A new startup wants to help online media outlets monetize by making it easier for consumers to access content through a paywall without being tied to multiple subscriptions.
Demo as part of the Battlefield 200 cohort at TC Disrupt this week, put tries to achieve something that others have tried before. Since the dawn of time (well, at least since the advent of the web), digital media companies have sought new ways to make money. While the path from traditional newspapers and magazines to monetization was relatively easy insofar as they charged money for a physical product (usually filled with paid advertisements), the online world had to flirt with a myriad of models, from advertisements and events, to – increasingly, it seems – pay walls.
But while paywalls promise a clear and predictable income, it’s a difficult model to scale outside the big outlets like the New York Times. People want (or can’t afford) dozens of subscriptions, but that doesn’t mean they don’t want to pay something to access individual articles if they have the ability to do so.
There are already subscription-based services like Apple News+, which bundles stories from hundreds of publications, and pay-per-article alternatives like Blendle, which allow publications to charge microtransactions to read one-time articles. Zette is somewhere in the middle, charging a $9.99 monthly subscription to access 30 articles from its partner publications, though it’s also working on several pricing plans for those looking to buy more credits. However, if the user doesn’t use their credit in a given month, it won’t roll over to the next month – everything will be reset.
The story so far
Zette was founded in 2020 from San Francisco by former Forbes reporter Yehong Zhu, and after raising some $1.7 million in seed capital last year, the company officially enters a private beta for waiting list members this week, pending. from an expected public launch early next week. year. For now, Zette has signed deals with New Scientist, Forbes, McClatchy, Boone Newspapers and Haaretz, with plans to bolster it by “hundreds” more over the next year.
So, how does it all work? Well, the user downloads and installs a browser extension, signs up for a Zette account and subscription, and when Zette detects a paywall on a partner website, it invites the user to unlock the item by paying a single credit.
The company said it is also considering allowing users to roll over some of their credits, albeit with a time limit on when to use them.
Perhaps the crucial point to note here is that unlike something like Apple News+, Zette doesn’t act as an aggregator, Zette’s pitch to publishers is that it allows them to maintain relationships with their readers, as their content remains on their own website.
“Publishers have control over how their content is displayed and covered, unlike the Apple News ecosystem,” Zhu said. “Readers can open an article anywhere — Twitter, Facebook, Google, iMessage, Slack, the news websites themselves — and still use Zette to unlock the article.”
Zette will initially focus exclusively on the American market, but has the ambition to also launch in international markets.
“We’re an American company that primarily targets American readers,” Zhu said. “We’re investing heavily in marketing and growth, especially as it comes to attracting younger readers — Gen Zs and millennials — on board.”
There may be some flaws in this type of model. The advantage of subscribing directly to a publication is that while you may not like everything, you will probably find some articles that you like. With a subscription-based, pay-per-article model, you don’t know if you’ll like it before committing credits to charity. Plus, you might not come across 30 paywalled articles in a given month that you want to read. So for a $10 monthly payment, some subscribers may just not get any value out of it.
There are some elements of Blendle’s model that make more sense. There is less pressure on the reader to consume a certain number of monthly articles as it is built around a few microtransactions – put money into your account and use it whenever you want. But while that may be a more consumer-friendly model, it doesn’t necessarily benefit the publication or the company behind the technology. According to Zhu, this type of business model only encourages “sporadic usage rather than long-term readership,” ultimately leading to higher churn and poor revenue.
“We also believe that consumers tend not to enjoy the fact that they have to pay a dollar and a cent for every article they want to read,” Zhu continued. “This makes them feel ‘nickel and dimmed’. That’s why Zette was inspired by video games, where you pre-purchase bundles of ‘virtual coins’ for in-app purchases: we replace money with credits to distance the customer from the feeling of a purchase. This makes every transaction accessible and also makes it easier to top up credit every month. We believe that a micro-transaction-like experience at the front end, recurring revenue at the back end, is the best of both worlds.”
In addition, while there are advantages to a traditional news subscription — such as readers consuming everything from sports and politics in one publication — not everyone wants to read a newspaper cover to cover.
“Traditional news subscriptions serve one audience very well: heavy readers,” Zhu said. “These are readers who run into paywalls enough and often enough that they decide to become paying customers of a single point of sale. The majority of online readers are light readers: they browse around looking for news, they only want one article at a time read so they can’t justify the cost and inconvenience of signing up for a subscription, they are relatively brand independent, they are price sensitive and are primarily looking for a diversity of content, rather than getting all their news from one publication. ”
In addition to the browser extension, Zette is also working on a mobile app, which should be ready in early 2023 by the time Zette opens to the public.
For now, however, Zette said it has begun opening access to a small percentage of its waitlist users who will have free access for the remainder of this year, though in return they will be tasked with giving the company feedback on ways to improve the product.