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The dawn of micro payments for online publishers

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Mention the word “Paywall” to an online publisher and you will get a stern stare back at best or sharp comments “been there…seen it fail…not looking at it!” at worst. But behind the word is a desire to create a new word or phrase that provides a solution to a major and growing concern that publishers are grappling with. The phrase they should be looking at is “Charge to Mobile” and the sub text is “mobile enabled micro payments”, says Rory Maguire, MD of AIME.

For many years, publishers who have placed their content online have relied on advertising to fund it and few have bravely introduced subscription models for online or app ad-free access sometimes with a paper version thrown into the subscription mix. After all, spreading the Sunday papers over the dining room table is part of a traditional British weekend that neither computers nor tablets can replicate.

The main issue for online publishers is that advertising revenues are falling away fast while content production costs are increasing. The major impact on advertising revenues is that access via the traditional 14” computer screen with loads of ad inventory surrounding the content is shrinking to the 5” screens of smartphones with near zero wrap around inventory.

Consumers hate pop-up ads and will install ad-blockers or continuously click away from intrusive ads. Advertising revenue models have also evolved from per-eyeball banners to per-click or per-acquisition payments, neither of which is successful while consumers click away or block. As the Guardian Online states on its Become a Supporter web page “…

While more people are reading the Guardian than ever before, far fewer are paying for it. And advertising revenues across the media are falling fast.”. Those advertising revenues that can be achieved are a fraction of the revenue from print advertising, but even that is falling away as advertisers are pushing for online click-throughs even more than ever.

Publishers that rely on subscriptions are relying on their loyal following. It is an unusual phenomena that creates almost undying loyalty to a newspaper brand in the same way that you pick your friends and remain with them for life. But this is diminishing as published consumption is increasingly based on search and recommendations instead of loyalty, much in the same way as the concept of “friends” has evolved with Facebook. New Yorks Wall Street Journal  and UK The Times successfully implemented a subscription paywall. The Times stable mate The Sun, struggled with conversion despite its loyal following. Regular financial commitment and access to online payment facilities may have been the issue.

The big question now for online publishers is how to serve this community of small screen promiscuous consumers with snack size –but quality –content and get a financial return to fund the business?

A few payment facilities for content are evolving. Piano (www.piano.io) provides US based publishers (mainly) with metered and hard paywalls and about 11 percent of publishers businesses are interested in the different payment models. Swiss company Millipay (www.millipay.ch) takes an upfront payment from consumers and allows micro decrements of their virtual currency to pay for bite-size content from a range of publishers. Dutch company Blendl will aggregate content from a range of publishers and provide a chargeable interface to this aggregated content, thus  overcoming the promiscuous consumer issue.

The base reason for the upfront payment or paywall subscription payments is down to the two barriers of gaining the payment details from the consumer in the first place and the cost of card payments. Below 50p it is not finically viable and conversion is low, yet the average quality content piece will only sell at 5 to 20p.

This is where Charge to Mobile fits perfectly with online Publishing. Any micro payment from 1p upwards is possible in the UK and in the “lower risk” arena of an online publication can be achieved with a single payment confirmation. The interaction can be achieved in a number of ways from single item consumption, metered consumption, ad-block embracing consumption and aggregated content consumption. The permutations are endless, scope is huge and experimentation viable.

Author

Rory Maguire is MD of AIME, the Association for Interactive Media & Entertainment

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Editor and content creator for Telemedia – for 18 years and counting

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