Monetization strategies

When it comes to the monetization of your audience there are basically four concepts. You should spend some time on the question which of these does fit best to your project. And only afterwards it is worth diving into details or technical solutions. (Often here is no either … or… Sometimes a mix of these concepts works quite well).

I see four basic monetization strategies:

1. The transactional approach – better known as ‘a paywall’

the transactional approach: you give me money for me giving you something which for you is worth the cost

You give me money for me giving you something which for you is worth the cost. That is the basic principle of our economy. It is the very same concept your favourite clothing store, your hairdresser, coffee shop or even your doctor is following (the latter, if you are lucky, getting paid by your medical insurance).

When the object of this transaction is digital content then the term paywall is in frequent use. “A paywall is a method of restricting access to content”, says Wikipedia.

the term ‘paywall’ stresses the aspect of restriction. Though that seems to be little appealing it comes with some helpful associations

Please note that virtually nobody would use this term when the same content is delivered in a physical format. You buy books and newspapers, you pay for records or CDs. You pay entry to a cinema. Nobody says ‘the bookstore/CD shop/cinema has a paywall. ‘Paywall’ is stressing the aspect of restriction, it is evoking the picture of a wall, where either you are not supposed to cross over or something or somebody is detained on the other side. That’s why quite a few publishers object to the usage of this term.

I don’t agree. I think, the term ‘paywall’ is well established. And though I’d advise against using it towards your audience I think it is reasonable to use the term internally or to communicate with colleagues. To me, a paywall simply indicates a price tag at a digital content product. And, if you like to dwell on the metaphor, a paywall bundles something into a product, it hinders content from leaking out, thereby losing its appeal

2. The relationship approach – memberships

if you see a common bound of your audience, ‘membership’ might be the best monetization strategy for you

In a membership scheme, you pay for being a member, part of a community of like-minded people. Your payments support this community. Your payment is a contribution to a common cause. That’s what the relationship approach wants to suggest.

When it comes to content monetization, memberships technically quite often are nothing else than subscriptions labelled as memberships. You pay for reading/viewing/listening. Maybe more often, the membership is sold with some more perks: you get access to ‘paywalled’ content, you can subscribe to newsletters, you may comment or post to forums, you get a tote bag, digital or physical badges or even some certificate of membership.

Memberships often come without annual commitments, though others are more committal and, at the same time, many subscriptions can easily be cancelled with short notice.

Altogether, a membership is a subscription to something which has an emotional component. And if whatever you publish addresses your users/readers/listeners/viewers/followers as a community, if you see a common bound of your audience, ‘membership’ might be the best term for you to label whatever you are charging for.

3. Voluntary payments

voluntary payments can work when your audience is very much committed to you

For sure, Patreon is a household name to you. Whilst most creators there are offering something in exchange for content (a transactional approach), the name Patreon plays not least with ‘patron’, somebody patronising others, or, more mundane, a sponsor to a creator. Patreon-creators often were publishing content for free before setting up their payment schemes at Patreon. And even if nowadays the creators usually restrict some or even all of their content to paying ‘patrons’, the relationship between them and their patrons often remains near to the latter paying voluntarily.

The concept of users paying voluntarily for digital content is nothing new at all. There are dozens of examples of technical solution providers as well as publishers, both extinct ones and still living ones, who were based on voluntary payments. There are browser extensions like Flattr, Tipsy or Scroll, who facilitate to give money to the websites the user prefers. There are several examples of (news) media earning considerable amounts of money (El Diario in Spain, The Guardian in the US and in UK, Taz in Germany) via asking their readers to pay even though their content is fully available to non-paying readers.

In general, it is safe to say that voluntary payments can work when your audience is very much committed to you and your content. But be aware. It is much easier to set up a one-time project, maybe in the format of a crowdfunding, or to initiate a voluntary payments moment than to motivate users to pay regularly without tangible upsides. Be prepared, that in order to run a voluntary payment scheme with lasting success you will have to pledge for payments constantly and to be quite pushy. That’s not what everybody likes. It might feel odd for you as a publisher and it definitely can be overplayed (“Are the Twitch Beggars Baiting Us?” asked Youtuber Drew Gooden recently).

4. Virtual goods & goodies

virtual stickers, badges or perks let paying users/readers/viewers/followers stand out of the crowd

Online games once came up with the idea to reach a very big audience through offering free play to everybody and to earn money via non-free gaming options. It started with games where players could buy additional ‘lives’, skip levels or buy tools and features which would make them more strong players. But the gamer community started to despise games of this kind soon.

For every decent player it is a question of honor that he reaches the next level or that he beats another player not because of his monetary resources but because of his talent and skills. So in many current online games like Fortnite you can spend as much money as you want but your progress as a player will depend solely on your gaming skills nonetheless. What you might spend your money on are features or perks which help you stand out of the crowd, individualizations of your avatars or other means of personalisation.

Especially vloggers and other live video publishers do profit from similar monetization techniques. Though all viewers can take part in chat streams on Youtube, ‘super chat’ and ‘super sticker’ options make the posts of paying users more prominent, longer lasting and often receive direct reactions from the Youtuber whilst free posts mostly slide through barely noticed by other viewers and the Youtuber him- or herself. Similar mechanisms are available at Twitch and other live platforms. Youtube even offers a similar kind of monetization for on-demand videos.

This kind of monetization is near to selling merchandise in the physical world. Merchandise articles usually are goods that help fans express or show their fandom publicly. To buy a branded item is as much a transaction with the goal of possessing something branded as a means of supporting the brand or, in our case, the publisher behind the merchandise branding. Interestingly, non-direct monetization via selling (physical) goods without that purchase being directly linked to the service the buyer is interested in primarily is quite an old idea. Since long, it is of help monetizing services which to sell in a more legacy way is difficult or even illegal. (I’ll do a blogpost on this topic soon. Until then, you might think about churches selling candles to believers who  enter the church without entry fees.)