Last year the publishing industry was abuzz with the news that the Winnipeg Free Presswas experimenting with a new payment model – a Read Now Pay Later micropayment platform. For $0.27 (Canadian) per article, readers could read as much or as little as they wanted on the Free Press site, paying afterward and with the ability to request refunds if they weren’t satisfied with the content.
We were among the many outlets that covered the news, many of us skeptical – but hopeful – that such a plan could work. Was it really possible for micropayments to really sustain the largest newspaper in its marketplace? The concept left more questions than answers, even though early results were positive.
Last week Scott O’Neill, senior vice president, North America, for MPP Global and Christian Panson, vice president, digital for the Free Press held a joint webinar to explain the micropayment strategy in detail and to share the first seven months of the strategy’s results. What follows comes from the webinar, as well as follow-up conversations with O’Neill and Panson who graciously shared their information, insights and time with us.
Industry challenges
The publishing industry is faced with multiple challenges as news outlets and media organizations consider monetizing content in a world where “digital first” is becoming the norm. Among the challenges are how to improve customer engagement, combat ad blockers, utilize social media effectively and affordably, and address changing customer attitudes.
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Christian Panson |
With 143 years of history behind it, the Free Press has prospered and grown stronger in the digital age. As a daily paper with print circulation around 80,000, the Free Press has built a well-known brand for local news, reaching about 80% of adults in the Winnipeg area, according to a recent audited study of Canadian publishers. But like other publishing stalwarts, it isn’t enough to have a growing digital audience. Publishers must also have products that support their operations, and they must provide products their readers want and are willing to pay for.
“I wouldn’t say the print model is failing, but it is certainly in decline, and our digital model is failing,” said Panson. “What we had up until 18 months ago simply wasn’t sustainable. We were under pressure from so many areas.”
Panson said the Free Press used to be the loudest and longest voice their readers heard, but people are getting their information from all over the world in real time now, making it difficult to become anyone’s sole news source.
“We’ve managed to build a very strong brand. Unfortunately, things are changing,” said Panson. “We have to come to terms with our monopoly. Our influence is gone.”
Ironically, with the growth of digital readership, the newspaper’s reach has grown in recent years, but the monetization of the Free Press’ digital strategy was not enough to compensate for the erosion of their print readership.
“Unfortunately, the declining print readers are worth so much more than the added digital readers, and we have to find a way to bridge that gap,” Panson explained.
Panson compared the dilemma to the young adult who returns home to live with their parents.
“Digital has been living in print’s basement for a long time and hasn’t had to pay its way,” he said.
Are paywalls the answer?
Paywalls have become a common monetization strategy to help publishers build a bridge between print and digital, but they have not been successful for every publisher who has tried one. The Sun, for example, abandoned its paywall late last year, and the Dallas Morning News has unsuccessfully tried a paywall twice, but hopes to try a third time in 2016.
“Metered paywalls have become synonymous with digital publishing, and for many, this is the right solution,” said O’Neill. “For others, the metered paywall is too much of a threat to website traffic and advertising revenues.”
O’Neill also said it is important for publishers to consider an array of business models to suit publishers’ varying needs.
Paywalls were one of the options the Free Press considered to monetize the digital side of the house. Ultimately, the newspaper chose a three-pronged approach which included adoption of a micropayment strategy instead of a paywall.
The journey
The Free Press was slow to make any changes, said Panson. Instead, they focused on watching other publishers who were experiencing limited success with paywalls. In some cases, certain segments of a publisher’s audience weren’t monetized at all, and in others, there were issues with paywall implementation and roll out.
Over the last eight years, the Free Press dedicated a lot of resources to improving its content to increase reader engagement. They created a more interactive experience, added streaming video, covered live events and made the experience faster, but their efforts yielded little in the way of results. Despite the better, richer, more abundant content, the average user still read five to six pages and spent an average of four minutes on site per visit.
“We got to a point where we couldn’t wait and watch any longer. Free just was not an option for us anymore,” Panson explained. “We structured our solution to salvage and maintain as much of our current revenue stream as we could.”
The Free Press started with an exercise in evaluating how profitable their top 30 journalists were. They learned that, using a CPM model, only two of those journalists were garnering enough page views to support their work through digital advertising alone. The Free Press recognized it needed to change that reality to get digital to support more of their operation.
