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For creative publishers, micropayments are an invitation, not a cautionary tale

Mark is the senior media reporter at Adweek in New York, where he covers the business of digital . His work includes fields such as  technology, identity solutions, audio and podcasting, events, newsletters and  strategy. He previously covered the media industry at Insider and lives in Brooklyn.

Micropayments, macro problems

After several years of daily labor, I have finally conditioned my friends and family to stop carping about paywalls.

When they used to complain about having to pay to read an article, I would agree, telling them that publications will drop the paywalls as soon as the companies they work for start giving away their products for free. And, after releasing salvo after salvo of these galaxy-brain zingers, I felt I had done my small bit to change the world, having convinced half a dozen people to pay for the news.

But every once in a while, a tiny bubble of dissent arises, and it always takes the form of the same cursed question: “Why can't I just pay for the article?” they would lament. “I would happily do that.”

Luckily, as this is far from my first rodeo, I now keep an article at the ready, primed and ready for sharing when such a rebuttal surfaces: “Why micropayments will never be a thing in journalism,” from the Columbia Journalism Review.

The reason I have defaulted to sharing that article, though, rather than simply explain myself, is because the logic is … tricky. Micropayments, or a system in which digital readers pay per article, fail to work thanks to a complex web of consumer psychology and macro economics.

For instance, unlike paying for your favorite tuna melt from your favorite sub shop, when you pay for an article, you have no idea in advance whether you will like it or not, meaning you have shelled out your hard-earned cash for what essentially amounts to a gamble. Compounding the problem, once you have paid for the article, you now expect it to be worth the money you paid for itmeaning some poor unassuming blog post now has an added pressure to wow.

The end result? You will likely find the article to have been a waste of money, discouraging you from making such a mistake in the future. Thus, what at first looked like a potential solution to the problem has the inadvertent effect of decreasing the consumer's likelihood to pay in the future.

The economics are even trickier. In a nutshell, they boil down to this: Publishers make a pittance in advertising off of a free viewer, but they make real money off of a reader they convert into a subscriber. So, after they do the math, publishers realize that if their paywall turns away 19 readers but converts one, that one new subscriber still generates more lifetime value than the 19 free viewers. If publishers offer a middle route, letting readers pay a small chunk of change for just one article, they run into the problem outlined above and they forfeit the opportunity to turn that reader into a subscriber.

Still, the reason I have to share the article is because micropayments seem like they would work.

Even the explanations for why they fail feel riddled with weak spots. Wouldn't publishers prefer to make $2 from a micropayment, rather than lose the reader entirely?

The Occam's razor of it all keeps the dream of micropayments alive but barely breathing, never quite eradicable and yet never fully implementable. They are, in the world of publishing, something of an El Dorado: always beckoning, never manifest.

Even when they fail, like optimistic Marxists their proponents insist it was merely a problem of implementation. They were done wrong, but they do work. And every few years, like clockwork, some harebrained publisher schemes up a new way to try them, and they always fail. I love this industry.

But, I do wonder (“Oh no,” you're thinking, “He's about to offer a new way to do micropayments!”): Perhaps micropayments are a misguided instance of a worthwhile idea. Maybe there are other options publishers could be offering readers.

Enter the newsstand

If you were to ask my dad, publishers are leaving money on the table by eschewing a tried and trusty remnant of print-era : the newsstand.

For younger readers, newsstands are physical kiosks, helmed by actual people, where busy passersby could rifle through a smorgasbord of newspapers, magazines, and other bits of consumer miscellany. Imagine the stores in the airport where you buy gum, but strewn across the city corners of major metropolitan areas.

At these storefronts, consumers could buy newspapers and magazines at a premium – $14 for a magazine whose monthly cost $9. But for these one-off shoppers, the slight surcharge was worth the convenience and the lack of commitment.

Why should the economics work any differently on the internet? A digital passerby no more wants to subscribe to a newspaper than a print passerby did, and yet we give them no alternative option; they can either subscribe or not read.

Of course, with a print product the consumer purchased a package of stories – an entire magazine, an entire newspaper – rather than one article, so the comparison is not perfect.

But there is a simple solution: Why not, for say $15, give the digital reader access to unlimited articles on the website for a week, maybe even a month? Call it a monthly access payment (MAP).


The publisher generates nearly the same amount of immediate revenue as they would from selling a subscription, but the consumer has not signed a contract obliging them to future spending.

