top of page
  • Writer's pictureBart Melton

The other 95% (aka non-subscribers)

Updated: Feb 16, 2021

According to DigiDay, only 5% of a publishers users will subscribe, which means that sites are either not getting any money from the remaining 95% or might get a few tenths of one cent from ads in their X free articles per month. That is a LOT of money to be leaving on the table! In fact, it is the majority of the money.

For the sake of argument, let's do an example with math. One out of twenty people that visit a site will subscribe. That leaves 19 not paying any money. For the sake of argument, let's say that a subscription is $10/month and let's also assume that 10 of those people will never pay money under any circumstances. That leaves us with 9 who are willing to pay money, but won't subscribe because say, they only read 1 article per day. If a publisher monetizes those 9 people at $0.05 per article per day, that comes out to $0.45/day x 30 days = $13.50. Micropayments just beat your subscription model by one third. Your free ad people who got 3 free articles? $0.03 for all 10 of them combined, based on ad averages. That, ladies and gentlemen, is the power of micropayments.

Subscriptions for dinner

Won't micropayments cannibalize subscriptions? No, they won't. Research has shown that the 5% who pay for subscriptions continue to subscribe. What research has shown is that micropayments bring in new paying audiences, particularly the under 35 crowd. Millennials, Gen-Z, and others have grown up making payments for content. iTunes, Netflix, Spotify, Twitch (a gaming social media app), and more. That same demographic also grew up with the internet. They consume content from social media, so they don't get value from single sites. They also don't tend to want subscriptions for actual printed materials and they don't have the financial ability to subscribe to dozens of sites each month. There is a generational divide. Boomers, are more likely to subscribe, often for traditional physical media. Gen-X is somewhere in the middle between subscribing or not. Younger generations, which have grown up on the internet, simply don't operate the way traditional media has. By using micropayments, businesses can gain revenue from younger audiences that they otherwise would never capture.

Breaking the internet

Micropayments have been tried many many times. Going all the way back to 1998, there were predictions that micropayments were the future of content. When you look through that article, many of the predictions are still true. Ads are more annoying and intrusive than ever. People are pushing back against ads harder than ever. Businesses that rely on ads are doing worse than ever. More content is being moved behind a subscription paywall than ever.

One of the failings of many publishers, particularly ones which also have a printed publication, is that they still think in terms of the printed publication first. That the product is presented as a story from front to back. That there is a flow. Because of that, they focus on subscribers who buy the "whole thing".

That's not reality for the internet. In fact, it is the opposite of the decentralized design of the internet. Subscriptions in fact, break the model of the internet. Whether it is a Google search or social media, people find and consume content one piece at a time. Paying a subscription is the opposite of that. It is defining that a user will primarily go to single source for their content.

This is part of the generational divide. The people who use the internet the most are younger, less affluent than their parents, and less dedicated to any single source for their information. Needing to pay a full subscription, when a user doesn't know when or if they will come back to that publication in any given period of time, is a very high hurdle to jump. Research has also shown that users subscribe to, on average, 3 subscription services with no plans to increase that. For businesses, that means that in order to get a user, who is willing to subscribe at all, to become a new subscriber, that business needs to be able to show that it provides a higher value proposition than one of the user's current 3 subscriptions, such that the user will unsubscribe from somewhere else, in order to subscribe to the new publication. That is a tall order when the user cannot get to the content in the first place, due to the subscription paywall. Three free articles per month is going to take a long time to convince someone to make a change, if they were willing to subscribe in the first place. Lots of buzz

Over the last 2 years, there has been a lot of buzz around micropayments for content. If you do a search for the term micropayment, you will find that there were many articles written about the topic in 2019 and 2020. As noted, people have been talking about them for over 20 years, but recent trends have increased the chatter that now is the time for it to finally work. Market forces are converging to suggest that now is finally the time, at least in the US. Micropayments in Asia, Africa, and Eastern Europe, have been around for years and are either now or becoming ubiquitous. Ad revenues continue to decline. Browser makers are implementing the 3rd party cookie ban in 2022, which will likely cause a further decrease in ad revenue. Ad blocking software is seeing hockey stick style growth numbers. We've seen an uptick in subscriptions but users are hitting subscription fatigue as they simply don't have the money to subscribe to everywhere they get content. The "passion economy" is seeing massive growth, with more demand for viable monetization methods such that creators don't need to have millions of followers to earn a living. Advances in technologies, such as blockchain and cryptocurrencies, also show promise in overcoming some of the technological challenges of micropayments. In short though, it comes down to 2 primary factors. Businesses aren't making enough money and users don't have enough money for subscriptions everywhere.

