The Toronto Star launches micropayments

The Toronto Star will begin testing micropayments for its website content in the next few weeks, making the Canadian publication one of the first major news outlets to experiment with the monetization approach in a meaningful way.

Readers who don’t subscribe to the Star will be prompted to purchase access to single pieces of premium content for 75 cents each, and purchasing access to two articles in a day will grant them unlimited access for the remainder of that day. The functionality is being marketed to Star readers as a “pay as you go” alternative to a subscription and is powered by micropayment technology firm Axate. The Star’s parent company, Torstar Corporation, said it also intends to test it across its regional news titles.

Torstar’s chief revenue officer, Brandon Grosvenor told Toolkits the company hopes micropayments will help drive more of its audience towards long-term subscriptions, but it also sees an opportunity to extract revenue from users who may never purchase full subscriptions.

“For most publishers, the subscription model has basically become to offer a deep initial discount and then hope that subscribers stick. We want to find out if there is a more organic way to grow subscribers versus just deep discounts,” Grosvenor said.

“I’m also of the belief that there are some people who will never subscribe. There is going to be a saturation point. If I’ve got 500,000 subscribers in a market with 5 million people, that’s a fairly large audience of non-subscribers that we could still find a way to monetize,” he added.

Torstar hopes micropayments could help unlock paying relationships with younger audiences, for example, which news publishers have historically struggled to do. Other news publishers such as The Washington Post say they too are exploring “flexible payment options” designed to appeal to younger and/or more casual audiences.

“I firmly believe if you’re under 30 years old, you’re very unlikely to subscribe to a news product. But as you grow up, if you’ve actually consumed content from publications you’re much more likely to go with those publications if and when you’re ready to subscribe. If we can make a little money at it along the way, that’s great,” Grosvenor said.

Testing and learning

Torstar says it’s committed to exploring micropayments seriously, but intends to test, learn, and iterate its approach. That will mean experimenting with which content is made available to purchase on a one-off basis in addition to how and when the option is made available to different segments of its audience. 

Initially, micropayment options will only be offered to known non-subscribers coming to the Star’s site via email, newsletters, and other targeted channels. From there, it will explore ways to introduce and actively market micropayments more widely within its paywalls and content locks, perhaps presented as an alternative to a full subscription. 

“We know that we have to walk before we run. We’ll be trying to give people a choice… and we’ll be doing that in a very specific way and with very managed user groups on our platform before we go to full scale,” Grosvenor said.

Pricing is another important variable that could change as the publisher collects more data and adjusts to ensure micropayments are playing their intended role both in its marketing funnel and as part of its broader revenue mix and strategy.

“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. Our hope is by introducing people to the quality journalism that you find in the Toronto Star that after you read a couple of articles, you will become a subscriber,” Grosvenor added.

Incremental revenue

One reason publishers have been reluctant to experiment with micropayments is the fear they could cannibalize subscription revenue or otherwise compete with their recurring revenue products and efforts. Grosvenor said Torstar is confident that won’t be the case and that micropayments will ultimately help generate incremental revenue provided they’re implemented and managed correctly.

“We don’t want to cannibalize our core subscriber base but I think there’s very little risk there. My belief is that subscribers are hardcore newsies, they’re ones who are subscribers for a reason,” he said. 

“If we turn it on and day one we find we cannibalize a huge amount of our potential subscribers, then obviously we won’t continue on that path. But I would say the upside opportunities are much greater than the downside cannibalization risk. I think if some of our digital subscribers move to this model we will more than make up for that in our ability to attract full-time subscribers by using this as a hook.”

Even if they don’t result in net revenue gains, another potential benefit of having micropayments in place might be their ability to help collect first-party data, which in turn could be used to fuel other parts of Torstar’s business.

“While digital subscriptions are our main focus and certainly our main revenue driver, the more people I can get in and past a paywall, the more people I can sell targeted advertising against. That’s obviously beneficial for us as well,” Grosvenor added.

The micropayment moment?

Torstar wanted to be the first news publisher in Canada to launch micropayments, Grosvenor said, but he hopes that others follow. Axate’s “digital wallets” are tied to consumers’ email addresses making them portable and applicable across different publishers’ sites. New users can create wallets for free to claim $3 in credit, according to Axate, and spend it across any participating Axate publisher. Once depleted, their wallets can be topped up by depositing funds.

“We will be talking with other Canadian publishers about jumping in on this model because I do think there’s an ecosystem for people that we know will never subscribe, but who might put five or ten dollars into one of these wallets a month and move across a range of news and information sites, ”

It remains to be seen if other publishers will follow. Micropayments have been discussed by news publishers for years, and a wide range of vendors have emerged offering various digital wallets and spins on the concept.

For various reasons, few publishers have decided to test micropayments seriously to date, but that could change as consumer behavior evolves, publishers’ subscription businesses mature, and the thirst for new monetization opportunities and revenue streams becomes more acute. Publishers are increasingly talking about the need for more flexible paid access options, for example, including the ability for subscribers to “rightsize” their subscription offerings to some degree.

According to Grosvenor, publishers need to be a little more “fearless” when it comes to evaluating new opportunities such as micropayments.

“It’s well documented that we’re not the fastest moving industry, but we’re at a point now where we’re going to try a lot of different things and we need to get into a significant growth mindset,” he said. “Someone had to go first. So we did.”