Zuora’s subscription platform: a paid content lifeline?
A handful of companies are talking about helping publishers implement next-generation paid-content platforms for their digital properties. One startup is actually doing something about it.
Zuora, a Redwood City, Calif., developer of subscription-based billing and payments software for the technology industry, recently launched Z-Commerce for Media, a platform to help publishing companies implement and manage online subscription models. It says it’s working with two big media customers: GigaOM, the tech publisher that launched its GigaOM Pro subscription service back in May, and Reed Business Information, the large trade publisher, which plans to implement a partial pay wall for Variety early next year.
Test and learn
As publishers struggle to determine the best way to monetize their content online, products such as Z-Commerce for Media are designed to help them find the best fit for their audience without locking them into one method. In this regard, Zuora's software utilizes common test-and-learn principles that brand marketers have used for years.
“Strong marketing organizations are constantly testing messages and products and pricing plans with their customers,” says Zuora CEO Tien Tzuo. “It’s about understanding what your customers are trying to do and what your price sensitivity is. There’s a path of exploration and learning that media companies will have to go through to figure this out.”
Publishers can test various pricing methods for digital content and use the software to make rapid changes in response to various customer metrics, such as conversion rates or churn.
“The tech industry has gotten really good at the ability to iterate quickly with things like agile development,” says Tzuo. “That’s what the media industry needs to do.”
The Z-Commerce for Media platform includes content-mapping tools (still in beta) that will enable publishers to segment different types of content behind a pay wall. Through tagging or URL mapping, a publisher can earmark specific content to be gated, such as by publish date (e.g., older than 7 days) or topic (e.g., Op/Ed, Sports & Entertainment).
The Z-Commerce software is based on an open set of APIs (application programming interfaces) that developers can use to integrate with legacy print subscription-management systems, making it easier for media companies to manage subscribers across both channels.
Pricing for the software is based either on the number of invoices processed or the dollar amount put through the system (Zuora takes a 2% cut to start; as volumes go up, the percentage goes down).
Tzuo’s advice to media companies considering a paid content strategy: Start small. “Try something simple, such as a low monthly fee, and see what happens,” he says.
Publishers also need to understand the broad spectrum of subscription options available to them. Paid content “is not an all-or-nothing decision,” says Tzuo. “You can have 80 percent of your content unpaid, to drive eyeballs, and you can monetize the rest.”
One model that Tzuo does not have a lot of confidence in is micropayments. “The media industry is obsessed with micropayments, but I think it’s a red herring,” he says. “Trying to make money off of a 10-cent transaction doesn’t make a lot of sense.” A better alternative for these one-off transactions, he believes, is a prepaid option where the user purchases a $5 or $10 plan for viewing a certain number of articles or other assets.
Tzuo says his company wants to “save journalism.” While that’s probably overstating Zuora’s impact, the fact that they’re helping media companies address a fundamental business problem – an overreliance on advertising revenues – is certainly a step in the right direction.
“Media companies are obsessed with advertisers,” says Tzuo. “Certainly there are advertising models, but you should also get your customers to pay you. Every other industry approaches business that way – there’s no reason why media companies shouldn’t be thinking that way as well.”