The digital publishing industry is shifting from solely focusing on ad revenue to subscriber revenue. This means publishers expect more from their readers. Instead of passively consuming advertising, readers now need to make an effort and contribute themselves: and they’re reluctant to do this.
Approximately 15x more people pay for VOD services than digital news. The expectation of free news is so pervasive that you can find a solution to circumvent paywalls in about 5 seconds on Google. Why do people hate paying for journalism so much?
Desktop tactics don’t work for a mobile world
People don’t like doing things that are complicated. Today, paying for digital media subscriptions is complicated. It takes as much effort to sign up for a premium account than it does to purchase a thousand dollar item off of Amazon. Here’s what you need to do to get a basic subscription with The New York Times:
That’s 17 steps to make a payment for a news story. It will likely take as much time to complete the payment as it will to read the story itself, especially when the checkout happens on a tiny smartphone screen. Most people will likely give up, head over to Google and search for a free alternative. Whether we call it convenience or laziness, people’s behavior can’t be changed. What can be changed is the checkout flow.
Digital publishers are putting a lot of focus on finding the right moment when to ask for the user to subscribe. Personalized recommendations and machine learning are helping find this sweet spot. Optimizing user flows is the main focus for digital publishers, but the 17-step checkout flow is still there. You simply can’t get around it when using email accounts and card payments.
The current approach does work on desktop, where people can easily navigate between windows and the keyboard makes it easy to enter long series of numbers and text. However, close to 50% of people today are browsing from their mobile device. The existing user acquisition and payment solutions are less effective in this environment and can only be optimized up to a certain point.
The user will always have to confirm the email address from their inbox, and you can’t get their credit card info without asking them for it. Eventually the optimization process hits a stone wall. There are better options, if you look for them.
Telco-based solutions unlock additional growth
Everyone browsing from a mobile device has a SIM card in their device. This SIM card belongs to a mobile operator who knows the user’s phone number and sends them a monthly invoice for services consumed.
These services can be either the mobile operator’s own (such as calls, data or messaging) or third party services. Companies working together with mobile operators can also leverage the fact that the telco knows the customer’s mobile identity (phone number) and is able to charge them on their invoice (carrier billing). While largely unused by digital publishers, these kinds of telco partnerships have been deployed in virtually every other segment of digital content, including by Apple, Google, Netflix and Spotify.
Here’s how subscribing to The New York Times would work with a telco-based solution:
The checkout flow is reduced from 17 steps to 4 steps. No email addresses, no passwords, no ZIP codes and no credit card numbers. Unlike card-based payments, the reader does not need to worry about identity theft because physical presence to the device (smartphone) is required when the payment is made. The process is not only simpler but also safer for the reader. Which in turn means they’re more likely to follow through with the payment.
Our own recent experience in deploying carrier billing for one of Sweden’s largest newspapers Aftonbladet shows that between 20-30% of users will choose to pay for the subscription through their mobile operator. The simpler checkout flow helps reach at least three new audience pockets:
- Those without access to a credit card (unlike the US, most people in the world don’t have one)
- Those for whom the checkout flow is too complex (they reconsider an impulse purchase)
- Those who are unwilling to pay online (for example due to fear of identity theft)
But what if that’s not really true? What if the readers would sign up and pay with their credit card anyway, even if a simpler solution was offered? What if the time and effort put into adding an additional payment method will simply cannibalize the revenue from credit cards? Turns out that’s not the case. Last year, we presented findings on new market launches at Merchant Risk Council with one of our merchants, Badoo (an online dating service with 400M users). It turns out that launching additional payment solutions has little impact on the behavior and revenue from the existing user base:
In some countries, the uplift from telco-based payments is not that big (country C) but it also doesn’t impact revenue from existing channels. In other markets (country A) the difference is huge. This means email based accounts and credit card payments will still be there for readers who prefer that option. The alternative solution is meant to complement the existing one. It gives people a simpler option and less chances to reconsider the payment.
Digital publishers today put a lot of focus on maximizing the value proposition to readers and increasing the likelihood that they will follow through with the payment. At least some focus should also go to making the checkout flow simpler. Reach out to mobile operators in your country and ask them for help.
Mattias Liivak is the Head of Marketing at PayRead.
About PayRead: PayRead lets digital publishers identify and charge users through their SIM card, the most widely available digital identity globally. PayRead reaches more than 3.1 billion consumers in 100+ countries and gives publishers the tools to get rid of friction in their paywalls. PayRead is built by Fortumo, the mobile technology company working with publishers including Schibsted, Magzter