If you are anything like me, if I capitulate and subscribe to a publication just to read an article, the first thing I do after finishing the article is cancel the subscription. I have too many already, so I force myself to tie up those loose ends lest I forget about them.

Sometimes, if I am feeling generous, I might not immediately unsubscribe, but I will monitor the number of times I visit the site like a hawk, waiting for proof that I do not actually need the subscription. Then I unsubscribe.

Either way, the immediate pressure to subscribe forces me into a defensive mentality, unsubscribing immediately or forcing the publication to prove, beyond the shadow of a doubt, that I need it in my life. Neither mentality gives the subscription much of a chance of winning out.

Imagine if, instead of feeling under the heel of an impending subscription, I saw the payment I had just made as a month-long treat. I would peruse as many articles as I wanted over the course of the next month, knowing that my trial would be coming to an end soon and that nothing bad would happen if I did nothing.

If I felt so compelled, I could pay for another MAP. After a month or two of paying $15, I might decide that a subscription could be worth the money, and I could subscribe for $12, thus making the actual decision to subscribe feel like the economic choice, which it should be!

Subscriptions used to be the economical way for power-readers to consume the writing they loved; now we force them on everyone who wants to read anything.

The counter-argument goes that when a user subscribes, you want to offer them as few opportunities to unsubscribe as possible. Monthly access payments would mean a reader would have to opt to pay for the product on more than one occasion, and financial logic suggests that this gives the reader multiple times to reconsider their choice.

But selling a reader a subscription and then praying they forget they subscribed is an indication of an unhealthy model. If the consumer feels that they are being corralled into a subscription prematurely, it is because they are. By removing the threat of ongoing payments, a MAP turns the time the reader spends with the content into an amusement, rather than a hanging axe.

Plus, by charging the reader more for the access payment than the subscription, the subscription becomes the financially responsible way to continue enjoying the writing, which makes subscribing feel smart, praiseworthy even.

Consider the alternatives

Newsstand pricing is just one example of other pricing models that publishers should be experimenting with. It draws on pre-digital precedents, so it has a proven track record that makes it easier to take a chance on.

There are other, more experimental methods, though, that might prove worthwhile as well. These go the other way from the above logic, in that their end goal is to drive subscriptions in readers who would normally balk at the price.

For instance, in a recent post I shared findings that suggested that slashing the price of an annual subscription very deeply could ultimately pay for itself. When a reader subscribes to a publication for a year – a year, for god's sakes! – access to that writing becomes an expectation in their life.

After they have grown used to it, they are far less likely to unsubscribe. Thus, getting someone locked in for a year, even if you lower your profit margins initially, could translate to a greater lifetime value, as the rates of such a reader would likely plummet.

> To save for later: Why retention is more important than acquisition

Extending this logic, in addition to slashing the price of an annual subscription, publications could consider selling multi-year subscriptions. These would appeal to die-hard fans that subscribe year after year anyway, because they would presumably save money on the discounted price. The yearslong offering would also reduce their likelihood to churn.

But a fire sale for multi-year subscriptions, even if sold at a loss, could prove to pay off in the long run. Again, these readers would grow so accustomed to having access to the publication that their churn rates would be next to nil. In practice, this could look something like $15/month, $50/year, and $80 for two years. The publication would get a lump sum of cash upfront, they would make money off advertising sold against the reader, and they would bake in lock-in that would send the lifetime value of that customer to the moon.

In sumo nation

I rest soundly at night confident that the greatest minds of our generation are hard at work trying to figure out how to make the subscription machine go brrrr, and perhaps these ideas are all financial cockamamie.

But the gut logic of a micropayment system would suggest that there must be other ways of paying for news content that make more sense than the ones we are trying. You should not have to subscribe to a publication every time you want to read an article of theirs. You just shouldn't!

As in any healthy partnering, pressure to make too big of a commitment too early in the relationship is a red flag, and the media industry is waving that red flag like they're Santa Anna (that reference is for San Antonians only). Surely we can invent a system that avoids goading readers into signing up for a monthslong experience when they just want to read one piece of writing?

Or, if you already subscribe or are considering doing so, you should be rewarded for your loyalty with massive financial incentives. Publications should offer subscription options that are cheaper and extend longer than the current models.

Whatever the case, consumers should have more options than the binary one – subscribe or don't subscribe – they have now. They should feel empowered in their decision, not cowed into it, and there must be models out there that enablr that.

Then again, maybe micropayments aren't such a bad idea after all …