December 18, 2017 Last Updated 9:55 am

Buying your time: the allure of direct payments

Ben Barokas, CEO and Co-Founder, Sourcepoint, says ‘publishers must be ready to accommodate shifting consumer tastes, needs, and habits, which in turn means monetization strategies should always be agile and open to new additions’

Advertising alone is no longer a fail-safe funding mechanism for digital publishers. With the continued challenges associated with ad blocking and looming changes on the horizon from GDPR and ePrivacy Regulations that could significantly impact the way in which publishers monetize content – it’s clear that digital publishers need to plot new strategies to achieve sustainable revenue streams.

Continued consumer interest in ad blocking has also revealed another important truth: consumer needs have changed and content monetization must adapt too. Not only do consumers want better ads, but they are also demanding greater choice when it comes to buying goods and services. Just look at the variety of methods now available to consume music — physical albums are still made and sold in Analog and Digital formats, iTunes enables individual digital song purchases, streaming radio is subsidized by advertising, while Spotify and Apple Music rely on monthly subscriptions.

As a result, similar industries are starting to move in a different direction. Instead of depending on one model to keep content in production, many publishers are expanding the range of ways audiences can provide content compensation to keep revenue flowing.

Let’s take a look at how this diverse new publishing landscape is shaping up:

The expanding publisher portfolio 

Though it still has value as a means of supporting content, the traditional ‘view ads for content’ exchange has its restrictions; not least of all giving consumers no choice about whether they see ads or not. As recognition of these limitations has increased, publishers have begun to explore alternative funding options. For instance, some are using subscription-based services, while others are deploying varied micro-payments.

The development of these models is also closely tied to the growth of streaming services such as Netflix and Spotify. Providing versatile payment plans and access, these services have struck a chord with consumers who want control over the content they engage with — Netflix alone now has more US subscribers than cable TV — and publishers are understandably keen to emulate this success.

Yet, whichever model publishers choose, they must consider one key factor: transparency. If publishers want to develop lasting relationships with audiences that will consistently sustain their business, audiences must understand what they are paying for and why. So, it’s vital that publications not only make it clear to audiences how transactions work, but also communicate the value of the content consumers receive in return.

Going direct: why pay-per-view is taking off 

One of the most popular of these new models is direct payments, and it’s easy to see why. Not only does it tap into consumer willingness to fund content if it means they can enjoy it on their own terms — nearly 20% of US consumers would rather pay for ad-free content — but it also delivers on the need for transparency. After all, direct payments are straightforward transactions whereby consumers pay a defined fee to access specific content.

This approach also allows publishers to create differing compensation options that accommodate the mixed requirements of individual consumers. For example, publishers can offer access based on time (24 hours, monthly, and yearly being common choices) or volume; unlocking defined content bundles or single articles for smaller amounts. Additionally, they can follow in the footsteps of The Guardian and ask individuals to make one-off donations that enable them to operate without a paywall.

But focusing solely on variety is not enough to guarantee success; publishers should also ensure systems are easy to use and aligned with core business goals. This means that any solution must be designed to reach consumers at the most efficient and effective time for both parties. As publishers introduce added levels of friction to their users – they should keep a keen eye on the impact on user satisfaction and behavior. For instance, integrating analytical capabilities such as A/B testing will enable publishers to evaluate the impact of pricing and messaging on unique audience segments, and performance objectives. Armed with a complete picture of what’s working and what isn’t, they can then alter payment strategies to boost experiences, and the bottom line.

For digital publishing, change and more importantly progression is inevitable. As a result, publishers must be ready to accommodate shifting consumer tastes, needs, and habits, which in turn means monetization strategies should always be agile and open to new additions. Instead of limiting their scope to single methods that limit consumer choice and put revenue generation at risk, publishers need to keep enhancing their compensation toolkits with fresh technologies capable of future-proofing their organization — and right now, direct payments are core to a strong and agile publisher business model.

Barokas is the CEO and co-founder of Sourcepoint, a platform built for publishers, which provides the data needed to make informed decisions about content compensation.

Home Page Photo: Money by 401(K) 2012, used under Creative Commons Attribution 2.0 Generic

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