Paywalls or Paygates: Alternative Revenue Solutions
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The document discusses alternative solutions to paywalls for content publishers, including Znak it!, a proposed micropayment platform. Some key points: - Paywalls can be expensive to implement and maintain, create barriers between publishers and readers, and see low conversion rates. - Znak it! proposes to use micropayments (called "Znaks") as an alternative, allowing readers to pay small amounts for individual articles or content. - The platform claims benefits for publishers, advertisers, and readers by providing multiple payment options, sponsored access, and analytics on user behavior. - Early pilots showed over 8% conversion rates from visits to purchases, higher for younger demographics and varying by
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Paywalls or Paygates: Alternative Revenue Solutions
- 1. by Znak, Inc. Paywall or Not To Paywall: Alternative Solutions Revenue Trends, Warsaw April 2012 All presented here materials, ideas and business concepts are confidential. They are the property of Znak, Inc., a Delaware corporation; and, they cannot be used, copied, distributed nor shared in any form and means (the appropriate US and international laws apply). Znak it! Is a registered trademarks owned by Znak, Inc. The Znak it! business idea and a micropayment solution are protected by the USA and international patent laws – New US Provisional Application No. 61/046,623 1
- 2. A Technology Solution for Publishers Payment Technologies do NOT Sell Content But They Can Help Publishers and Their Users Make Payment Transactions Easy & Fair Copyright (C) 2009 by Znak, Inc. 2
- 3. $240 Billion Loss in Ad Revenues since 2001 Peak 30% 1950 cut Copyright (C) 2009 by Znak, Inc. 3
- 4. 2011 The Rise of the Paywall? “The metered wall is the coolest thing since the beginning of the WWW.” Steve Brill “The NYT paywall is working… …it’s a dream.” Felix Salomon Copyright (C) 2009 by Znak, Inc. 4
- 5. 2012 – Paywalls Revisited The NY Times Paywall is Stupid… Really Dumb Greg Satell “’a cartel of news’… ’walled gardens’…” Clay Shirky Copyright (C) 2009 by Znak, Inc. 5
- 6. Lessons Learned Paywalls can be: Expensive to start; It took the NYT two years technologically challenging; and $25 to $45 Million to costly to run/market. launch its „metered wall;‟ Bloomberg, paidContent Additional $13 Million to promote it in 2011 alone; New York Times Given the 390,000 new subscribers at the end of 2011 -- $97 to $148 to acquire one subscription Loss of traffic and ad revenue Copyright (C) 2009 by Znak, Inc. 6
- 7. Lessons Learned Paywalls can be: Expensive to start; Before paywall the NYT technologically challenging; traffic was about 39 - 41 costly to run Million uniques per month (US traffic only); Require large scale; conversion rates slow down & Down 20% in Dec 2011; plateau; „silo effect;‟ With 390,000 subscribers – 1% visitors signed up; Subs growth slowed from 124% Q1 to 20% in Q4 Copyright (C) 2009 by Znak, Inc. 7
- 8. Lessons Learned Paywalls can be: Long-term commitment Expensive to start; with up-front payment and technologically challenging; low 34% renewal rate, costly to run compared to 55% (print); Magazine & Newspapers Circulation Institute Require large scale; conversion rates slow down & Substantial cost if multiple plateau; „silo effect;‟ sources/subs desired; „Walls,‟ after all – barriers to Registration (ID/PIN/cc readers‟ access & engagement info) – can be lost/stolen; 50% apps have problems recognizing sub ID/plans; Copyright (C) 2009 by Znak, Inc. 8
- 9. Lessons Learned Paywalls can be: One-way „engagement‟; Expensive to start; technologically challenging; costly to run You pay, we deliver what WE want, incl. “free” or undesired content; Require large scale; conversion rates slow down & plateau; „silo effect;‟ Only 20% of subscribers download content; Magazine & Newspapers Circulation Institute „Walls,‟ after all – barriers to readers‟ access & engagement Reliance on (exploitation of?) the most loyal (local) Media/publisher-centric readers; passers-by a second category? Copyright (C) 2009 by Znak, Inc. 9
