February 18

What’s the REAL deal behind the new ‘pay wall’ trend…

17  comments

So if you’re not caught up on the latest and greatest marketing trends don’t worry they change quickly. But you know that and that’s why you’re reading this…HA!

So, a lot of big companies (Apple) and big marketing guys (Deiss, Vaynerchuck, etc) are talking about how free is dead and how moving to micropayments for free content is the wave of the future. Apple’s a big company so maybe it’s not just another tricky trend, but without BILLIONS behind your company hear me out here…

First of all, I think it’s funny how it’s being pushed by so many people as the next big thing. Almost like a forced convincing! HAHA. “Hey everyone else is doing it and it’s time you do it too!” Doesn’t mean it’s wrong or bad, but just funny to me. Now not everyone is on board, but we’ll see how many others jump on board.

Second, I actually think it’s a pretty good idea and here’s why…

SELLING IN THIS ECONOMY IS HARD!!

‘Yeah Brad, I know…’

But this is what I ask my clients…

“Our end goal is to get the person to jump over our 8ft fence, because we get paid 100 bucks per person that jumps the fence…right? So do we lower the fence and only get 50 bucks per person that jumps over? OR do we stop trying to give 400lb people a boost and only focus on people that could actually jump it?!?!”

Strange analogy, but the ‘micro payment’ pre-qualifies your potential buyers. You’re just making sure all your people can jump the fence. It’s a great move that WILL MAKE PEOPLE MORE MONEY. You’re getting a lot of the tirekickers out of the mix, and basically taking up the quality of leads and potential (big ticket) buyers.

It’s ALL about qualified leads…and what better qualification then someone who’s actually bought something (even if it’s just a buck). So it’s a GREAT idea, but then you’ve got the problem of selling them, but not at 2k but at 2 bucks. Still selling, but not as easy as free. But it’s doable.

Now, with my clients I’ve taken a different approach to pre-qualifying and CONVERTING without the ‘micro-payment.’ We’re still giving away a ton of free content and offers, but our lead conversion is a bit different, but still bringing in HIGHER qualified leads…like the ‘micro-payment’ model. And I want to tell you…

But you’ll have to pay for that…joking. But I’m not telling you.

I’m not so smart that I’m outwitting the ‘masters,’ I just look at it a bit different, that’s all.

So what do you think? Will you start charging for your free content? Will you PAY for content you like or will you find it somewhere else? Will you pay for my content?? ( <— most important question to answer in the comments hahaha)

Honestly, let’s start a discussion on this!

Best,
Brad

P.S. If you disagree TELL ME…and try to give a few reasons for the benefit of the class 😉


Tags

Brad Stafford, free content vs paid content, Gary Vaynerchuck, new pay wall trend, paywall, Ryan Deiss


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  • I think the old fashioned way is still the best. Free leads for free content. Then find a way to monetize the free leads so as to not be wasting your time with them.

    Then if you provide enough value they will someday become customers… or not…either way, as long as you have a way to monetize free leads you are still way ahead.

    The hurdle is getting folks to come out of pocket. Are you seriously gonna go through what it takes for a buck or two?

    • I agree, free can always be the best way if you can convert them. Sometimes getting someone over that first step by pulling out a buck MIGHT be the first step towards spending more. But thinking about it from a buyer, if I want something and I’m convinced I need something price won’t be the biggest factor.

  • Great article Brad. I think many people are getting used to paying a few dollars for instant access to premium content for Kindle, iPhone/Android apps, Steam games, and other things on the internet. Why can’t it work for our industry? Especially to qualify people for higher sales. Interesting idea; going to have to think about this more.

    • Keep me posted David as I think it’s doable, but again kinda a pain. Might be an easier jump from one dollar to one thousand…but is that 1.00 that much more valuable then the free lead??

  • Hey Brad,

    Thanks for the article. I think the answer to this question is heavily dependent upon what current vendors in your sector are doing in this regard, which would effect the supply/demand scenario of the kind of content you are offering for free or for micro payments. If you are offering content for $3 that most others are offering for free the path of least resistance has the majority of people at least checking out the free content first. Even if they come back to your $3 content later there will be very few who do this as the free content has quenched the interest of people interested in this type of content.

