Can the Starbucks card model work for publishing?

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Tien Tzuo
Founder & CEO,  

We’ve all had this experience: Someone sends us an article, we click on the link, then bam, we hit a hard paywall.

I actually get blamed a lot for this, as at Zuora we power a lot of paywalls for some of the most popular publishing brands in the world. They’re critical for publishers, but as a reader, there’s still something between me and the content I’m trying to read.

So what are my choices when I see that paywall? I can sign up for a free trial. Nope, I’ve done that already. Discount subscription? No, I’m not yet ready to commit to a recurring relationship. But, I’d be willing to pay something to read the article. Is there another option?

One we’ve seen in recent decades is micropayments, where some publishers would let you pay, say 5 cents per article. But that often isn’t feasible because our payment systems aren’t built to handle such small amounts. Also, under that model, card transaction fees alone could be more expensive than the cost to access.

No, that’s not quite it. But the other day, I was buying an Oleato Latte, and I had to top up my Starbucks card, and then it hit me: Why don’t publishers use the Starbucks Card model?

Subscriptions are a revenue bedrock for media companies, but they’re a one-size-fits-all approach that doesn’t satisfy each consumer’s needs. Not all customers want the commitment of a full subscription, which is contributing to the current market shakeout. The key to survival lies in giving them flexibility and control, especially in how they pay. This is why we brought back The Subscribed Weekly: to lead the charge for Total Monetization, a strategy that uses a range of offerings and mix of pricing models to match ever-evolving consumer demand. Publishers that embrace Total Monetization can transform news consumption into a personalized, accessible experience akin to buying a cup of coffee, unlocking a new revenue stream and recurring growth.

We have great examples of this in the tech industry, where “consumption” or “usage” models are all the rage. Amazon Web Services (AWS) offers prepaid credits that its customers can purchase and use for various cloud services. This gives users the option to pay only for what and when they consume.

With publishers, this could be a model used to purchase articles, podcast episodes, videos—any singular item of content—instead of subscriptions for access to an entire website, app, or service.

Here are two major ways usage pricing can work for publishers: 

Offering content a la carte as a one-time transaction. See the example below. Notice how The Yorkshire Post (published in Leeds, Yorkshire, England) readers can either subscribe to the entire publication or pay for one article. They’ve found a way to price both options in a way that works for a wider range of consumers and for their bottom line. But it’s clear which option is better for a regular consumer versus someone who is just there for that article or doesn’t want to commit to more just yet.

Image of The Yorkshire Post subscription options. Option 1: Subscribe for £1 for the first month for unlimited access. Option 2: Read articles for 50p each, up to £1 per day. Options include buttons for actions.

And on the other side of the pond, we could see a new example of this as soon as Q3 of this year. The Washington Post recently announced it would launch a new division “entirely dedicated to better serving audiences who want to consume and pay for news differently from traditional offerings.” Sounds a lot like what we’ve been preaching! Post CEO and Publisher Will Lewis explained: “The aim is to give the millions of Americans — who feel traditional news is not for them but still want to be kept informed — compelling, exciting and accurate news where they are and in the style that they want.” This is an exciting development and one we’ll be following closely.

The other usage pricing option is a prepaid, draw-down model. Like my Starbucks and AWS examples, customers would pay upfront to purchase access to single pieces of content in the future. Think $25 for 25 or 50 articles — whatever makes the most sense for the business and what customers will accept.

Usage pricing widens the market, increases revenue, and captures potential readers earlier in the life cycle.

But what about subscriptions? The biggest concern I hear is that usage would cannibalize subscriptions. Subscribers would simply downgrade and pay for just the content they consume. There goes revenue predictability and financial stability, they say. The problem with this take is it assumes that media companies in this scenario are powerless and can only grow by making their product as cheap as possible, both of which aren’t the case, if you revisit the Yorkshire example.

What would it hurt to try usage? With the technology that powers Total Monetization, it doesn’t hurt one bit. Pete Hirsch, Zuora’s Chief Product & Technology Officer, recently explained: A modular monetization platform empowers businesses to offer a mix of pricing models and packages, track usage, and adjust offerings based on how their audience reacts. These platforms provide flexibility and scalability for businesses that need to be thoughtful and agile in this changing market.

We’re encouraging all publishers to add usage pricing to their mix of offerings. Change can be scary. But when it comes to Total Monetization, it doesn’t have to be. It costs nothing to try something different. No singular pricing model is bad or wrong, but it all depends on how a business uses them. We believe the best approach is to give consumers options, in a way that also makes sense for the business, and continuously matches demand. For many readers, paywalls are the end of a relationship before they can even begin. But if readers could experience a brand through an article that only costs $1 or $5, then that paywall could transform into an invitation.

Speaking of invitations, we’re taking the Total Monetization conversation to the stage at Subscribed Live in Berkeley on June 26, and you’re invited! We’re back with deep conversations about monetizing AI, building relationships with your customers, and, as we shared in this article, diversifying monetization models. Liked this article about usage-based pricing? There’s a lot more where that came from! Few seats remain, but I’d love to see you there. Register here.

This is the fifth installment of the Total Monetization Series. We’re challenging companies to move beyond one-size-fits-all pricing models and craft a dynamic mix of offerings and business models that meet ever-changing consumer demand. This customer-centric and future-proof approach can unlock recurring growth and give modern businesses staying power.

Stay tuned for more conversations about Total Monetization. We’re just getting started and have so much more to cover. See you next time.