A digital manifesto for content companies, part 2: Build habit, charge everyone.
If you can't charge for it, it's not good enough.
In the first part of this series on content companies, I focused on why it’s time for a real mindset shift on content monetisation and set out seven principles on which a new generation of content companies can be built. Now I want to focus in on money and payment.
Money must be an explicit and honest part of the future relationship content companies have with consumers. Digital consumers are not anti-payment: they’re anti-rubbish and anti-commitment. Where services are worth paying for — and when they can pay in ways that they recognise to be aligned with the experience they’re getting — they’ll spend more than ever.
Let’s think about how money used to move through the ‘content’ system.
If you wanted something to read, you’d go to a retailer, browse what was on offer and choose something you thought you’d like. You paid for what you chose.
If the creator did a great job you’d buy it again. If they kept their standards up, you’d keep buying it and pretty soon that buying behaviour was a habit.
You spent more as the habit grew until you exhausted supply and could buy no more. You can use the words ‘habit’ and ‘addiction’ interchangeably here, so powerful was that behaviour when it kicked in. Keep providing good product and they keep buying it.
Habit is a fundamental human behaviour. If you’ve ever tried to change one, you’ll understand how powerful it is. Make no mistake, habit drove the fortunes of almost every content company in the world for generations. Habit fuelled growth, and will again.
There were no commitments in this system. Any consumer could walk away from any creator’s product at any time and the creator wouldn’t ever know who that consumer had been. No data exchange, no commitments.
Enter the subscription.
Somewhere along the line, you might be presented with a subscription offer (it literally fell into your lap most of the time) and you could decide whether to pay a larger amount in one go (usually annually) to do one of two things: reduce the cost of your habit and ensure you never missed an issue; or increase the cost of your habit but be supplied with disproportionately more product.
In effect, the creator rewarded you for habitually buying their product with a reduced price per-issue if you took up a subscription offer and gave the creator your name and address so they could send it to you. They traded better value for more predictable income, even though it reduced their income from their most loyal consumers.
The role of subscriptions — commitments — was to offer better value to habitual buyers.
(I should say here that some titles with low cover prices (like tabloids) never offered subscriptions because the direct fulfilment maths never stacked up, and it certainly never affected their success. Quite the opposite: millions habitually bought them in incredible volumes every day.)
Paywalls are not digital equivalents.
Now compare how digital paywalls work. Their role is primarily to inhibit consumption of content — to protect the creator against free access to their content by preventing the consumer from viewing it unless they sign up to some form of commitment. They impose a commitment mindset in consumers from day one (no matter how hard, soft or leaky the paywall or generous the trial offer), and deny them any opportunity to build a meaningful consumption habit.
As a result, they cap the commercial potential of that product to a small percentage of its possible audience and leave a ton of money on the table.
They increasingly also have a negative impact on the perception of the title concerned.
The Reuters Institute’s ‘Journalism, Media, and Technology Trends and Predictions 2019’ put it this way: ‘The rise of paywalls is shutting more people off from quality news and making the internet harder to navigate. Consumer irritation will build this year, leading to a combination of more news avoidance and the adoption of ‘paywall-blocking’ software.’
Hardly a glowing endorsement.
Commitment models can work — to an extent. I’ve long been involved in, and supportive of, subscription models; not least because they inherently require their owners to focus more on the quality of the overall experience they offer their subscribers than they would if they were ‘free’.
But the simple reality is that — even amongst those that are considered a success — they only get paid by a small percentage of their potential customers. Even the NYT, boasting four million subscribers (3.1M digital-only) is only tapping into a tiny percentage of its digital audience (around 90M uniques per month at time of writing).
The solution, if you want to monetise that big audience? Advertising money. And what led to the need for paywalls? The lack of advertising money. We can also thank it for the shift to volume over quality, clickbait headlines, horrible consumption experiences, creepy uses of data, driving the perceived value of ‘content’ to zero… I’ll stop there.
Advertising can work brilliantly. Ask Facebook and Google. Just don’t ask anyone else. They take all the real money in this space, and, ironically, that’s because they and all of their social peers are based on data gleaned from the intensely habitual behaviours of their consumers. Lots of personal data, an often overly-obsessive habit, and not a commitment in sight.
Aside from paywalls and advertising there are many more commercial strategies in play from ‘trade your data for access’ registration models (that inevitably end up trying to monetise that data via ad targeting) to ‘pay what you think we’re worth because you believe in what we stand for’ memberships.
Almost everything in play right now is, in some way, negative, deceptive or apologetic. You don’t see successful digital businesses in other sectors doing that. It’s time to make payment a positive ingredient.
Changing the money mindset.
I am convinced that the most financially successful content products in this coming era will be those that embrace payment and — even in those who are currently achieving some form of success from them — deconstruct paywalls in favour of ‘trade up’ subscriptions. Note that the latter cannot come without the former.
We’ll talk about what people are paying for in part three, but one of my principles — charge everyone — is central to what comes next for content companies. The only way they can maximise income is to focus on building habit and charge everyone, simply and fairly, for their product, without requiring commitment or relying on advertising.
Make payment an honest part of the relationship between creator and consumer and focus on making a product worthy of being paid for repeatedly.
Easy payment without commitment.
A great real-world example of a new way to think about payment can be seen in a platform I’ve worked with over the last year or so called Agate. Agate’s founder Dominic Young held a senior strategy role in the newspaper industry and recognised that traditional models allowed content creators access to only a small percentage of their audience’s value. So Agate performed the type of flip that can drive real foundational changes in markets like this: instead of monetising content, it monetises the consumer.
The model is simple. Any creator can enable Agate as the payment mechanism for their product and they can instantly offer frictionless payment to anyone with a Wallet — for anything they offer.
Early implementations have enabled publishers to offer instant access to articles (effectively micropayments) across a range of sites at a price they set, with a clever system of caps encouraging habitual consumption, but there is no real limit to how any creator charges for their product: by article, by issue, by day…
The key is that consumers pay the same way to access any number of products, and if used correctly, every consumer is charged fairly for what they consume.
The only commitment a consumer ever needs to make is to add money to their wallet, and publishers can still offer ‘trade up’ subscriptions that offer higher value once that consumer has started to consume their content habitually.
I increasingly believe that with a system like this it may be smarter in many cases to avoid subscriptions altogether, removing the cap on what each consumer can spend if they love the product they’re getting. (Anyone who read Nicholas Lovell’s ‘The Curve’, written back in 2013, will recognise this ‘uncapped upside’ as one of the most powerful opportunities to make money in the digital economy.)
This is a step, now we need a leap.
This is the first time I’ve seen a mechanism that genuinely enables both habit-forming consumption of a product and frictionless, commitment-free payment for it. It’s a visible step towards content products that can be delivered to the principles I’ve set out.
However, it is just a step, and we need to see much more ambition on the part of content creators if they are to fully capitalise on their opportunity. If not, we’ll see some incremental gains but not the big change in fortunes that’s needed.
In part three I’ll discuss product, data, the importance of a fully unified approach to payment and experience, and why this will help content companies become true digital businesses.
