World, Business, Media

Piano Media: Slovakia’s surprising paywall success story

By Mandy De Waal 19 March 2012

In a media world where newspapers have come up with all manner of membership clubs, partial paywalls, hard payment systems and other strange and fandangled solutions to extract money from readers who are reluctant to pay, Slovakia’s Tomáš Bella seems to have scored a hat trick. By MANDY DE WAAL.

March 2012 saw a paywall go up at the Los Angeles Times, and soon afterwards Gannett announced that most of its 80 community papers would be locked behind a payment system by this year’s end. Tribune Company, owners of the Los Angeles Times, and Gannet, which owns US Today and 81 other daily newspapers, must have been emboldened by success stories from America’s other big newspapers.

The Wall Street Journal had some 550,000 digital subscribers late last year, Pearson’s Financial Times registered 267,000 digital subscribers by the end of 2011, while The New York Times has close on 400,000 paid digital subscribers, said to be close to half the newspaper’s print subscription number.

The big question on pundits’ lips is “will the new paywalls work”, while analysts like Paul Levinson, author of New New Media, says payment systems are dead in the water. “The horse has left the barn on this one,” Levinson told The Christian Science Monitor.

Levinson says these pricing systems will only hurt newspapers further, because they fly in the face of the underlying mechanism of the digital age. “It inhibits connectivity,” he says adding: “Fast and easy connectivity is the life blood of the Internet, and anything that does not keep pace with that will shrink.”

Gannett would do well to look beyond the borders of the US to a surprising paywall success story that’s flown in under the radar from Slovakia. There an emerging company called Piano Media launched a nationwide paywall in the country’s capital, Bratislava, in May 2011 and the results have been remarkable.

In less than a year the system signed on 2.3-million users in Slovakia, and after launching in Slovenia in January this year now has 1.2-million users in that country. “The results from Piano’s first operational month in Slovenia are in. We saw a 37% rise in revenue per 100 users in Slovenia over Slovakia despite Slovenia being a much smaller market than Slovakia,” says David Brauchli who manages communication for the technology company.

“Piano’s revenue per 100 users per publisher was about €400 higher. Piano’s revenue is additional to what publishers are already earning from their sites, which were free before, so this immediate revenue increase in revenue is already helping the beleaguered industry,” Brauchli says.

To find out the “secret” to Piano Media’s breakthrough, Daily Maverick spoke to its CEO. Tomáš Bella is a former journalist who was editor-in-chief for Slovakia’s biggest online news site before creating the system that Columbia Journalism Review says has “shed some light on one of the biggest challenges to the news business in the digital age: how to get people to pay for news online”.

“We were trying to establish a payment system when I was at Slovakia’s biggest newspaper, and it was quite similar to most of the other systems that were dying,” says Bella. “A few people were paying, but the traffic was going down. We cancelled the paywall but we had quite a lot of people who were saying that in principle they understood the value of journalism. They understood the value but when we asked them to pay they were just not paying.”

Bella and his team believed that it could be the payment systems that were causing the problems for the press. “We tried to see what would be the easiest way to ask people for money online so that we could get some revenue online to sustain quality journalism. We basically copied the cable TV system for journalism, and this became the system we used.”

With Piano Media, users only pay once on any newspaper site they want access to and then all the other newspapers that are a part of the system are automatically available at no further cost. The system offers an independent, common-payment system for top media in Slovakia for readers, while for publishers it is an outsourced solution that enables press to focus on what they do best (produce quality journalism and sell advertising). Piano says that another benefit is that media can monetise content without the fear of losing traffic or ad revenue.

“This concept where you have joint system of national payments for news online works much better than the individual systems, and the revenues for publishers are much higher,” says Bella, who adds that a critical part of the consumer attraction is lowering the “mental cost” of the transaction. “For most of payment systems the problem is not the amount of money that you have to pay, but the issue is how hard it is to make the payment. Then there’s the decision about which media people should subscribe to.”

Piano Media takes that consumer headache away with a national payment standard where consumers can get quality journalism at one place, and all their favourite media is included in the subscription cost. “Most of the newspapers can’t afford to build a really good payment system, but by pooling publishers’ resources one can make a single payment system so much better.” The transaction process is intuitive and fluid, plus there’s the boon of not having to pay more than once for a news subscription. “This makes it so much easier for people to make a decision to pay, this is the critical thing,” says Bella speaking to Daily Maverick from Slovakia.

“The other important thing is that the publishers can share the know-how, so what we do is we don’t only offer technology to the publishers but also advice and feedback which helps make their operations smarter in terms of what they should be doing. We tell them what is working and what is not working. This lowers their risk which is the most important part of the system,” says Bella.

“It is a long-term process and what we have seen is that publishers that have had a payment system get very high numbers with us from the beginning. For others it takes a few months to drive significant revenues but the numbers still go up so the results are better than what the publishers expect,” he says.

Piano Media launched in Slovakia with nine publishers, but now most newspapers are on board together with a large TV station, online video sites and many of the bigger local magazines. “In other markets that are less pragmatic that Slovenia and Slovakia, we may be able to start with a fewer number of publishers,” says Bella.

“We are now working very hard to launch in other countries that are much bigger than Slovakia, but it is likely that this year we will only be working in European countries. But we’re finding that we are getting a growing demand from all over the world so we are talking everyone who is speaking to us because we are very keen on international expansion,” he adds.

No prizes for guessing that the next calls Bella will be receiving will come from newspaper owners in South Africa. DM



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Photo: Tomáš Bella of Piano Media. PIANO MEDIA.

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