Mixed models: How micropayment can work with freemium

Note: The International Symposium on Online Journalism (ISOJ) is taking place right now in Austin, Texas.   Last year we unveiled our “Modified News Micropayment Model” at that very conference.  Panelists discussing paywalls today stressed the need for multiple business models.  I couldn’t agree more.  Now seemed like an appropriate time to write this post that I’ve been wanting to do for quite some time. Here goes.

When my colleague and I developed our “Modified News Micropayment Model” (now in press, International Journal on Media Management) we wrote that it was but one new business model for online news.  Our micropayment model not only could be, but should be, used in tandem with other digital business models.  With the launch of the New York Times’ “paywall,” the news industry’s focus has been on its tiered, metered approach.  Other smaller news organizations, such as Morris Communications’ Augusta Chronicle are following suit with similar metered approaches.

Such a freemium model, while promising, leaves out a valuable audience segment and is not without  flaws.  A micropayment system can address the flaws and fill in the gaps created by a freemium metered approach.  The good news is that micropayment can work with freemium.  Let me tell you how.

What metered approach is not

The metered approach is predicated on the old notion that news consumers will seek out the news they want to consume.  It relies on the newspaper website as a destination. The reader can have 20 free views when they come to the site. Of course, in today’s news ecosystem news often finds the reader rather than the reader finding the news.  Metered fails to capitalize on, use and harness the power of referral and sharing that takes place on the Social Web.

The existing metered approaches are also designed to get new digital subscribers.  With online content, there are a number of users who come to the site who are not in your market, who only want to read a few articles from your site (since it found them and they are not seeking out your site, brand or content) and who will never become a subscriber to your publication.  Micropayments allow for news organizations to capture some revenue from “one off” users.

Another downside to the prevailing freemium model is that it does not place a premium on valued content.

Freemium + Micropayment = Success?

Micropayment can be implemented to serve a variety of needs and in a variety of ways in tandem with freemium metered approaches:

1)Metered micropayment:  You can set benchmarks that would activate a switch toward micropayment per article.  For example, once an article that is free on your website reaches X number of pageviews, you can start to charge for that piece of content.  If a story happens to go viral, you can (literally) capitalize on the buzz and additional traffic.  John Paton, CEO of the Journal Register Co. has talked about the importance of news organizations stacking “digital dimes” and such a “metered micropayment” approach allows news organizations to monetize their most popular stories.

2)Exclusive, premium content:  You can be selective with the types of content you offer for free and the types of content users must (micro) pay for.  If your news organization offers exclusive, high quality premium (presumably hyperlocal) content that readers cannot get anywhere else, why not charge for it?  Implement a micropayment component for your most prized content.  The Augusta Chronicle offers a perfect example.  In just a few short days, The Masters golf tournament will roll into town.  The Chronicle owns that story because it is in their backyard.  Golf lovers who do not live in Augusta but want to read stories they can’t get elsewhere will likely (micro) pay for individual stories.

3)Social readers: Micropayments can serve a unique audience– users who do not want to subscribe to your newspaper.  This may be because they live out of the market.  This may be because they want to read a specific piece of content that found them (perhaps by the recommendation of a friend), not that they actively sought.  Micropayments work better as a monetization strategy for active Social readers, rather than destination-seeking Web viewers.

4)The one-off news event.  This is not an everyday event, but from time to time a breaking news story happens in your community that may attract regional, national or even international attention.  You may suddenly find foreign readers clamoring for your coverage.  Why not have a mechanism in place to make money off the increased traffic and attention your paper will receive if and when these “one-off” events find their way to your town?  Micropayment serves that need.

These are just a few examples.

The bottom line is that micropayments can work and work well with other approaches.  Thoughts?

 

 

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