Axate, a digital news micropayment tool founded by media veteran Dominic Young, is looking to monetise casual news readers who won't commit to a subscription to get through a paywall. Young believes that readers must vote with their wallets in pay-per-view to help secure a future for some publishers.
The product, formerly called Agate, was founded in 2017 as a cross-title news wallet intent on building a sensible value exchange for news content. Amid declining ad yields and sluggish subscription growth outside top-tier publishers, Axate has corraled around 20 titles into charging modest sums like 25p an article and has accumulated “tens of thousands” of members.
Its first partner, Popbitch, calls Axate a “pretty sensible system of funding digital publishing”. It charges 25p for access to select pieces, explaining: ”If you’re anything like us, you’ll want to graze across loads of different websites without having to sign up or subscribe separately at each one.”
Another partner, ExaminerLive, admitted “continuing to give away our content for free was difficult to sustain”.
The Axate wallet appears as a pop-up on participating pages, as you see below.
Many Axate partners previously shared all content for free. Or print-only stories are going behind it, Young said.
“They joined first because there is less risk for them and a more urgent need for new revenues.”
This year, the Reuters Institute Digital News Report said that there were thousands of layoffs across digital media, offset by only a “small increase” in the number of people paying for online news – whether by subscription, membership or donation. The New York Times (3.3m digital subs), The Wall Street Journal (1.5m), and The Washington Post (1.2m) appear to suction much of the spend.
In nine markets (including the UK), only 11% of people said they actually pay for news. A sunnier view comes via separate research from FIPP, which claimed that the Reuters survey may not have presented an accurate picture; it claimed that news and magazine media subscriptions have doubled worldwide from 10m to 20m in the year and a half leading to November 2019.
Axate is in talks with around 50 titles – including some of significant scale with established subscription offerings. The adoption of a few big players could swell the wallet and create a large cross-pollinated audience as well as form this new news consumption habit.
“We're not seeing any negative effect on subscriptions, in fact, the opposite. We've seen subscriptions go up alongside Axate. The take-up rate increasing and so is the return rate. We are driving a lot of loyalty,” claimed Young.
Micropayments create opportunities for readers to “fall in love” with the product. “You need to try before you buy. And none of the existing ways of doing that particularly satisfying. Some people want the relationship to be casual even though it is frequent.”
Consumers are less likely a subscription to two competing titles with some content crossover [He used The Drum and Campaign as an example...].
"The winner makes the reader unavailable to the others, reducing that reader's worth to the market. Subscriptions are is a good model to reward and monetize the very best of your audience – but at the cost of blocking out 90% of people who may occasionally or even frequently want your product – there’s a lot of money still left on the table.”
The Spotify of News?
News media is competing with entertainment services for revenue. UK research from Deloitte found that half of UK adults have at least two media subscriptions on average, but by 2020 this will increase to four. Few prioritised news spend in this pool. Globally, the research said there would only be 20m paid digital news subscriptions by 2020 but that this is now competing with an increasing array of subscription video on demand (SVOD) services, most recently Disney+ and HBO Max, but there are also music and gaming verticals.
With SVOD, Young said: "People can’t spend their money in line with what they're watching. They have to make all these advanced promises.”
There is a cap on how much people can spend. There is also a limit in how much they can consume, Netflix's chief executive Reed Hastings jokes that the title's main competitor is sleep.
And that leads into the 'Spotify for News' conundrum. Publishers cannot set prices in bundles. A 100-hour investigation into political corruption from a broadsheet would carry the same value as a tabloid’s slapdash Love Island recap in a Spotify for News model.
Young said: "Publishers need to maximize their share of attention by preventing readers from reading anyone else's stuff. In subscription, there is no value differential around products. An aggregated personalized newspaper with pieces from The Times, The Sun, and The Guardian affords them no way to control their product. And because there is a fixed amount of money in the market, the only way to profit is by minimizing your costs against your revenue rather than maximizing your investment in the product in order to make it more popular.”
“The value of every publication becomes the same.” And in that case, is there an incentive to produce a quality product? Also, it is worth remembering that while consumers are content with the platform's pricing, few artists are fully content with their share of Spotify's revenues.
He added, in Spotify, you may listen to the same Rolling Stones song 10,000 times in a lifetime – a song could even grow in value as it ages – but you’re unlikely to read a news story twice, and it will often quickly depreciate in value. “We ask why a subscription the right model for news.”
“Media companies want their media product to be the principal product. At the moment, they either sell their consumers to others for very little while making a product that isn't very satisfying – or they sell something else to those consumers. When you return to the idea that it is your product that is driving everything, we open up a category of revenue that exists between free and ad-funded.”
Why hasn't it been widely adopted already?
Esther Kezia Thorpe, co-host of the Media Voices Podcast, explained that few publishers have micropayment options yet, beyond the optional donations deployed by the likes of The Guardian (which requires great scale).
“Introducing micropayments is a logical step for publishers looking to capture less frequent users. Many are now considering membership or paywalls of some sort, but these at best will only convert 2-5% of users. The question now is what to do with that middle section of readers – those who visit sites occasionally, but not frequently enough to subscribe?“
There is an industry perception that the model won't quite work with consumers yet to warm to the idea.
“The more publishers that adopt this, the more audiences will warm up. A product like Axate has to win over the market and capture a large scale of users.“
Thorpe concluded: “Now, if a lot of publishers adopt Axate and I can flick between publications happily hitting 'pay 50p' in just a few seconds, then we're talking. But at the moment, only Google, Amazon and Facebook (and maybe Apple) have that kind of scale and integration into people's lives.“