A new startup aims to help online media monetize by making it easier for consumers to access paywall content without being locked into multiple subscriptions.
Zette is being demonstrated at TC Disrupt this week as part of the Battlefield 200 cohort, attempting to accomplish something others have attempted before. Since the beginning of time (at least since the advent of the internet), digital media companies have been looking for new ways to make money. While traditional newspapers and magazines’ path to monetization was relatively easy, as they charged money for a physical product (usually filled with paid advertising), the online sphere had to flirt with a variety of models, from advertising and events to — increasingly, it seems – paywalls.
But while paywalls promise clear and predictable revenue, it’s a difficult model to scale outside of big outlets like The New York Times. People don’t want (or can’t afford) dozens of subscriptions, but that doesn’t mean they aren’t willing to pay some access individual articles when given the opportunity to do so.
There are already subscription-based services like Apple News+, which bundles stories from hundreds of publications, and pay-per-article alternatives like Blendle, which allow publications to charge microtransactions for reading one-off articles. Zette sits somewhere in the middle, charging a $9.99 monthly subscription for access to 30 articles from its partner publications, though it’s also experimenting with different pricing plans for those who want to purchase more credits. However, if the user doesn’t use their credit in a given month, it doesn’t carry over to the next month – everything resets.
The story so far
Zette was founded in San Francisco in 2020 by former Forbes reporter Yehong Zhu, and after raising approximately $1.7 million in seed funding last year, the company officially enters private beta for waitlist members this week before it goes public early next year. For now, Zette has signed deals with New Scientist, Forbes, McClatchy, Boone Newspapers, and Haaretz, with plans to add “hundreds” to that in the coming year.
So how does it all work? Well, the user downloads and installs a browser extension, signs up for a Zette account and subscription, and when Zette discovers a paywall on a partner site, it invites the user to unlock the item by paying a single credit .
The company said it was also considering allowing users to renew some of their credits, albeit with a time limit on when they must be used.
Perhaps the key point to make here is that unlike something like Apple News+, rather than serving as an aggregator, Zette allows them to maintain relationships with their readers since their content is on their own site remain.
“Unlike within the Apple News ecosystem, publishers control the display and messaging of their content,” Zhu said. “Readers can open an article from anywhere — Twitter, Facebook, Google, iMessage, Slack, the news sites themselves — and still use Zette to unblock the article.”
Zette initially focuses exclusively on the US market, but also aims to start on international markets.
“We are an American company that primarily focuses on US readers,” Zhu said. “We’re investing heavily in marketing and growth, particularly when it comes to onboarding younger readers – Gen-Z and Millennials.”
There may be some shortcomings with this type of model. The benefit of subscribing directly to a publication is that you may not enjoy everything in it, but you will likely find some articles that you will enjoy. With a subscription-based, pay-per-item model, you don’t know if you’ll like it until you commit to the cause. Additionally, you might not stumble across 30 paywall articles in any given month that you want to read. So, with a $10 monthly payment, it’s possible that some subscribers just aren’t getting any value out of it.
There are some elements of Blendle’s model that make more sense. There’s less pressure on the reader to consume a set number of monthly articles as it’s built around individual microtransactions – put money in your account and use it whenever you want. But while this might be a more consumer-friendly model, it doesn’t necessarily benefit the publication or the company behind the technology. According to Zhu, this type of business model only encourages “sporadic usage and not sustained readership,” ultimately leading to higher churn and poor monetization.
“We also believe that consumers don’t like putting a dollar and cent value on every article they want to read,” Zhu continued. “It makes them feel like ‘nickels and dimes.’ For this reason, Zette took inspiration from video games where you buy bundles of “virtual coins” for in-app purchases: we replace money with credits to distance the customer from the buying experience. This makes every transaction smooth and also makes monthly top-ups easier. We believe that a microtransaction-like experience on the frontend and recurring revenue on the backend are the best of both worlds.”
Additionally, while a traditional news subscription offers benefits, readers can read everything from sports and politics in a single publication, but not everyone wants to read a newspaper cover to cover.
“Traditional news subscriptions serve one target group very well: Heavy readers,” Zhu said. “These are readers who encounter paywalls often enough and frequently enough to decide to become paying patrons of a single outlet. The majority of online readers are light readers: they browse for news, they only want to read one article at a time so they can’t justify the cost and inconvenience of signing up for a subscription, they’re relatively brand-agnostic, they’re price conscious and searching largely after a variety of content rather than just getting all of their news from one publication.”
In addition to the browser extension, Zette is also working on a mobile app, which should be ready by Zette’s launch in early 2023.
For now, however, Zette said it has started granting access to a small percentage of users from its waitlist, who will have free access for the rest of this year, although in return they will be tasked with providing feedback to the company on ways to improve it Product.