    I think the reason why the micro payment scheme currently used by companies like AAPL has been so successful is for a few reasons. The first is that software, in the form of games, had formerly been fairly expensive as it was generally experienced on a platform that facilitated a much longer experience with the software product.. ie, if you are playing xbox 360 you are at home on the couch, which is a place where you can spend a while doing any given activity, and because of this relationship with the product people are willing to pay more for it. So how is AAPL able to disrupt this market this market if it has found it’s balance already? Simple, because when you are playing a little game on your iphone you are generally doing this for only a few minutes. iphones can be taken virtually anywhere, to the doctors office where you have a few minutes waiting for your appointment, to school where you can tap out a few moves on a skateboard game between classes, and on the car ride to both of these places. The point is, now that people are only using these products (apps) for short increments of time the developers do not have to put as much into creating an elaborate experience, which in turn costs less money and takes less time to create, thereby enabling them to charge much less for the app and the ability to reduce overhead drastically has afforded them the ability to focus on quantity of content vs quality of content. I think the beauty of the app revolution is that AAPL did not only exploit a market, but actually created one when they created the iphone, which was indeed the same demographic that had formerly been participants in the traditional gaming platform market.

    In summary, one of the most prominent reasons the app revolution is so successful is because people were introduced to a product that offered a similar experience for much less utility.

    The app revolution has been a huge undercut. Whereas if you begin charging $3 for something that you’ve been offering for free you are in effect raising the price in the the traditional way, which people don’t like and naturally less of them will respond to thereby leading to less participants in general. Which might indeed work if your current turn over is much less than you would like due to diminished quality of leads. Which calls into question your ability to reach the right people in the right way.

    I think after thinking about all of this the best solution is to feel out the market until you begin to see the better results. My personal approach is to first form a plan based on what I know about my market and then execute that plan, but trial and error can also be a very powerful learning tool when your goal is to make more money. The equation is simple in this case, if you begin making more money you are doing something right!

    Gabriel

  • Great points Brad (et al). I think the other point with regards to the “app-ification” and pay wall trends is that AAPL is more than a little full of it. What apps and content garner the premium price? The ones that have the freemium model.

    Try one level of Angry Birds for free (or make the mistake of letting your kids) and just TRY to not end up buying the game for $3. There’s no way.

    Same thesis for trading or other content. Give something that has real value away (your professional opinions on a marketing blog, for instance) and draw others in, credentialize yoursself, and seek to gain paying clients.

    The long-term trend away from forcing people to buy something as their first interaction with you professionally is still intact. Those who can think, write, speak, create videos that are high quality and draw an audience will win business. Those who can’t will try to charge upfront before they are proven empty.

    • 100% right!!! The trick with apple is that they have a HUGE free offer (app) market to bring in qualified leads. It’s about quality and I’d guess that for every 1 app purchase there are 20+ free ones to get them in the door!

  • Dear Brad-Ford (combo of Brad Stafford),

    I think it’s a industry/demographics thing…which is why, like you said, just because it works for a big company or a small company doesn’t mean it’ll work for you. Or maybe it’ll work, but that segment of your potential customer base is so small it’s not worth the effort. I think Apple’s just carrying over with microcharging on iTunes to the App stuff, so their model works well for leeching the pockets of teens and young adults with limited allowances per month but wlling to spend it whenever their parents give them a recharge.

    does that apply to our industry? i think finance industry is quite different…so yes, thats why readers NEED to keep reading FMPGLLC.com…because brad has the answers for finacial marketing Apple doens’t have.

    but no, i would not pay (because you’re not that cute).

    • Jeff maybe if I put up more pics of the kids you’d pay?? Haha

      Agree with comment as well, the thought of a CEO or trader paying a few bucks for something might not even hit their radar…as it might come across as low quality or just a way to glean more money without providing the best stuff.

  • Good article for discussion, Brad.

    I find that I can qualify my leads without having to charge. I provide a wide range of free offers and services and based on what was selected, I can tell if the lead is a raw beginner, or someone who has already done some studying and is ready to take the next step, or someone who has trading experience. When someone requests a large number of items, especially if spread over several days, then I know that they are very pleased with the content and they, in turn, are good candidates to “up” sell. On the other hand, most of those who are “just looking” will not part with their personal contact info so they are naturally and correctly filtered out of my lead flow.

  • I’ve got a wild idea. Test it on your site and see if it works “better” for you (ie, better than your current model). Who cares if it works for someone else.

    • Good call Eric…but I’m in the camp of free works better. I might create a site using aff financial content for a low-end pay-wall to test in this space. I’ve tried it with a client using his external ads and results didn’t differ by much regarding upsells from the lead gen that goes free…thanks for the comment!

  • Great article Brad, thanks for sharing.

    I’d like to add to this conversation with some experience in this matter. A couple years back we tested something similar to this. We were doing like everyone else in our space (investment newsletter content) where we brought in leads with free content and e-letters then tried to upsell them into paid subscription services.

