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Why the Toronto Star sees micropayments as a key part of subscriber acquisition

The Toronto Star’s Chief Revenue Officer Brandon Grosvenor says that they are very much in the infancy of their micropayments experiment - or as he calls it, microsubscriptions. “We’re not delusional in thinking this is going to replace the layers of stable subscriptions,” he told Media Voices. “But we’ve been extremely impressed, surprised and optimistic about this becoming part of our acquisition strategy.”

Back in July, The Toronto Star announced it would begin testing micropayments on its website. It is the first major news outlet in North America, and one of the first more widely, to take the plunge with a pay-per-article model.

Whether it’s paying pennies to access single pieces of content, or hopeful Spotify-style models of news consumption that would pay publishers per read, the topic of micropayments is one that simply refuses to die. Blendle, which pivoted from micropayments in 2023, may have been the biggest experiment yet in selling news by the article. 

As the number of publishers putting paywalls up has increased, the clamour from audiences for a pay-per-article option has only grown stronger. Yet, for a wide variety of reasons, few publishers have attempted to implement casual payments. The Washington Post is the closest high-profile example, as it is experimenting with week-long passes which don’t renew automatically, with variable pricing between $4 and $10.

Perhaps the industry needs saving by Elon Musk’s one-click pay-per-article solution, the promised rollout of which is now 17 months overdue.

So what makes micropayments appealing to Canada’s largest online local news brand? This week, Brandon Grosvenor, Chief Revenue Officer at parent company Torstar, joined The Publisher Podcast to explain how they’re using micropayments as part of their subscriber acquisition strategy.

Identifying a place for micropayments

On the surface, the Toronto Star looks much like a typical regional news site, with a  range of local and regional features, investigations and news topics covering everything from politics and sports to real estate, entertainment and business. But unusually for a publisher, they have what Grosvenor described as “one of the most robust and stable print subscriber bases in North America.”

This has allowed the title to experiment as they aren’t under as much pressure to chase the digital subscription line as aggressively. “But we’re at the point now where we have to get much more serious about digital subscriber acquisition,” Grosvenor noted, pointing out that the conflict with Google has hit the acquisition strategies of many local publications in Canada particularly hard.

Rather than building micropayments to be their own revenue stream, the Toronto Star sees their place as part of their subscriber acquisition strategy. “It’s an entry point. It’s an organic acquisition channel versus pumping all your money into search and trying to acquire customers off the backs of search engines,” Grosvenor said. 

“There’s a lot of evidence that there’s a certain subset of readers that are interested in specific content, but will never become a core subscriber. We would obviously rather have a valuable, stable subscriber. But if there’s an opportunity to open up our advertising ecosystem a little bit more through pay-per-article, while getting paid for our content, that’s a compelling reason for us to experiment.”

Only an estimated 5% of a publisher’s digital readership will convert to pay for a full subscription. Grosvenor sees micropayments as a first step to building a paying relationship with the rest, in the hopes of converting to higher payments at a later date:

“Where pay-per-article or microsubscriptions have [a place] is exposing people to the quality of content they get; the ability to show them that, if they’re paying a premium to read one article, would you rather for the price you’re paying have unlimited access?”

Grosvenor emphasised that the publication has been conservative around digital subscriber acquisition, and has resisted deep discounts or aggressive advertising strategies. That definition is up for debate though, as a current offer shows $1 for 6 months before going up to $19.99 a month for digital access. Yet with Toolkits reporting that pricing for a single piece of content would be 75 cents, any reader willing to get their credit card out for a single article or day pass may well be tempted to upgrade.

There is also an age-based driver in play. Grosvenor said that although the print subscriber base is stable, they tend to skew older, with a large number having been subscribers for decades. That’s great for a reliable revenue stream, but is not how younger people prefer to consume content.

“If you’re under 35, you’ve probably never paid to subscribe to a news product,” Grosvenor said. “There’s tonnes of research out there that says once we lost control of distribution… we created a behaviour, a muscle that said, ‘Hey, why would I pay if I can get it free?’”

But he believes there is an untapped audience that will pay for quality news if they’re warmed up to it. “They’ve been exposed to [subscriptions] through things like iTunes, Spotify, and other subscription-based models,” he emphasised, saying that the Toronto Star is taking a very conservative approach to experiments. “We are less worried about cannibalism because of the stability of the subscriber base. Our target is really around younger consumption.”

