Micropayments’ big moment

The Toronto Star said it would begin testing micropayments for its website content last week, making it one of the first major news publishers to experiment with the monetization approach. 

Micropayments have been discussed by publishers for years and a range of vendors have emerged offering various spins on the concept, but few publishers have decided to test them seriously – usually because of concerns about their economics, payment friction, and the possibility they might cannibalize their subscriber bases.

That skepticism appears to be softening, as subscription businesses mature and the thirst for new marketing and monetization options becomes more acute. More publishers are now exploring micropayments and more flexible paid access options – some to appeal to their casual and/or younger audience segments, and others as a simple way to highlight the relative value of their subscription offerings.

Besides the Toronto Star, The Washington Post is actively exploring a “pay-as-you-go” payment option, for example, and has already tested a product called “Limited Pass” which offers access to a limited number of articles per month for a nominal financial commitment. Readers in the U.K. have been offered access to four articles per month for £1 every 4 weeks, for example.

News of the Star’s micropayments experiment was quickly dismissed by some industry observers, who implied it was a waste of time. “I don’t want to rain on anyone’s parade, but there is literally no chance that this is going to work,” Columbia Journalism Review’s chief digital writer, Mathew Ingram, posted on X.

The “micropayments won’t work” stance is a common one, but their value for publishers depends on how they’re implemented and what publishers are hoping to achieve with them. How will they define “work” in this context? Publishers may not need to reorient their entire businesses around micropayments to find ways to leverage them to their advantage, particularly if single articles are priced carefully and intentionally. 

In the Star’s case, it’s hoping micropayments will help it sell long-term subscriptions and it doesn’t necessarily expect them to drive significant revenue as a standalone revenue stream. Offering access to single pieces of content at a significant premium will help highlight the relative value of its subscription options, the thinking goes, while readers who do purchase access to single articles could be persuaded to upgrade to a subscription for a small additional fee.

“This is another tactic to try to get people to use the product and eventually subscribe… This will just be another tool we can use to do that,” Torstar’s chief revenue officer, Brandon Grosvenor told Toolkits.

Pricing is the key variable. If priced accordingly, per-article access options could prove useful from a marketing perspective alone, even if relatively few users purchase access to single articles. Many publishers already employ “decoy” strategies in their subscription marketing to push users towards specific subscription plans by placing them alongside less attractive options, and micropayments could prove an effective way to reposition the value of individual pieces of content in readers’ minds.

The Star’s parent, Torstar, says it’s also confident it can implement micropayments at a price point that doesn’t lead to cannibalization of its subscriber base. “We don’t know yet what the ideal price point is in our market. Is it 75 cents? Is it a dollar? Is it 50 cents? We’ll play around with that, but it is going to be a much higher premium on a per-article basis than it would be to be a full-time subscriber,” Grosvenor said. 

Ultimately, the question of whether a meaningful portion of consumers will transact on a per-article basis or whether micropayments “work” from an economic standpoint is a bigger concern for micropayment vendors than publishers. 

If publishers approach the tactic intelligently – and strike favorable revenue share deals with any partners they choose to work with – there may be no real downside to experimenting. If the data suggest that per-article access is cannibalizing or otherwise hurting their subscription products or their overall businesses, they can adapt their pricing and/or switch them off. 

For those reasons, we’ll likely see more publishers experimenting with micropayments, day passes, light subscriptions, and other pay-as-you-go access options in the months and years ahead, even if their long-term viability and appeal do turn out to be limited.