- 10. Need Something Better Copyright (C) 2009 by Znak, Inc. 10
- 11. Alternative to Paywall Copyright (C) 2009 by Znak, Inc. 11
- 12. What is it? For whom? Znak it! – an integrated premium content curation and monetization Content Providers platform Znak it! – a frictionless, safe and private way to access premium content as-you-go Web Users Znak it! – a direct-to-user Marketers & promotion channel and market Advertisers research tool Copyright (C) 2009 by Znak, Inc. 12
- 13. A Win-Win-and-Win Solution Web users can buy Znaks (credits), using credit cards, PayPal, bank transfer, etc. Or, they can earn Znaks through Marketers‟ ECOSYSTEM sponsorship. Marketers – the Third Winner “Free” or ad-sponsored Znaks earned in exchange for a clickthrough (CTR) or an action (CTA), e.g. 1 Znak = $0.01 or an answer to a mini- equivalent in other currencies survey/market poll. Copyright (C) 2009 by Znak, Inc. 13
- 14. Business Model Options & Benefits Paywalls vs. Paygates such as Znak it! SaaS -- no set up and system maintenance Expensive, low ROI; costs; up to 94% return; Require large scale; Also for the “long tail;” truly World Wide; divide users into categories Technology- and portal-agnostic; Flexible, a la carte, on-demand access; Create „silo effect;‟ Supports different payment methods, incl. Closed, rigid, might donations and ad-sponsored access; cannibalize other sources of revenue; User-centric, payment as social engagement, content sharing & recommendations; Media/publisher-centric , Private, intrinsically safe; can be used for not engaging anonymous access – without registration; frictionless Copyright (C) 2009 by Znak, Inc. 14
- 15. Znak it! Market Niche 120% Znak it! Payment Niche Cost of Znak it! as compared to 100% 102.90% PayPal charges Znak it! Percentage Commission 80% PayPal Regular PayPal Micropayments 60% 52.90% 40% 27.90% 20% 21.67% 17.90% 8.85% 6.00% 5.40% 3.90% 0% $0.3 $0.6 $0.9 $1.2 $1.5 $1.8 $2.5 $5.0 $20.0 Transaction value Copyright (C) 2009 by Znak, Inc. 15
- 16. An Example – Online Newspaper Examples of Znak it! embeddable links and widgets – as payment gateways. Customizable shapes. Easy, copy-and-paste insertion of Znak it generated codes by Publishers. For the User: two mouse clicks to get access to and pay for selected content. Payment authorization and fund transfers done by the system in real time, SSL-encrypted, safe. Copyright (C) 2009 by Znak, Inc. 16
- 17. Publish on Third Party‟s sites Examples of Provider‟s content submitted to Znak it! Agenda for additional distribution & monetization Also, in soc nets Facebook or Twitter Can be self-administered; Access to Agenda via customizable Admin Panel Data mining and reports Copyright (C) 2009 by Znak, Inc. 17
- 18. User Has a Choice Alternative to pay; User access to paid content sponsored through opt-it advertising “Free” to User Copyright (C) 2009 by Znak, Inc. 18
- 19. Ecosystem Benefits to Content Providers Marketer or Advertiser and Users In exchange for User‟s data or action; High CTR and competitive CPC/CPA Much higher conversion rate than when using paywalls Copyright (C) 2009 by Znak, Inc. 19
- 20. Frictionless Instant Access to Content Two mouse-click access and authorized payment; No delays, no need to leave content page or enter any codes, PINs; no tracking Copyright (C) 2009 by Znak, Inc. 20
- 21. Samples of Successful Application In April 2011, we developed a new version – won the Florin Award for the most innovative online transaction service (EPCA, Amsterdam) The current platform was launched in August 2011 (public beta) – in the first three months, 320 content providers and 52,000 users have registered. Now, we run several pilot projects with various content publishers, incl.: two regional news/magazine publishers a photo sharing and media site, similar to Flicker an online music service and soc net global producer of video content: sports, fashion & entertainment Copyright (C) 2009 by Znak, Inc. 21
