SP Brief #1: Pay-as-you-read vs. pay-per-article
1. Media publishers have several options to diversify revenue, e.g.:
Advertising
Subscriptions
Sponsored content
Events
Affiliate marketing
Donations
Merchandise
2. But your most under-monetized asset is your existing traffic
The majority of visitors do not pay for the content they consume
Non-paying readers can often number as high as 150x paying readers
This is an enormous customer segment that remains untapped
3. The reason is you've been limited to just one reader revenue tool
To date, only subscriptions have given you access to revenue from readers
This is a great solution for a particular customer segment: loyal readers
It is not so great for other customers, which is why conversion rates can be so low
4. Other customer segments need a different type of tool
Casual and flyby readers have different preferences and requirements from subscribers
Subscribers visit regularly and get value for money - they are happy with a flat price
Casual readers visit irregularly and don't get value for money consistently enough to justify a subscription - they need flexibility and affordability
5. Micropayments and pay-per-article do not work
In 10+ years there have been multiple micropayments solutions and no breakthroughs
The main cause is the high friction
The highest point of friction for any customer is going through the checkout flow
Pay-per-article requires sending a customer through the checkout flow for every article
Topping up e-wallets similarly requires regular checkout flows and high friction
6. So what is a viable, workable alternative? Pay-as-you-read
Pay-as-you-read works like this: A reader can open an article for free (no checkout flow) and consume the article and get charged for exactly what they consume, paying at the end of the month along with all the other content they consumed
Example: I click on a link, open the article for free and see that it costs, say $1. I read 50% of it and so $0.50 is added to my tally. I then do the same throughout the rest of the month on other articles and rack up a total of, say $9.23, which is deducted from my credit card at the end of the month - no micropayments, no multiple checkout flows
7. Pay-as-you-read works because of 4 main advantages
Aligned jobs-to-be-done: The key is both readers and publishers want the same action to take place. Readers want to scroll to consume content. Publishers want readers to scroll to tally revenue (not click a 'buy' button). This is the marrying of action and transaction.
Super low friction: This creates an almost frictionless reading experience for your customer, who, once onboarded, doesn't have to go through any checkout flows to pay for content but simply click and read, which is what they are there to do anyway
Transparency and control: Readers know how much an article costs, how much is left, and how much they've already paid from the subtle but powerful UI embedded in each article. Publishers can set a monthly payment cap after which it is free to read. With sufficient visibility and control to keep their spending in check, readers experience low anxiety and can focus on their primary purpose, enjoying your content.
Flexibility and affordability: Since each reader only pays for exactly what they read, their payments are personalized to them, their budgets, and their spending preferences, making pay-as-you-read both flexible and affordable month to month
8. Pay-as-you-read unlocks 3 major benefits for publishers
Revenue: A much larger customer segment can now be monetized. Even if at lower average rates of spending, the significantly larger volume can make for materially significant increases in overall reader revenue.
Pipeline: Publishers can now engage with their casual reader audience and build up loyalty and reading habits. Some readers will regularly spend close to or above your subscription rate. This creates a pipeline of highly qualified leads to convert to subscription. (It can also recapture lost revenue from churned readers.)
Data: New data is now available about your casual readers, including knowing who exactly is in your top-of-funnel, what they read, and what they will pay for. This informs your editorial strategies, pricing, marketing, and audience engagement. Aggregate data across publishers allow for insights into what high monetizing topics are trending and identifying lookalike customers to market to, generating a flow of new readers.
9. Deploy pay-as-you-read at your own speed with minimal risk
Subscription paywalls are hard, expensive, and stressful to implement
Pay-as-you-read is designed to be low risk, low cost, and low burden to deploy and test
You do not at first need to make it a universal offer to all your readers alongside your subscriptions. Instead, you can target specific readers and only offer them the option of using pay-as-you-read.
Start with small cohorts and over time expand as quickly or as slowly according to your needs, targeting different audiences depending on your priorities, e.g. recently churned readers, registered readers, young readers, readers arriving from social media, etc.
Whenever you are ready, you can then make the pay-as-you-read offer available to all readers who visit your site, alongside your subscription offer
10. This mitigates the risk of cannibalization of subscribers
By rolling out in a slow and targeted way, your subscribers are not given the option to switch to pay-as-you-read
In the meantime, you are building a pipeline of high-quality, highly engaged subscribers who are less likely to become high-risk 'sleeper' subscribers (as you get from discounted trial subscription offerings)
This gives you time to build up revenue from your casual readers and derisk your subscriber base so that when you do make pay-as-you-read available to all, the risks of cannibalization have already been mitigated
11. Scenario: Let's take a look at a theoretical example
Example Media Co. has 1m in monthly traffic and 100,000 subscribers at $10 a month, generating $1m in monthly revenue. They implement pay-as-you-read with a $15 payment cap.
Revenue: Example Media converts 20% of casual readers to pay-as-you-read, who spend on average $1.50 per month, generating $270k pm or $3.24m py, a 27% bump to overall reader revenue
Pipeline: Example Media engages with readers, building them up over time, with 2% of pay-as-you-read users regularly spending between $10-15 per month, generating 3,600 highly qualified leads, half of whom are converted to subscription each month
Data: Example Media receives first-party data on its pay-as-you-read users and now knows who is in their top-of-funnel, what they will pay for, and what topics they read, generating insights for audience engagement, editorial, pricing, marketing, and revenue teams. Example Media benefits from industry-wide aggregate data to inform them on what trending topics are monetizing most. They identify and market to a pool of new readers based on lookalike patterns of behavior, expanding their readership base and pipeline.
Outcome: After just 1 year, Example Media has increased annual reader revenue by 39% from $12m to $16.64m. With first-party and aggregate data, this would increase still further by monetizing additional traffic, engaging more effectively with audiences, optimizing pricing, increasing conversion rates, and recapturing churned readers.
12. Next steps: Make an informed decision based on your data
Conduct a limited, low-risk rollout of pay-as-you-read, testing on small cohorts
Gather data based on your content and your readers' behavior
Decide whether pay-as-you-read is the right-fit solution for you
Learn if pay-as-you-read works for you. Request a quick 15-min demo.
Find the original post on LinkedIn.