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June 22, 2018, 9:47 a.m.
Business Models

In Winnipeg, micropayments aren’t generating big money, but they’re serving as a top-of-the-funnel strategy

Three years in, the Winnipeg Free Press’ attempt to get readers to pay by the article is still producing less than $100,000 a year — but it also produces data that allows for more targeted upsell efforts.

It’s been three years since the Winnipeg Free Press introduced pay-by-the-article micropayments to its website. The goal was to find a model that could get people to pay for content while avoiding some of the issues presented by more traditional subscription models.

But what they’ve since learned is that getting people to pay for digital content requires a human touch.

In 2015, the Free Press — one of Canada’s few remaining English-language metro dailies not owned by the Postmedia chain — started asking readers to pay 27 cents for each story; readers also had the option to buy monthly subscriptions. That stood out from what was then and still is the most common newspaper digital subscription approach: a metered paywall, where readers get a certain amount of articles free a month before being asked to pay.

A year into implementation of the micropayment system, the Free Press projected it would generate $100,000 in revenue from digital micropayments in 2016.

But today 2018, that total still hasn’t quite been cracked. According to their most recent quarterly earnings report, while digital revenue for individual articles grew 64 per cent in 2017, it still generated less than $100,000 in revenue.

Bob Cox, the publisher of the Winnipeg Free Press, said the paper has never looked at micropayments as a lucrative source of income. Instead, he sees micropayments are a tool for luring subscribers to higher-priced monthly packages, he said.

“It’s just part of the sales funnel, as we call it,” said Cox. “Our focus is really on building the number of full-time online subscribers, using micropayments as the way in the door.”

Like many newspapers, the Free Press has seen a dip in digital advertising — in 2017, digital ad revenues were down $500,000 from the previous year. But Cox doesn’t see digital subscription revenue as replacing digital ad revenue. Instead, like many papers, the Free Press is looking at building its long-term business model around paying subscribers.

Over a 30-day period in April and May, there were over 1,500 micropayment-paying readers, who collectively purchase about 600 to 1,000 articles a day, according to data provided by Christian Panson, vice-president of digital and technology at the Free Press. Of those users, Cox projects they are able to convert about 15 percent to full-time digital subscribers.

As of May, the Free Press had over 7,000 digital subscribers — up from about 4,000 two years earlier. “Our goal this year is to actually double the number of people who are actually paying for full-time access to digital,” Cox said. “We’re putting a lot of efforts into that goal because we realize the importance of it to the future.”

To get there, the Free Press has invested significant resources into marketing personnel, including customer service staff. “Oddly, in the online world, the personal sales approach still works,” said Cox.

Free Press staff use a number of methods to track how readers are using the site, including those who frequently buy single articles — which has helped micropayments become an important marketing tool. Frequent users get targeted approaches and offers for full subscriptions. The paper is also making a major push to get print subscribers to also sign up for a digital subscription.

Cox calls this “fairly good” progress — “but it takes a ton of work.”

A version of this article first appeared at J-Source, where H.G. Watson is managing editor.

POSTED     June 22, 2018, 9:47 a.m.
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