Contenture Launches. Micropayment-Based Freemium Model
techcrunch.com
techcrunch.com
Step #1: Convince my user to pay $6 a month forever to use my website (and by the way a bunch of other sites which are not relevant to them).
Step #2: Receive $1, once, from Contenture, plus a fraction of $4.80, assuming I keep them coming back to my site.
I have an alternative freemium model proposal:
#1: Convince users to pay $6 a month for my site.
#2: I receive, hmm, $5.50 a month or so, depending on my credit card processor.
But what about users who get only $0.50 of value from it for a month or two? You'll never get them to pull out a cc for $0.50. However, if they already signed up for contenture, you still get your $0.50.
So no, it won't be one site making the sale. One site plants the seed of the idea, then another waters it a little, and another some more, until finally the user feels a gush of appreciation and/or need for one of the tiny upgrades. Then every site gets a proportional cut, from that point on.
Even if none of them alone can make the $6/month sale, in toto they can. And they earn microslices of the subscription fee even for first-time visitors who already signed on elsewhere.
In fact, unless your site is already charging some sort of subscription fee, there's no reason not to sign up. Just by adding the tracking code, you start receiving a tiny slice of any Contenture visitors' payments. You don't have to convert users yourself or run banners or lock content up (as far as I can tell; I haven't parsed all their fine print).
Sure, there's a risk of gaming and free-riding in this regard -- but that helps bootstrap the publisher network, and they can tighten things based on user feedback over time. (If I were running it, I would give all users an absolute right to reallocate their $6 arbitrarily -- the passive metrics would only create the default allocation.)
2) You and I agree, you can get all the bennies of being a publisher without actually attempting to convert users. Put on tracking code, collect checks, yay.
3) You think the game theory equilibrium results in a healthy ecosystem of lots of publishers cooperating to make an Internet-wide Content Cartel which will use the awe-inspiring power of warm fuzzies to convert a sizable number of people into Contexture customers. (Incidentally: you seem to minimize the difference between the free and freemium experiences -- tiny upgrades and warm fuzzies. I think this is because you understand that there being significant differences in the experiences makes sites substantially LESS valuable to you. Do you understand that this this same dynamic gives every site an incentive to defect?)
4) I think the game-theory equilibrium is that nobody makes any attempt to convert users, a few dozen blogs nobody has ever heard of put the tracking code on their sites, some intense competition happens for cuts of fractions of $4.80 times a few dozen people, and a few months later the system dies for lack of interest.
Like I said on the last thread, there needs to be a Killer App site to build this ecosystem around, like eBay was the Killer App that every other Paypal merchant got to freeload off of. However, unlike the eBay/Paypal symbiot, in this case if you have the Killer App you should run screaming from this business proposition.
My, this would be a fascinating collective action problem for a game theory class...
But yeah:
All sites have an incentive to defect (not lock up a significant amount of value behind the paywall, not attempt to convert users in any significant fashion).
If no one puts value behind the paywall, then this idea is a more complicated implementation of the oldest failed business model, which is putting out a tip jar and hoping money falls into it. Money very rarely spontaneously falls into tip jars.
(1) Publishers sign up as free riders.
(2) The signup bonuses and other payoff tweaks from Contenture convince a few sites at the margin to push paid subscriptions and increase the functionality gradient between paid and unpaid visitors.
(3) That provides enough variety and experimental information to keep iteratively optimizing conversion tactics -- where conversions are both turning unpaid users into subscribers, and turning publishers into better upsellers.
A site that can manage its own subscriptions can 'defect' -- but just as with running your own ad sales, there are many, many more sites that just want a drop-in solution.
However, the 'defection' you talk about -- shirking the shared task of creating/retaining paid subscriptions -- is subject to monetary incentives totally under Contenture's control. They design the 'black box' of payouts and can adjust the signup bonuses, the ratio of payouts for protected pageviews vs. free pageviews, and more. They can expel anyone blatantly gaming the system -- unless such gaming also benefits them. Eventually, if you're not carrying your weight, your check each month is just a token amount to remind you you could be doing more.
It's a subscription-revenues mirror of AdSense in many ways, and they have enough levers to adjust there's a chance of finding a self-reinforcing formula.
Disabling features with Javascript? I bet it's easy to write a Greasemonkey script that'll give you the paid features on all these sites.
"Only a very, very small minority of users would ever attempt to do something like this, and worrying about these users is a waste of your time and your money. There will always be those people who will do literally anything they can to get around paying for something."
We really do think worrying about these users is a waste of your time though. Just like blocking ads, if you want to try to get something for nothing, you can.
Lastly, sites don't even have to enable any of the premium features. They are optional. Contenture is as much about users supporting sites that they enjoy as it is about enabling premium features on your site. Because everyone knows ads don't even pay the hosting bill. If you don't want to pay - that's your decision.
Micropayments suddenly turn your casual users into customers, even for 2 cents, and the nature of the relationship drastically changes. Keep casual readers is one thing, retaining customers is a much larger problem. I have yet to see a micropayments scheme that addresses this.
Contenture's system is fully automated. You pay a small monthly fee of 5.99 (which the sites get 80% of), and we automatically distribute that money to the sites you visit based on how often you visit them. While there are drawbacks to this sytem, certainly, we feel the advantage of a fully automated system vastly outweights any of that.
This is not a troll. It's a criticism.
But, it needs a catchier name. This needs to be something subscribers are proud of paying for -- something they can easily blog and talk about. 'Contenture' is a tricky -- and tricky-sounding -- word.
And it could benefit from more readable and understandable entry pages -- plus different ones for publishers and subscribers. (I'm seeing tiny faint grey text, and neither 'Learn More' nor 'Register Now' really answers the questions I need to take the next step.)
And it would really help to have one or more named participating publishers at launch.