At that point, the Free Press didn’t believe a metered environment would sufficiently build a prosperous environment by itself. What other options did they have? The first step was evaluating their audience: what do we know about them? They knew very little about their print subscribers, and for digital data, they only had large aggregate data from Google analytics.
“It was a pretty big void,” said Panson. “The number one thing we needed to do was learn about our audience, to be sure what we were designing made sense for them.”
They filled the data void by partnering with Cxense, a data management and analytics company. The Free Press installed a log-in wall, inserting it slowly over time, offering readers the option to skip logging in at first. After six to eight weeks, the newspaper forced all readers who read more than two articles to log in.
While concerned they might lose traffic during this testing period, Panson said it was worth the risk. Ultimately, they lost only about 2% of web traffic. The Free Press was hoping for 70,000 log-ins, but they got 180,000 registered users, more than double their goal. Panson advises publishers who want to try it to do so in a measured and careful way for best results.
The Free Press went quickly from having no data to having tons of data, which allowed them to break their audience down into three large groups:
1) One-and-done: users who won’t register or share information. They often come via social media, read and leave. They are the least engaged users, and the likelihood of getting any further monetization out of them is minimal. The Free Press has a low metered environment to let them through.
2) Returning readers represent about 50% of total page views. They may not hit a meter every month, but even if they did, they wouldn’t see the value in jumping over the paywall. They will, however, come back to read future articles.
3) Loyalists read hundreds of articles a month. This segment of the audience is most likely to convert in a metered environment. They will hit the meter and want to keep reading, so a meter would address these readers.
Panson and his team then looked at their audience to figure out how to monetize them. Panson pointed out that they didn’t go into this looking for three separate monetization strategies or leaning toward a micropayment solution.
“Our first question was ‘how do we convince people to pay?'” said Panson, “and then ‘how do we build value?'”
It boiled down to basic economics. Value = Benefit – Cost (or Price)
To increase value, they had to increase the benefits of the product to make it more beneficial to their customers while also reducing costs. They focused on driving value. One obvious way to do that was to reduce their price which steered the team toward a micropayments solution, but that came with its own set of barriers, including the concept of a pre-filled wallet with a solution like Blendle. Such a solution required a commitment on the part of the reader.
“We sought a solution where nobody had to think too far forward when they were making a purchase decision, so we didn’t want to implement a pre-filled wallet,” Panson said.
Their rationale for this decision was based on psychological studies that show we don’t connect very well with our future selves, and we don’t reward our future selves by paying off our credit cards or saving for retirement, for example. While on a smaller scale, the Free Press felt that a pre-filled wallet required a future commitment they considered to be a barrier.
“In a metered environment, when they read their first 10 articles, we teach them that the value of those articles is zero and the eleventh article is worth $16.99,” Panson said. “If a reader only wants to read one more article, the article is worth a huge amount of money, and they have to put themselves in a position where they either know they’re going to read another 50 articles after that or they are going to abandon, and most abandon.”
“If you are going to drop $20 into a wallet, you have to know you are going to get future value out of the product. We wanted to avoid that, so there is no pre-loading of the wallet and no contract,” he added.
Another issue was the frequency of purchase decisions. How often did they want their readers to make a purchase decision? In a metered environment where readers get 10 articles per month free, readers are making purchase decisions as they get to their eighth and ninth articles.
“We wanted to avoid purchase decisions. $0.27 isn’t very much and what we’re seeing from our users is that they aren’t worried about the article price,” said Panson. “Because we have no commitment and no minimums, users can dip in and out of the service as much as they want.”
Choosing a vendor
Now that the Free Press had decided what it wanted to do, it had to find a vendor that could help it achieve its goals:
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Scott O'Neill |
1) They didn’t want to warehouse credit cards. They wanted a vendor with a proven track record of handling credit cards and personal payments and PCI compliance. Most micropayment companies are start-ups with six months to a year of experience. The Free Press wanted more of a track record.
2) They wanted a post-pay solution, not a pre-filled wallet like Blendle.
3) They wanted to maintain full control of their customers.
4) They wanted to house and control the single sign-on and password.
5) They wanted the customer’s payment relationship to be with the Free Press, rather than as a pass-through. They’d had previous experience doing so with Amazon and Apple, and they did not want to repeat that.
