readers who would end up benefiting more from a subscription
Revenue: Generate revenue from your existing base of traffic without the need for checkout flows or complex conversion funnels and unlock the volume play potential of your site
Primary use cases for streaming payments all focus on supporting publishers' existing objectives
Inherent to each use case is the idea that streaming payments is not a replacement to but a complement for any existing subscription model already in place
Streaming payments at their best turbo charge an often under-powered subscription paywall and help publishers achieve and set higher OKRs
Furthermore, streaming payments can be used by publishers looking to launch new content or monetize content that is currently free as a way to gauge monetization potential
Publishers can therefore deploy streaming payments as a tool according to their own priorities
Spotlight: Does it work?
As a new technology, streaming payments raises important questions for publishers around viability and effectiveness - the main one being does it work?
In a closed beta run over the course of 5 months, approximately 70 readers had access to 25 publications via streaming payments
The purpose of the beta was to test the following assumptions:
Do readers experience any friction using streaming payments
Are there positive or negative sentiments from the experience?
Do readers return to read and how frequently?
Are streaming payments a viable source of revenue?
The short answer: yes it works, both from the reader experience and as a viable source of potential new revenue.
Readers were able to access and pay for content seamlessly, without the friction commonly found with micropayments
Readers had positive feedback as they appreciated the simplicity and ease of access to content without feeling financial stress
Many readers regularly returned to consume articles using streaming payments, with an average ~50% cohort retention rate after 5 months
Benchmark: 40% is good, 70% is great (Lenny's Newsletter 2020)
Readers on average spent $4.45 per month, with publishers earning on average $1.13 per reader per month (min $0.11, max $5.13)
The more nuanced answer: the fundamentals are there with room to grow and optimize.
Limitations with the beta test (laptop only, limited reader targeting ability, under-optimized pricing) mean that the above numbers represent a floor on which publishers can greatly improve
With a phased rollout, publishers can test and optimize before making streaming payments a full offering to all readers
Section E: Opportunities and upsides
Once a streaming payments engine is running, it can generate business and industry-level data not previously available that can help publishers better understand readers, drive efficiencies, and optimize revenue.
Acquisition prediction metrics, helping to pinpoint which readers are most likely to subscribe, and that likelihood vis a vis subscribing at other publications
Customer lifetime value metrics, for understanding the value of casual readers v subscribers
Behavior metrics, understanding how casual readers behave on your site versus across other sites
Article metrics, understanding on a per article basis the revenue over time, readers over time, scroll rates, etc.
Writer performance metrics, understanding each writer’s revenue over time, revenue per article, etc.
Loyalty metrics, understanding the frequency and recency that casual readers return and the number of articles they read, benchmarked against how much they return to and read at other publications
Reader quality metrics, understanding how much readers pay in general across all sites versus at a publisher’s site in particular
Content quality metrics, understanding which types of content perform better (e.g., sports v business, long v short, opinion v editorial) with casual readers
Trending metrics, knowing which topics, articles, authors are performing or rising quickly for a publisher; aggregate level insight on the same across the industry
Quality scoring, giving publishers a performance ‘score’ on authors or content comparative to similar publications and topics
Earned growth, understanding how much of your revenue growth is coming from existing casual readers and their referrals
A streaming payments engine also creates powerful conversion-retention loops that can drive customer acquisition in entirely new and cost-effective ways.
Typically, converting a reader to a subscriber requires that each publisher onboard each subscriber individually, managing them from top-of-funnel down through registration and out through checkout flows, with many friction points along the way
With a consumption model based on streaming payments, the reader need only be onboarded once on any publisher because readers have universal accounts that allow them to pay-as-they-read on each publisher using the same credentials - this distributes the risk and burden of onboarding and shortens the time-to-value of each reader
This time-to-value is further shortened: a typical conversion process requires a reader to go from $0 to a subscription fee in order to become a customer, but with streaming payments the barriers are much lower as a reader need only pay for $0.01 of content to qualify
The customer acquisition journey therefore becomes less dependent on complex funnels and more reliant on readers just opening an article and scrolling, which is what they want to do anyway
Finally, sourcing new subscribers can move away from traditional techniques of buying expensive and inaccurate lists to highly targeted processes where publishers can identify new readers based on specific parameters (spend, interests, etc.) or lookalike audiences
Once streaming payments are enabled, publishers can tap into the volumetric revenue potential of their entire website traffic and not just their subscriber base.
On average top publishers have a casual reader base 130x their subscriber base, but this number varies and can go as high as 300x
This opens up a sizeable opportunity for a volume play whereby publishers that tap into their casual reader base can see significant revenue upside
For example, a publisher with only a 10x casual reader v subscriber base that on average earns revenue from casual readers at 10% of the subscription rate would double their reader revenue (see streempay.com/calculator to calculate your own scenarios)
Section F: Options and next steps
There are 4 main pathways for publishers to start with streaming payments.
If content is already behind a subscription paywall:
Start with small, low-risk test cohorts to ascertain response of casual readers to streaming payments, then expand cohorts using the incoming data to inform priorities, such as pricing and editorial strategies
If content is not launched but will be behind a subscription paywall:
Start with small, low-risk test cohorts to ascertain potential monetization value and price points for future subscription rates
If content is free but moving behind a subscription paywall:
Start by selecting a limited range of content to monetize, offering all readers who land on it the opportunity to use streaming payments, then expand to more content over time, using the data to inform the price point of the planned future subscription rates
If content is free and will not move behind a subscription paywall but will be monetized:
Start by selecting a limited range of content to monetize, offering all readers who land on it the opportunity to use streaming payments, then expand to more content over time, using the data to inform the price points of your articles
In all cases, publishers can keep risks low and roll out a streaming payments-based consumption model as quickly or slowly as appropriate.
Unlike the roll out of paywalls, streaming payments are designed from the ground up to match a publisher’s level of risk tolerance and be scaled up as needed
Streaming payments can first be offered to select readers or across select content before rolling it out fully
Publishers can therefore decide whether to expand the use of streaming payments or not based on direct data from actual readers instead of relying on proxy or market data
Test and validate if streaming payments is a viable solution for your content and your audience.
Every publisher is different, with distinct audiences and content
By starting with small test cohorts, you can understand whether streaming payments work for your business context
Streaming payments can then be scaled up or down as needed, depending on the priorities of each publisher
The value of streaming payments increases as the dataset of readers widens.
While publishers should start small, once data has validated that streaming payments work, there are benefits to expanding the size of the cohorts of readers using it to access and pay for content
With small datasets, streaming payments can inform a publisher’s pricing and editorial strategies, but as the datasets increase in size eventually, there will be sufficient readers to drive a conversion-retention engine and bring in significant revenues to the bottom line
Conclusion
Streaming payments are a low-risk, low-burden method to boost revenue, strengthen subscription conversion rates, and unlock granular monetization data.
Publishers can tap into the enormous potential of casual readers by offering streaming payments as an alternative way to pay for content
This can help them 'cross the chasm' into the mainstream market and grow beyond what subscription platforms are able to offer