Initial tests with pay-per-article

The Toronto Star is currently running two main tests with what Grosvenor calls ‘microsubscriptions’. The first is underwriting of access to the site for educational and medical institutions, and charities. Corporations have been willing to sponsor day passes to students at Toronto educational institutions, and the payment wall is being used to facilitate this.

The second test is targeting pay per article and day passes at lapsed subscribers, and people who are identified as heavy users but haven’t been willing to pay for a subscription. A few months in, and Grosvenor has found the results encouraging:

“We’re extremely surprised by the conversion of lapsed subscribers that have come in to buy different articles,” he shared. “We’ve had a lot of success out of the gates, but it’s really around those that we know have lapsed, haven’t had a subscription in six months, and now potentially want to bring them back in and expose them again. 

“Our acquisition strategy has been solid from that standpoint, because these are people that in the past were willing to pay for a subscription, who may now come take another tour and look around.”

So far, the micropayments wall hasn’t been shown more widely. Grosvenor said the trial was likely to be expanded to general website visitors at some point, but placed to try and convert to subscriptions rather than focus on developing it as a standalone revenue model.

“We’ve been extremely impressed, surprised and optimistic about this becoming part of our acquisition strategy,” he emphasised.

Wider potential for micropayments

Despite the focus for Grosvenor of micropayments being used to convert to full subscriptions, he does see the potential for developing their use further, and acknowledges that their current model is definitely a first iteration.

“We approach everything with a certain level of scepticism, but also open-mindedness to see if there’s a spot in the ecosystem,” he said. One hope is that a by-product of the tests will be people who aren’t willing to pay for a regular subscription, but will pay $1 every four to 5 days to read an article.

This is also where Grosvenor sees newsletters as having a valuable part to play. These can be used to push articles out, giving people who aren’t subscribers but on the newsletter list a chance to buy single pieces or day passes if they aren’t convinced by a full subscription.

As a local publication, The Toronto Star will always have a ceiling on the number of subscribers they can convert. “The [Toronto] Star being the largest newspaper in Canada, obviously there are a lot of people reading content outside [the geo] that we don’t monetise through traditional advertising channels or traditional subscriptions,” Grosvenor explained. “So in order to appease those that want to consume our content on an infrequent basis, it does give us an opportunity to monetise and be much more aggressive on the pricing side, because we know you’re not going to be a long-term subscriber. 

“The advertising that’s localised is of no value to you. So how do we make sure that we’re being smart and monetising that content?

Single article payments and day passes can be of benefit here as they offer those who live in London or New York for example, a chance to pay for the content. “We probably won’t see [those people] again, and that’s fine, but our belief is still that good quality journalism, those that are quality content producers, deserve to be paid for the content they produce,” Grosvenor said. 

The logic checks out. Whether audiences will get their wallets out for publications they have infrequent relationships with remains to be seen. But the more publishers that try it, the more exposure audiences will get to the concept of articles having monetary value.

What can publishers learn from The Toronto Star?

It may only be a few months in, but Grosvenor acknowledged there had been some challenges in balancing the advertising and subscription ecosystem. “We’re in a time of great demand on the advertising side as well,” he said, noting that all revenue streams have to be taken into consideration rather than rushing out tests more widely.

Grosvenor does have plans to fully implement the micropayments technology across all Torstar’s subscription-driven regional daily websites. The technology is provided by Axate which allows users to have a single login and add credit to be used across multiple websites, rather than needing to set up payments on a per-publication basis.

“We’re still very much in our infancy with micropayments,” Grosvenor added. “I’m not suggesting this is going to be a revenue stream that gets stacked up as one of our top performing contributors. However, I still think it’s a piece that fits into our acquisition strategy, and into the marketing funnel quite nicely, especially as we try and limit our reliance on search and social.”

That, in a nutshell, is what publishers should be sitting up and taking notice of. It’s never been about micropayments versus subscriptions, or the volumes of traffic needed to turn pennies into sustainable revenue. The Toronto Star is demonstrating - cautiously - that it can use micropayments effectively to offer ‘first dates’ rather than a long-term ‘marriages’ to audiences.

Anyone else for an, ‘I do?’

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