Znak it! Pywall Strategies Feb 2012

by Znak, Inc.

Paywall or Not To Paywall: Alternative Solutions

Revenue Trends, Warsaw April 2012

All presented here materials, ideas and business concepts are confidential. They are the property of Znak, Inc.,a Delaware corporation; and, they cannot be used, copied, distributed nor shared in any form and means(the appropriate US and international laws apply). Znak it! Is a registered trademarks owned by Znak, Inc. The Znak it! business idea and a micropayment solution are protected by the USA and international patent laws – New US Provisional Application No. 61/046,623

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Copyright (C) 2009 by Znak, Inc.

A Technology Solution for Publishers

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Payment Technologies do NOT Sell Content

But They Can Help Publishers and Their Users Make Payment Transactions Easy & Fair


$240 Billion Loss in Ad Revenues since 2001 Peak

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1950

30% cut


2011 The Rise of the Paywall?

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“The metered wall is the coolest thing since the beginning of the WWW.”

Steve Brill

“The NYT paywall is working……it’s a dream.”

Felix Salomon


2012 – Paywalls Revisited

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The NY Times Paywall is Stupid… Really Dumb

Greg Satell

“’a cartel of news’…’walled gardens’…”

Clay Shirky


Lessons Learned

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Expensive to start; technologically challenging; costly to run/market.

Paywalls can be:

It took the NYT two years and $25 to $45 Million to launch its ‘metered wall;’

Bloomberg, paidContent

Additional $13 Million to promote it in 2011 alone;

New York Times

Given the 390,000 new subscribers at the end of 2011 -- $97 to $148 to acquire one subscription

Loss of traffic and ad revenue


Lessons Learned

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Expensive to start; technologically challenging; costly to run

Require large scale; conversion rates slow down & plateau; ‘silo effect;’

Paywalls can be:

Before paywall the NYT traffic was about 39 - 41 Million uniques per month (US traffic only);

Down 20% in Dec 2011;

With 390,000 subscribers – 1% visitors signed up;

Subs growth slowed from 124% Q1 to 20% in Q4


Lessons Learned

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‘Walls,’ after all – barriers to readers’ access & engagement

Paywalls can be: Long-term commitment

with up-front payment and low 34% renewal rate, compared to 55% (print);

Magazine & Newspapers Circulation Institute

Substantial cost if multiple sources/subs desired;

Registration (ID/PIN/cc info) – can be lost/stolen;

50% apps have problems recognizing sub ID/plans;




‘Walls,’ after all – barriers to readers’ access & engagement

Media/publisher-centric

Lessons Learned

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Paywalls can be: One-way ‘engagement’;

You pay, we deliver what WE want, incl. “free” or undesired content;

Only 20% of subscribers download content;

Magazine & Newspapers Circulation Institute

Reliance on (exploitation of?) the most loyal (local) readers; passers-by a second category?


Need Something Better

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Copyright (C) 2009 by Znak, Inc. 11

Alternative to Paywall


What is it? For whom?

Znak it! – an integrated premium content curation and monetization

platform

Znak it! – a frictionless, safe and private way to access premium

content as-you-go

Znak it! – a direct-to-user promotion channel and market

research toolMarketers & Advertisers

Content Providers

Web Users

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Marketers – the Third Winner

Web users can buy Znaks (credits), using credit cards, PayPal, bank transfer, etc.

Or, they can earn Znaks through Marketers’ sponsorship.

“Free” or ad-sponsored Znaks earned in exchange for a clickthrough (CTR) or an action (CTA), e.g. answer to a mini-survey/market poll.

1 Znak = $0.01 or an equivalent in other currencies

A Win-Win-and-Win Solution

ECOSYSTEM


Business Model Options & Benefits

Paywalls vs. Paygates such as Znak it! SaaS -- no set up and system maintenance

costs; up to 94% return;

Also for the “long tail;” truly World Wide;

Technology- and portal-agnostic; Flexible, a la carte, on-demand access;

Supports different payment methods, incl. donations and ad-sponsored access;

User-centric, payment as social engagement, content sharing & recommendations;

Private, intrinsically safe; can be used for anonymous access – without registration; frictionless

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Expensive, low ROI;

Require large scale; divide users into categories

Create ‘silo effect;’

Closed, rigid, might cannibalize other sources of revenue;

Media/publisher-centric , not engaging


Znak it! Market Niche

Znak it! Payment Niche

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0%

20%

40%

60%

80%

100%

120%

6.00%3.90%

0.216666666666667

0.0884615384615385

1.029

0.529

0.279

0.179

0.0540000000000002

Per

cen

tag

e C

om

mis

sio

n

Cost of Znak it! as compared to PayPal charges

Transaction value

PayPal Regular

Znak it!

PayPal Micropayments


Examples of Znak it! embeddable links and widgets – as payment gateways.

Customizable shapes.

Easy, copy-and-paste insertion of Znak it generated codes by Publishers.

For the User: two mouse clicks to get access to and pay for selected content. Payment authorization and fund transfers done by the system in real time, SSL-encrypted, safe.