Ads have been done for 25 years and it hasn't worked so far. Subscriptions have been increasing, both in the number of sites using them and the number of users paying, but they aren't going to save the industry We are seeing more buzz about pay-per-article solutions because we see an industry that needs to find a new business model to survive.

Winning formula

There are a few critical factors to being able to make micropayments work.

1) It needs to be 3rd party. What that means is that users are not going to go to each publication, create a payment account, which then lets them buy articles from that site only. It is way too much work and has the same issues with value proposition that subscriptions have. 2) It has to be fast and easy. Users aren't going to sign in, put in credit card information, etc over and over again to spend $0.05. It just won't happen. People don't mind, or really care, about spending trivial amounts as long as they can "make it go away" quickly.

3) It has to be low priced. Businesses are not going to make money charging $0.50 per article in order to drive users to subscribe. Users have limited money. If they are consuming 30 pieces of content per day, their budget gets blown away, in the same way as subscriptions. Sites should experiment to find the sweet spot, but they are likely to earn more money by charging $0.05 than they would with $0.50, just due to volume. The bright side is that nobody says that every piece of content has to be the same price or that some content cannot be free. Maybe the daily sports roundup is $0.01 and the typical article is $0.05, but that in-depth 5000 word expose on government corruption is $0.35.

4) Users hate paying for low quality. We will write more on this in the future, but the short of it is that users get upset about paying for things like clickbait. Ultimately though, this will clean itself up. Users won't buy, or will demand refunds, for low quality.

Why CentiPenny?

At CentiPenny, we set out to make a service that is fast and convenient for users and both easy and flexible for businesses. With CentiPenny, users can use the "remember me" option at sign in, so that they only have to login once every 90 days regardless of what site they visit. CentiPenny's service is fast and easy, users can make purchases with 1-click or use AutoPay for no-click purchasing . For businesses, CentiPenny offers pricing flexibility. Business can set a default price at the business level and at the category level, if the business uses categories. Prices can also be set for each individual piece of content. This gives businesses the ability to adjust their prices to fit their customers. While CentiPenny doesn't have any direct control over #4 above, one of our goals is to help facilitate an improvement in the quality of content online. We are consumers of content, just like everyone else. We don't want to waste our time on clickbait or low quality content any more than other people, but we understand the reasons behind it. Ads have been a destructive force on quality. As ad revenue has continually dropped, businesses have been forced to create more content to offset the losses. Creating more means creating faster and cheaper with more eye candy headlines. It is a downward spiral. With micropayments, businesses earn more, so they are able to hire more and are incentivized to produce quality instead of quantity. A positive spiral.

Moving forward

The promise of micropayments have been imagined since the creation of the world wide web in the 1980s. The creators even added a error for content requires payment (code 402). The idea has been tried many times, and failed many times. That doesn't mean it is a bad idea. We have had 25 years of technological advances which make implementing micropayments in a way that satisfies the needs of both consumers and businesses infinitely more feasible. We have a generation of consumers who aren't intimidated by technology and are conditioned to pay for content. Ads and subscriptions have been tried, repeatedly, and businesses are still on the edge of failure, with the future holding little promise.

It is time for a new business model or at least a hybrid model. After all, subscriptions and micropayments can work side by side, simply letting the users choose what works best for them. Ironically, when you ask users if they would pay $0.05 for an ad-free piece of content, almost all say yes. The reluctance is more on the side of the businesses not wanting to try something new, which would seem counterintuitive given the state of the publishing industry. Will 2021 be the year that micropayments will take off, or more accurately take off in "western countries", and finally deliver on 25 years of hope and promise? Only time will tell, but the combination of factors pushing the market towards a pay-per-article paywall and the technological improvements to provide a good user experience are pointing in the right direction.

51 views0 comments


Post: Blog2_Post
bottom of page