    We wanted to test if there was a way to shake out the “takers”–those who will never pay for ANY content–from the people who value investment research content enough to pay for it.

    We’d been through the tests like so many others–free 30 day trial, 30 day full refund with payment upfront, step up payments, etc.

    We wanted to see if the difference between takers and payers was more than just the dollar amount. We wanted to test the “get off your rear and pull out the credit card” divide.

    So we set up a split test on one of our products.

    Group 1, the control: trading service at $49 a month, upfront payment of $49, 30 day full refund.

    Group 2, the test: trading service at $49 a month, upfront payment of just one dollar, $49 billing at end of 30 days.

    We ran this test for about a month (we have several products in the marketing mix, so this one got promoted about 10 times during the month between dedicated emails and e-letter editor lifts). Each offer received the same number of exposures (dedicateds or lifts), targeted roughly the same number of people, used the same copy, promoted the same product. Only the offer was different.

    The result:
    – Group 1, the $1 offer, brought in substantially more new subscribers. No surprise.
    – Group 2, the control offer, retained more subscribers, in percentage AND absolute terms.
    – Group 2, the control offer, made more top line revenue for us.
    – Group 2, the control offer: new subscribers had a higher lifetime value.

    So, the takeaway for us was that while there’s still a taker/payer divide, the micro-payment type of approach did NOT work. In fact, with credit card processing fees and customer service time, it actually cost us money.

    I realize this is only one test with one publisher and I welcome anyone on this thread to run their own test and report back the findings, but as of right now I’m not convinced the micro-payment approach works for our industry. At least in terms of selling subscription–continuity–products.

    The difference with Apple is that when I buy a song for $99 (and technically I’m not buying it, but licensing it) I get that one thing I wanted at that one time. Investment newsletters are different in that they are really about relationship and trust selling. Now, I’d be interested in if anyone has taken their investment newsletter content and commoditized it into content chunks, like reports, that can be sold one-off. That might be a case where the micro-payment approach can be used to upsell the subscription product. But as several folks have pointed out, our market space gives this stuff away for free and that’s the user expectation, so you’ve really got to have something different to get that little bit of money.

    Lee

    • Lee great insight! Being so transparent is much appreciated and I know you guys do a LOT of testing to ensure success. Was the economy in the same place it was now?? Might have made a difference from now until today…but I doubt it…you?

  • I think the internet marketers promoting the micropayments are sort of grasping at straws in reaction to changed in the internet marketing niche and launches in that niche that have been failing. So they are trying something different.

    I think the free to pay is fine and is still working fine in the financial world. It is also what people are pretty much used to and comfortable with, I don’t really see big drawbacks to it.

    Truth is on any email list less than half the people are going to open the emails and read them and know what is going on no matter what you are doing.

    Also there are some people who simply are not interested in buying a trading service, newsletter etc for whatever reason, but they will buy something cheaper like a book or dvd. Perhaps they fear making a bigger commitment or simply afraid of having their credit cards charger over and over again. Could be different things, but I just think that there are a percentage of people who just don’t want to buy and trying micropayments or some other gimic isn’t really going to make much difference.

  • Brad,

    This was about two years ago, so you’re correct, the economy was in a different place. It might be worth testing again, though I suspect that the results will be similar in that you’re still dealing with the buyers and never buyers. I’ve found in the past that you can expect a certain number of never buyers to sign up then cancel within a few days, or on the other end just before the full refund period is over. I’ve heard anecdotally that some even set calendar reminders to cancel so they don’t get billed. Kind of stinks, but there’s not much to do about it unless we switch to a no refund policy.

    And correction to my earlier post, I meant 99¢, not $99, for songs from iTunes. Sorry for any confusion.

    We’ve also tested straight up sales of premiums as well. For example, selling the “special reports” we’d normally give away. We tested $9.99, $19.99, $39.99, and $97; all without commit to continue a subscription. And then did follow-up marketing afterward.

    Unsurprisingly the $9.99 sold the best, though $97 came in strong, too. That was unexpected. What we found was that there we few takers for subscriptions on the follow up marketing. We even had the benefit of the stocks in the report doing great during the time from when people bought it to when we finished up marketing. Our thought is that these were people looking for one-off sale items, like you might get at Amazon.com or Buy.com, versus looking for a long term subscription commitment.

    I’m not sure that $9.99 counts as a micro-payment for content in the same vein as you’re discussing, but it’s certainly much, much lower than what everyone in our industry charges for newsletters.

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