“It made it pretty easy to appoint MPP Global because they were the only vendor who didn’t want to actually get in between us and our customers,” Panson said.
“There is a premium to be paid when you work with a company like MPP Global, simply because they aren’t making money by owning your customer. We think that’s well worth the investment to maintain the relationship directly with our customers. That’s really why we selected MPP Global.”
MPP Global’s O’Neill said today’s digital user is more sophisticated and experts a richer experience. They need to care about their content if they are going to pay for it and connect with a publisher’s brand.
“Delivering the right solution for your readers is key,” said O’Neill
How it works
From a customer perspective, here’s how the Free Press’ micropayment solution works:
- A website visitor can read the first two articles for free. There are no price tags and no metered warnings. The site is completely free and wide open with no upsells, meters, etc. This option is ideal for one-and-done readers.
- On the third article, readers are asked to register. Once they register they get a 30-day free trial.
- Once a reader registers, they are automatically subscribed to some newsletters, and they get full access to the site for 30 days.
- When a reader selects a particular article to read, a tally and price total appears in the menu bar with a red strike-through. Over the next 30 days, the items will update to show the reader the value they would have paid if they were Read Now Pay Later micropayment customers.
- After 30 days, during the reader’s next visit, they receive a “thank you” pop up message on the site. Based on their news consumption over the trial period, the Free Press makes a recommendation from one of two choices
- If they’ve read more than 50 articles, they will recommend the all-access digital subscription at $16.99 a month.
- If they’ve read fewer than 50 articles, they will recommend the Read Now Pay Later option.
- Regardless of their selection, all readers get two free articles per month.
“We’re trying to give them a fair opportunity for our readers to pick the product that’s right for them,” explained Panson.
Read Now Pay Later
How did the Free Press arrive at a $0.27 price point? Panson said they ran numerous scenarios analyzing what price, based on current users’ consumption habits, would create a large enough segment of loyalists to tip them into the all-access option. They also looked at micropayment price points in other markets.
They arrived at a $0.30 – $0.33 price range which they felt was too high. They toyed with the numbers and arrived at a $0.25 price, recognizing that readers who paid $0.23 per article would mentally round up to $0.25 and those paying $0.27 would mentally round down. They opted for the higher number, and chose an odd number so it would stand out. They also calculated what their cost would be if a user only read one article. They determined their cost to be $0.21, so a $0.27 price per article would cover their costs.
Since they’ve launched, they spoke with another company who has been researching price. Their results indicated that a lower price did not increase consumption, so for now, the $0.27 per article price seems to meet reasonable criteria and retail psychology.
“We have not had anyone say it is priced too high, other than those who felt any price was too high,” Panson explained.
There are two other key characteristics to the micropayment monetization strategy: post-pay and refunds.
- Post-pay: Readers do not pre-fill a wallet. After the 30-day free trial, the clock starts running. Each time a customer reads an article, the Free Press records the transaction. In 30-day intervals, the customer’s credit card or PayPal account is charged for the articles read during the previous time period. Note: the site has a six-second delay, so if a reader inadvertently lands on an article they don’t want to read, if they leave within six seconds, it does not get added to their tally.
- Refunds: Readers who are not satisfied with an article can request a refund. To date, Panson said no single reader has abused this opportunity.
Increasing value through personalized curation
While the monetization strategy was being designed, the Free Press website was also being redone to support a new content strategy – offering readers more specific, more relevant content.
“What we determined was that more content was not the answer. What we felt was the answer was using our content better, being more specific, more relevant to our readers could deliver a higher value to them,” Panson said.
Following a semantic analysis to better understand their content and the creation of user profiles and look-alike user profiles, the Free Press was able to go beyond the standard “here’s what we recommend” type of content curation to personalize content for their users.
The Free Press uses a complex algorithm to provide a reader with relevant, timely content which includes what the editorial team thinks is important, what is trendy, what stories are gaining velocity, what an individual user has read in the past, and what similar users are reading. When a customer arrives on a landing page, the top stories are most likely selected by the editorial team. As the user scrolls down, the articles are tailored more toward the individual user, based on past history.
Before rolling these changes out, the Free Press did some A/B testing, but because they were implementing so many changes at once, it was hard to compare apples-to-apples results and to determine what metrics could be attributed to content changes alone.
“I’ll let the cat out of the bag here,” Panson said. “It works.”
