How micro-payment is playing out for digital publishers

As many news platforms look to adopt this option of paid content, speaks to experts to understand the future and the challenges of this alternative revenue model

Benita Chacko
New Update
How micro-payment is playing out for digital publishers

Last month, Outlook magazine received a phenomenal response for its edition that declared the government ‘missing’, in its cover story. The edition, which raised a raging issue and criticised the government for its mishandling of the second wave of the Covid-19 pandemic, had articles by eminent personalities such as Shashi Tharoor, Pratap Bhanu Mehta and Mahua Moitra among others.

Apart from physical copies of the magazine, these articles were available to readers online—albeit behind a paywall. Readers could either subscribe to the digital edition or read individual articles for a price ranging from Rs 5 to Rs 10. After putting a paywall on their website last year, Outlook launched an article-wise micro-payment option in February.

For this edition, Outlook is said to have witnessed 35% conversions through micropayments — which means out of 100 people who opened the story page and saw the paywall, 35 paid. And just through micropayments, they made 20 times more money than it would have made if every single page view would have generated digital ad revenue.

Many news platforms are now looking to adopt this model of paid content. ESakal, Dainik Jagran and Sarkarnama have tied up with another small payments platform for the media industry, Few¢ents, to adopt this model. The Hindu is also in talks with several platforms and plans to provide this option to their readers in the coming two months.

Pradeep Gairola

Pradeep Gairola, VP and Business Head, Digital, The Hindu Group, said micropayment is a great concept as it benefits both readers and publishers.

“From an economics perspective, for the publishers, if even one person pays once for reading one article, we make more value than what we make in one year from advertising revenue. From the consumers’ perspective, there is a ‘subscription fatigue’ in terms of how many sites they can subscribe to. It makes sense for them if they can pay Rs 5 to Rs 10 to read an article. So it's favourable to both the parties,” he said.

Abhishek Dadoo

Abhishek Dadoo, Co-Founder and CEO, Few¢ents, said that in the last year, people are more willing to pay for quality content, but only if the payment mechanism and the payment method are made simple.

“Every publisher’s website has roughly 95- 98% casual users. These are users who come to the site for a specific piece of content. That user is never going to subscribe. So not monetising that user is like leaving money on the table,” said Dadoo.

So will this model of micro-payments help do away with the ad revenue model?

Outlook’s micropayment system is enabled by ConsCent, a payment platform.

Sunny Sen

After the Outlook experience, Sunny Sen, Co-Founder & CEO at TSB Media Venture, which owns ConsCent, is optimistic that this model will bring in more revenue than advertising. “We have seen that in Outlook’s case. However, you can enable a much larger and a better revenue stream by having micro-payments alongside digital ads,” he said.

Indranil Roy

However, Indranil Roy, CEO, Outlook Group, said it's too early to reach that conclusion. “Paying for content is the beginning of the journey. It will take years for it to mature into a well-paid subscription model. But I am personally very optimistic because I believe people will pay for good content,” he said.

The micropayments system gives readers’ the flexibility to read stories behind paywalls without purchasing a complete subscription package. Readers can choose to pay only for those articles that interest them. With this, they can read more content across platforms without having to subscribe to all of them.

This could be enabled through a form of ‘media wallet’, whereby you deposit a certain amount of money in a platform to consume content worth that amount. So the user can universally access premium content across mediums—OTT, news publications or audio platforms. These platforms will attract a large number of users only when they host multiple publishers providing them a wide array of content to choose from.

So will the micro-payments model help Indian publications gain more paid readers?

Gairola said micropayments will help the industry develop an alternative revenue system as it cannot survive on advertising alone. However, the biggest challenge towards making this a successful model is that it needs enough people to create accounts in these wallets. “It is a great concept, but only if it works for both readers and the publishers. For most of these payment platforms, their critical user base is not there yet. So when publishers come onto the platforms they will have to really work with them for at least three to five years to build that base. Only then will the wallet universe become large enough to benefit the publishers,” he said.

Gairola said this problem can be resolved only if existing big players such as Paytm, Visa, MasterCard, Google, Facebook, Apple, etc, which have a large database with a few million users, start a wallet.

“Most of the new players are startups and they have to first create a pool of interested people. If the bigger platforms were in it, publishers would benefit as there would already be a large pool. Unfortunately, none of these big guys are into micropayments. This is a good solution for consumers, but at this point of time due to the lack of large databases it’s not a universe that can give publishers enough money,” said Gairola.

Despite these challenges, The Hindu plans to provide this option as they believe it is their responsibility towards their readers. Gairola said they are committing to it as it is a good way to solve a consumer problem. But it will not earn them revenue in the first two to three years. 

“We are here for a long-term perspective. So we will tie up with one of these platforms and help them as much as possible to create this ecosystem. Initially, we will have to give them more users than they give to us. The next few years are very difficult for the publishing industry. If we were to earn revenue through micropayments, currently that would be ideal. But that will not happen. So this is our corporate social responsibility towards the news business. We cannot shun our responsibility because there is no ecosystem available. So we are not looking for benefits in the short run. We feel that the benefits will start coming in a few years down the line when many people have wallets. But we will commit ourselves to build this ecosystem,” Gairola said.

Roy said content and discovery are the most important factors in this model. However, the discovery—how readers come across the micro-priced articles—is also the biggest challenge.

“It is going to take a while for millions of people to discover that there is a micro-payment option. That is one of the biggest challenges every publisher will have to be careful about. And we will all have to come together to sort of popularise the concept of micropayment and of one-platform content availability,” Roy said.

Some publishers feel micropayments will take away the subscriptions. However, Sen dismisses it, saying that the eventual revenue earned will be far higher than subscriptions can ever get.

“If you look at subscription conversions versus micropayment conversions, the average conversion in subscriptions for the industry is between 0.1 to 0.2%. But what we have seen with Outlook, the conversions are five to 10%. So, the number of paying people that you have engaged with is so much better and so much more that the eventual revenue will be far higher,” he said.

Dadoo said their model is meant for ‘never subscribers’. “These are people who are never going to subscribe. But still they could be willing to pay a small amount of money for quality content. So we are targeting those users,” he said.

According to Sen, the only challenge he sees with micropayments is the mindset of publishers as many do not believe that the content that they have been providing freely can be charged.

“Micropayments are now ingrained into the DNA of Indians because they have been using digital wallets for years. So micropayments are not the problem, but the mindset is. However, that is changing fast as different platforms, including OTT and news platforms, have launched subscriptions model, and everybody wants to get higher user-generated revenue now,” Sen added.

Dadoo said the biggest challenge with the micropayment model is that it works well only when it is ubiquitous across a lot of publications. “As an end-user, you don't want to sign up with multiple vendors for small payments as there would be ‘wallet fatigue’.

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