- 22. Pilot Cumulative Results Based on the first month of each of the 5 pilots (Nov 2011 – Jan 2012) No of Content Price/piece in Types of Content Supported Pieces Znaks Video clip (sports) 15 199 Music file (MP3 download) 90 99 Article bundled w/photos 60 49 Single article, free lead 30 39 Crossword puzzle 30 25 Photos 120 10 Total/average 345 52 1 Znak = $0.01 Copyright (C) 2009 by Znak, Inc. 22
- 23. Pilot Cumulative Results Price/piece in Type and No of Content Qualified Clicks Clicks/piece Znaks Video clip (sports) 15 199 678 18.0% 45 Music file (MP3 download) 90 99 1,297 34.4% 14 Article bundled w/photos 60 49 465 12.3% 8 Single article, free lead 30 39 397 10.5% 13 Crossword puzzle 30 25 169 4.5% 6 Photos 120 10 761 20.2% 6 Total/average 345 52 3,767 100% 11 „Qualified clicks‟ equals content purchases – 3,767 out of 43,299 visits, or 8.7%. Assuming quality/user interest, etc., are all equal, music was most popular overall; however, sport video clips generated the most clicks per unit. Copyright (C) 2009 by Znak, Inc. 23
- 24. Pilot Cumulative Results Revenue/ Price/piece Qualified Revenue Type and No of Content piece in Znaks Clicks in Znaks in Znaks Video clips (sports) 15 199 678 134,922 43.0% 8,995 Music file (MP3) 90 99 1,297 128,403 41.0% 1,427 Article bundled w/photos 60 49 465 22,785 7.3% 380 Single article, free lead 30 39 397 15,483 4.9% 516 Crossword puzzle 30 25 169 4,225 1.3% 141 Photos 120 10 761 7,610 2.4% 63 Total/average 345 52 3,767 313,428 100% 918 The average is $9.18 per piece of content; however, the revenues vary a lot between the type of content with video clips generating nearly $90/piece Copyright (C) 2009 by Znak, Inc. 24
- 25. Pilot Results, by Gender & Age Based on a sample of 43 299 Unique Users 13.8% 24.2% 18 to 24 41.1% Males 16.5% 25 to34 35 to 44 58.9% Females 45 to 54 55+ 22.4% 23.1% The sample represents gender and age distribution typical for online sites with high=quality news/magazine content, with a majority of users being male and older. Copyright (C) 2009 by Znak, Inc. 25 / 11
- 26. younger When compared to the Buyers Population, the distribution shows a considerable shift – younger users are more likely to be Buyers. 65.3% 58.9% Number of Unique Buyers – 1 281 41.1% 34.7% 29.0% 20.6% 21.0% 23.1% 16.5% 13.8% 16.5% 22.4% 12.9% 24.2% Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+ Unique Users Unique Buyers Copyright (C) 2009 by Znak, Inc. 26 / 11
- 27. Revenue Per Transaction and Buyer $2.79 $3.06 $2.45 $2.49 $2.36 $2.20 $2.18 $1.79 $0.83 $0.79 $0.92 $0.85 $1.00 $0.73 $0.75 $0.85 Total Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+ Revenue per Transaction Revenue per UB Copyright (C) 2009 by Znak, Inc. 27 / 11
- 28. Conversion Rates by Gender and Age Conversion rates 9 to over 15.6% 14.5% 15 times higher than those generated by metered 10.3% paywalls (1%) 8.7% 6.4% 8.2% 6.3% 3.0% 5.2% 3.3% 4.4% 2.5% 3.3% 2.7% 2.2% 1.6% Total Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+ Conversion Rate (Buyers/Uniques) Conversion Rate (Buys/Uniques) Copyright (C) 2009 by Znak, Inc. 28 / 11
- 29. In Summary Technology Can Make Payment Transactions Easy & Fair Technology Can Help Publishers Generate Online Revenue Open, On-Demand Payments – like Znak it! – Work Better than Paywalls, esp. with Younger Users Znak it! Shows about 9x Better Results than Paywalls In Certain Age Groups Even 14 - 15x Better SO,… ZNAK IT! Copyright (C) 2009 by Znak, Inc. 29
- 30. 2012 The Year of the Dime & Nickel? “As the economy sputters along, look for sites helping you sell almost anything you can imagine and making you a “fortune”– one micro payment at a time.” Lance Ulanoff, Mashable Copyright (C) 2009 by Znak, Inc. 30
- 31. Thank you Greg Golebiewski ggolebiewski@znak-it.com Znak, Inc , Sunnyvale CA, USA Warsaw, Poland Copyrights © 2012 by Znak Inc 31