Is it time to reimagine micropayments — for real this time?

There may be a way to make micropayments work. Recently, I’ve been considering how it could work in conjunction with an overall subscription strategy and consumer monetization. And while I haven’t had the opportunity to test this, I have heard some anecdotes that lead me to believe there is a way in a couple of scenarios.”

E&P columnist Imtiaz Patel has led growth, digital innovation and revenue strategy across major news organizations.

The concept of micropayments resurfaces every few years. Last year, The Toronto Star experimented with it, and more recently, The Washington Post has done so.

Micropayments were a source of constant internal debate when I ran the subscriptions business at Gannett. My initial perspective was a hard no, but over time, I’ve been thinking about situations where it might make sense. And while it isn’t a silver bullet, it may have a role in the overall mix of reader revenue options.

Micropayments have been around since the late 1990s/early 2000s, with pilots such as Digicash and Clickshare. Bitpass followed, and then came some Nordic experiments in 2010-14. Although a large number of readers initially made payments, this concept was abandoned due to subscriber cannibalization.

Blendle then emerged, claiming to be the “iTunes for news.” The New York Times and Axel Springer were investors in Blendle, but the company was unable to make the model profitable. Since then, there have been various attempts, but nothing has amounted to much. The Winnipeg Free Press has seen some success, but in the grand scheme of things, the associated revenue is minimal. And platform fees take a large chunk, making the whole thing a wasted effort in most cases. There has been an attempt to create wallets that readers can use across different publishers, but two core issues arise: Do consumers want to load a wallet, and who owns the consumer relationship? The publisher or the platform?

The source of my reluctance was straightforward. First, I’d never seen it work at scale, and second, the math was problematic, especially since my primary promotion subscription offer was $1 for 6 months. From a consumer perspective, how much more micro would we need to go to entice someone to make a payment?

Also, how would we count our subscribers? If 20% took the micropayment, then we would have 20% fewer acquisition subscribers to count. The key question would be whether we would see enough of a lift to offset that decline. However, since they are either article or day pass subscribers, you need to repeat that every single day — a difficult feat, to say the least.

The bigger issue with micropayments is our ability to demonstrate ongoing value that engages a reader enough to purchase a long-term subscription. The reason $1 for 6 months works is that it gives publishers plenty of time to create engagement and show value to readers. I’ve always thought of promo offers as trials, and the first conversion as an actual subscription. The Boston Globe is a master class in this. How else can they encourage promo subscribers to stick around and pay $30 every four weeks after the promotional period? If you aren’t going to put the systems, processes and tactics in place to drive engagement during the promo period, you shouldn’t bother with the $1 promo offer. You’re leaving money on the table.

But this may be too simplistic. There may be a way to make micropayments work. Recently, I’ve been considering how it could work in conjunction with an overall subscription strategy and consumer monetization. And while I haven’t had the opportunity to test this, I have heard some anecdotes that lead me to believe there is a way in a couple of scenarios.

First, we need to consider the propensity to subscribe. Readers may come to a site for a specific story, such as out-of-towners visiting a local pub. In this case, why not offer them a micropayment option to read the article they came for? When The Baltimore Banner ran the story on the Justin Tucker allegations, I’m certain they had many readers who were not from Baltimore or weren’t even Baltimore Ravens fans. This would be an ideal audience to monetize through micro payments.

Second, there is a growing reluctance among people to commit to a subscription, even at $1 for 6 months. They don’t want the hassle of canceling, they may forget to cancel, etc., so they won’t subscribe. In this case, a low-commitment option would make sense. How about a $5 one-month pass that doesn’t renew automatically? Yes, it is more expensive than the promo offer, but we are putting a price on the lack of commitment, which readers may value. And at $5, the associated revenue may just be worth it!

There’s another, more nuanced value to this. By showing a $5 monthly pass versus a promotional offer, some readers may opt for the longer promotional offer due to its associated value. You may see an increase in your existing subscription offer. And with a monthly pass, you get some time to engage the reader and convince them to take a longer-term subscription. A conversion offer may work wonders here.

If I had to do it over again, I would try this version of a micropayment, test the pricing and duration, and ensure that we had the scale of audience and the necessary infrastructure in place to drive engagement from day one.

Key takeaways:

• Article-based micropayments are not worth it.
• Longer passes, like a monthly pass, may work better.
• Micropayments have to be part of an overall reader monetization strategy. In themselves, they are unlikely to deliver any real value.

With next month's column, I will start exploring the potential of AI in driving revenue and transforming publisher operations.

Imtiaz Patel is a media executive who has led growth, digital innovation and revenue strategy across major news organizations. As chief consumer officer at Gannett, he oversaw consumer revenue and marketing for USA TODAY and 200+ local publications. As CEO of The Baltimore Banner, he built a digital-first newsroom from scratch, reaching 60K subscribers and $10M in year-one revenue. He previously held leadership roles at Dow Jones and has advised publishers like The Philadelphia Inquirer. Based in New York, Imtiaz is passionate about the arts, food and Liverpool FC. He can be reached at imtiazp99@gmail.com.