Other changes to support the new system included adding editorial resources and hiring more customer service staff and web developers.
The results
The Free Press rolled out its micropayment solution last July, and its results in just seven months are impressive, particularly considering they took this project from final concept to fully live in seven months! Here are a few of the statistics Panson shared with us:
- 20% increase in active time per piece of content. Prior to the new solution, this had not changed in eight years. The active time may have only increased by 10 seconds, but it can be attributed directly to the changes. People are more engaged with content.
- 87% increase in page views per user, doubling page views per user. Panson said this may not all be due to the personalization of content, but he believes it is a contributing factor.
- 124% increase in user duration, breaking the 10-minute mark for the first time in eight years.
- They’ve sold about 150,000 articles to date, for revenue of $40,500.
- There have been very few refunds. The average is 1.2%.
In addition to these numbers, the micropayment solution had “a few wonderful halo effects,” according to Panson:
- 45% of print subscribers activated their online all-access subscription, decreasing print erosion by 50%. Print erosion was 7 to 8% last year. It is now at 2.5%. The goal for 2016 is to go from 45% activation to 60%.
“That was a really tremendous impact and it settled any kind of fears that investing in digital is going to threaten print. In fact, activating the print subscribers and getting them engaged in multiple platforms actually keeps them longer.”
- More than 30,000 readers are paying for digital news.
- They went from 800 logged in users to over 32,000 active digital users with a paying relationship, whether it is a print subscription, all access subscription or Read Now Pay Later relationship.
“We’ve traveled a huge, huge distance in a short amount of time,” said Panson.
What can other publishers learn from the Free Press?
Based on his experience with the micropayment solution so far, Panson cited three primary takeaways:
- Always focus on the reader, and do what’s right for them first. Rewards will come back to you.
- Reduce barriers to commitment, like pre-loaded wallets. Be honest with yourself and ask yourself what barriers exist between you and your customer. Do whatever it takes to eliminate barriers.
- Use audience data to personalize their experience. Give them the content they want, when they need it, and in the fashion that they want it.
“The more we can deliver at the exact right moment with the least amount of effort on their part, the longer they’ll hang around,” Panson said.
O’Neill added these takeaways to Panson’s list:
- Embrace technology to develop a flexible and optimized audience revenue model.
- Do not underestimate the value of data intelligence to accelerate revenue growth.
- Data is driving the digital economy today. You have to understand the data.
“Winnipeg has developed and launched an innovative micropayment business model that takes full advantage of the flexibility and intelligence that is inherent in MPP Global eSuite platform enabling them to fully engage with their audience and deliver a value-based product,” O’Neill said.
What’s next?
In the next few weeks, the Free Press will be implementing some additional changes, as they attempt to tweak the model to improve the user experience. Among the changes will be adjustments to the registration process to shorten it.
The Free Press has also set some ambitious goals for 2016, including increasing online engagement with print subscribers, getting to 4,400 of incremental all-access digital subscribers and earning $1 million incremental revenue, part of which will be micropayments. While ambitious, the Free Press is already ahead of schedule for reaching these goals and we’re only 27 days into the new year.
Insider Take:
In addition to the takeaways Panson noted, there are other lessons publishers can learn from the Free Press’ success.
1. Publishers need quantitative and qualitative audience data to make intelligent decisions.
2. Different types of readers have different needs. Segmenting the audience and designing different solutions for each is feasible – without risking all of your current monetization strategies.
3. A successful roll out is done carefully and deliberately with customer education and a responsive customer service team.
Proper testing and a willingness to make adjustments and changes are critical.
4. Choose a solutions vendor whose goals and philosophies align with your own. In this case, the Free Press selected MPP Global who could offer a post-pay solution, helping them reduce the commitment barrier for their customers and a vendor who respected their desire to retain the direct publisher-reader relationship.
5. Understand that you don’t have to abandon existing strategies. Instead, find ways to use them to complement new monetization strategies for the benefit of your readers and the organization.
6. Always, always focus on the reader and do what’s best for them. As Panson points out, the rewards will come if you put the reader first.
We’d like to thank Scott O’Neill and Christian Panson for being so willing to share their experiences with us and allowing us to share them with our readers. They were open, honest and responsive. We hope you enjoyed learning from them as much as we have.
Dana Neuts is a contributor to Subscription Insider.