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An Example – Online Newspaper


Publish on Third Party’s sites

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Examples of Provider’s content submitted to Znak it! Agenda for additional distribution & monetization

Also, in soc nets Facebook or Twitter

Can be self-administered; Access to Agenda via customizable Admin Panel

Data mining and reports


User Has a Choice

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Alternative to pay;

User access to paid content sponsored through opt-it advertising

“Free” to User


Ecosystem

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Benefits to Content Providers Marketer or Advertiser and Users

In exchange for User’s data or action;

High CTR and competitive CPC/CPA

Much higher conversion rate than when using paywalls


Frictionless Instant Access to Content

Two mouse-click access and authorized payment;

No delays, no need to leave content page or enter any codes, PINs; no tracking

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Samples of Successful Application

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In April 2011, we developed a new version – won the Florin Award for the most innovative online transaction service (EPCA, Amsterdam)

The current platform was launched in August 2011 (public beta) – in thefirst three months, 320 content providers and 52,000 users have registered.

Now, we run several pilot projects with various content publishers, incl.:

two regional news/magazine publishers a photo sharing and media site, similar to Flicker an online music service and soc net global producer of video content: sports, fashion

& entertainment


Pilot Cumulative Results

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Types of Content Supported No of Content Pieces

Price/piece in Znaks

Video clip (sports) 15 199 Music file (MP3 download) 90 99 Article bundled w/photos 60 49 Single article, free lead 30 39 Crossword puzzle 30 25 Photos 120 10

Total/average 345 52

1 Znak = $0.01

Based on the first month of each of the 5 pilots (Nov 2011 – Jan 2012)


Type and No of Content Price/piece in Znaks Qualified Clicks Clicks/piece

Video clip (sports) 15 199 678 18.0% 45 Music file (MP3 download) 90 99 1,297 34.4% 14 Article bundled w/photos 60 49 465 12.3% 8 Single article, free lead 30 39 397 10.5% 13 Crossword puzzle 30 25 169 4.5% 6 Photos 120 10 761 20.2% 6

Total/average 345 52 3,767 100% 11

‘Qualified clicks’ equals content purchases – 3,767 out of 43,299 visits, or 8.7%.

Assuming quality/user interest, etc., are all equal, music was most popular overall; however, sport video clips generated the most clicks per unit.



Type and No of Content Price/piece in Znaks

Qualified Clicks

Revenue in Znaks

Revenue/piece

in Znaks Video clips (sports) 15 199 678 134,922 43.0% 8,995 Music file (MP3) 90 99 1,297 128,403 41.0% 1,427 Article bundled w/photos 60 49 465 22,785 7.3% 380 Single article, free lead 30 39 397 15,483 4.9% 516 Crossword puzzle 30 25 169 4,225 1.3% 141 Photos 120 10 761 7,610 2.4% 63

Total/average 345 52 3,767 313,428 100% 918

The average is $9.18 per piece of content; however, the revenues vary a lot between the type of content with video clips generating nearly $90/piece


Copyright (C) 2009 by Znak, Inc. 25 / 11

Pilot Results, by Gender & Age

58.9%

41.1% Males Females

13.8%

16.5%

23.1%

22.4%

24.2%

18 to 24

25 to34

35 to 44

45 to 54

55+

Based on a sample of 43 299 Unique Users

The sample represents gender and age distribution typical for online sites with high=quality news/magazine content, with a majority of users being male and older.


younger

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Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+

58.9%

41.1%

13.8% 16.5%23.1%

22.4%

24.2%

65.3%

34.7%

20.6%

29.0%

21.0%16.5%

12.9%

Unique Users Unique Buyers

Number of Unique Buyers – 1 281

When compared to the Buyers Population, the distribution shows a considerable shift – younger users are more likely to be Buyers.


Revenue Per Transaction and Buyer

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Total Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+

$0.83 $0.79 $0.92

$0.85 $0.73

$1.00

$0.75 $0.85

$2.45 $2.49 $2.36

$2.79

$2.20

$3.06

$2.18

$1.79

Revenue per Transaction Revenue per UB


Conversion Rates by Gender and Age

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Total Males Females 18 - 24 25 - 34 35 - 44 45 - 54 55+

3.0% 3.3%2.5%

4.4% 5.2%

2.7%2.2%

1.6%

8.7%10.3%

6.4%

14.5%15.6%

8.2%

6.3%

3.3%

Conversion Rate (Buyers/Uniques) Conversion Rate (Buys/Uniques)

Conversion rates 9 to over 15 times higher than those gener-ated by metered paywalls (1%)


In Summary

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Technology Can Make Payment Transactions Easy & Fair

Technology Can Help Publishers Generate Online Revenue

Open, On-Demand Payments – like Znak it! – Work Better than Paywalls, esp. with Younger Users

Znak it! Shows about 9x Better Results than Paywalls

In Certain Age Groups Even 14 - 15x Better

ZNAK IT! SO,…


2012 The Year of the Dime & Nickel?

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“As the economy sputters along, look for sites helping you sell almost anything you can imagine and making you a “fortune”–one micro payment at a time.”

Lance Ulanoff, Mashable

Thank youGreg [email protected]

Znak, Inc , Sunnyvale CA, USAWarsaw, Poland

31Copyrights © 2012 by Znak Inc