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Credit: Frank Noon/Mousetrap Media

Microtransactions have been a standard monetisation technique in the video game industry for some time now as a way to entice consumers to purchase add-on content at low prices.

Newsrooms have since pondered whether this would work as a way to increase cash flow, or roping readers into memberships or subscriptions. Some early adopters have used microtransactions as part of a blended strategy to fight ad-blocking.

Speaking at Newsrewired (6 March), Dominic Young, founder of microtransaction platform Agate, said that this model can slot into a behavioural gap in today’s news audiences.

His platform Agate uses an online wallet system which is topped up by the user and spent across various affiliated sites at prices and terms set by the publisher.

“You need readership revenue,” said Young, adding that this should not be a controversial concept.

So how does it work?

Agate allows users to pay publishers small amounts, for example 20p or 30p, per each article they read. However, online spending is capped at the equivalent value of the subscription for the same time period; for example, if a weekly subscription is £1, once the reader spent £1 in the same week, they can access content for free. The objective is to reward readers for engagement with the brand without locking them in to a subscription from the beginning.

“You have to reconnect popularity of product to revenue,” Young said, adding that subscriptions can be a good model, but it ends up making an organisation focus on just the five per cent of its potential readership that would be willing to pay consistently a relatively large amount, ignoring the 95 per cent who may only consider that brand one part of a larger selection of outlets they regularly visit.

Young, however, disapproves of the term microtransactions, saying it creates a misunderstanding that it is somehow a different from any other type of payment. He said this prevents online platforms from monetising countless numbers of small interactions which online behaviour, especially news consumption, consists off.

Any barrier online, no matter how small, leads to loss of users and stops them from forming a habit of coming back to your website. Paywalls, Young emphasised, can be damaging as they create a barrier at the entry point, the opposite of what should be done.

Removing barriers and encouraging users to sign up to several different subscription services can also encourage a more collaborative mentality among publishers, allowing them to focus on becoming more popular with the user, rather than fighting against each other.

“The easier, habit-forming and popular, the more money you make.” Young concluded.

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