Open for Debate: Micro or Teeny-Tiny-Payments

To start off with, I’d like to let you know that this is essentially a continuation of the Micropayment discussion from the Workshop Mailbag posted last week. I’ve also recently posted on my comic’s site that I am pushing a large amount of my content off of the free site area and I’m working on developing a micropayment option – although I don’t want to consider it a “micropayment”.

I’ll explain, but first I’d like to point out that I believe that just because micropayments haven’t worked in the past, doesn’t mean they won’t work in the future. It’s a little bit of “before it could be done, it couldn’t be done“. I don’t subscribe to the theory that if the big guys don’t do it – it must not be worth it. Kickstarter has been around for a while and recently it’s been on fire with the comics community. That means for a while the big guys weren’t using it – and it still worked fine without their participation.

It goes without saying – these views are my own and do not necessarily reflect those of the other Webcomic Alliance members or contributors.

Sometimes technology outpaces our needs. For instance, if Apple introduced the iPad in 1995, it might not have been as successful. For most people, it would be just too big a leap considering not many people had their lives integrated into the Internet or were familiar with the usability of the iOS.

As I mentioned in the last article, consumer perception on “paying for content” is changing. It’s not their fault we can’t get them to pay for comics. It’s our fault we haven’t found a solution to make it easy for them to buy our comics. Let me change that. It’s our fault we haven’t made it mind-numbingly easy to buy our comics. Do you know what you could buy in a supermarket or convenience store for a dollar? People drop a dollar on candy at the checkout stand. Why? For starters, it’s an impulse purchase, but it’s also easy to grab it and drop it in with whatever else your buying. It’s thoughtless, painless and easy – and specifically placed there for that purpose.

It’s our fault we haven’t found a solution to make it easy for them to buy our comics. Let me change that. It’s our fault we haven’t made it mind-numbingly easy to buy our comics.

That’s the main reason I have high hopes for Apple’s NewsStand. It looks to do everything that would allow consumers that thoughtless, painless and easy means to buy comics.

Aside from what I’ve already mentioned, I think another problem with micropayments is the stigma associated with the term. The micropayment model I’m working on for my website will be donation driven. It’s basically another term for micropayment, but I’d rather people feel like they are contributing by donating than just paying for another product.

So that leads me to another issue where we may do poor job justifying micropayments. It’s not enough just to slap a PayPal donation button on the site. I feel that by being honest and giving your audience the opportunity to contribute, they can take a vested interest in your comic succeeding and buy in emotionally. But…additionally, your readers are investing in you and you need to be careful not to lay it on too thick or take advantage of their generosity. That specifically is targeted at artists who rely on the “if I can’t get financial support, I can’t afford to keep the comic going“. While that may be an unfortunate, true and an honest statement – most people don’t want to feel like they have to support you.

And there’s more.

It’s up to us to paint a vividly clear picture. We shouldn’t rely on the readers to simply connect the dots because we’ve gone ahead and set them up. Everyone’s perception is unique and they experience things differently. So overall, I think it’s also about perceived value – if you can effectively create the perception that your readers are getting real value for your content – I believe people will be likely to pay for comics.

Of course the caveat being that we create a thoughtless, painless and easy way to do it.

Ken Drab sporting the thin faced lookKen Drab (me) has a small brain but a savant-like interest in branding, marketing and design. He better, that’s what he gets paid to do in real life. In make believe – he’s a Comic Artist.

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10 Comments

  1. As you know I am a tad passionate about Micropayments (or what ever term you choose to apply to them) I have written about it extensively including a new article on my site ( http://karmicdebt.net/2011/06/26/apple-newsstand-zombie-fied-micropayments/ ). At first I was a firm believer in the power of Micropayments, then I saw it fail over and over again. Including some that I thought had a pretty good shot at succeeding. Up until you brought NewsStand to my attention I had put the idea of micropayments in the same category as Free Universal Healthcare for all, a noble ideal but impractical in the real world. I will admit however to at least having some small amount of hope for NewsStand, Apple’s arrival could be a game changer. It certainly was for music. I have questions galore in regards the how exactly NewsStand will work, like whether it will be as censored as the app store for instance. Or how one gets in, is it as simple as getting published via Amazon? Because honestly if it is then I think that would be a great option for long form webcomic artists.

    Your quote of “before it could be done, it couldn’t be done“ is accurate as far as it goes. But maybe Micropayments are more like New Coke, it could be done but nobody bought it.

    As for having a Donation area on your site I think one of the most interesting “paywall” ideas I have seen is over at http://www.codenamehunter.com/ supporters get the comic in full color and I believe are about a week ahead in terms of storyline. Matt and Darc have created a perceived value with their audience, and I think it has been pretty successful because as far as I know Darc is still supporting herself via the revenue they bring in.

  2. Ken, I’ll be interested in seeing what you’re trying and (more interested) to see how it turns out.

    You mentioned Kickstarter, and I think there are some interesting (and brilliant) design elements of Kickstarter that have made it a successful fundraising platform.

    1) It’s smooth. Clean interface, social network integrated, and attached to Amazon payments, a known and trusted brand.

    2) It’s high stakes. All or nothing, baby. Either the project gets funded or it doesn’t. $5 and $10 contributions really CAN make a difference.

    3) There’s a ticking clock. 30, 60, or 90 days…that’s it. The time pressure gives a real impetus to potential supporters NOT to put off backing.

    4) There’s something in it for them. The rewards system skews things. The more you give, the more you get…and while most people support Kickstarter campaigns out of a sense of goodwill, they’re more apt to give more if there is a reward they want.

    Webcomics that rely on “donations” have a bit of a “free rider” problem going for it. Most people will support financially a small number of webcomics, a fraction of ones they read. It’s usually the ones they feel most strongly about that they support, so being someones 12th favorite Webcomic isn’t worth all that much.

    Borrowing from what makes Kickstarter successful, I think ANY attempt at micropayments or fund raising from your audience should make clear to them:

    – What is my donation for?
    – What do I get for making it?
    – Why should I make NOW, and not put it off?
    – What happens if I (or others) do not donate?

  3. I don’t think there’s a right answer to this. To be honest, I’m still not sold on the toll booth method for archives. If you’re going to charge people to access it, then charge them – but give them MORE incentives to pay for that access rather than just the archives themselves. It could be that archive dives are a huge investment, and may not pay off as readily through ad CPM/CPCs as a single volume of select strips for a modest price.

    People are always looking for the best deals that benefit them. Simply throwing up a paywall with no additional bones really turns potential consumers off – but if there’s a meaty incentive to join, they’ll sign up. On the flip side, if you’re looking to give people affordable content, I think you need to do a bit of leg work and repackage your goods so they’re worth purchasing if they’ve already been viewed for free.

    Scenario 1) Retire your archives up to a certain year. Package those archives in a compilation – either a ‘Best of’ or a themed compilation. Make it a PDF download for $2-5, and it becomes a supplemental purchase to your printed books. If there’s enough interest, perhaps a limited print run and artist editions could be made.

    Scenario 2) Pull down your archives and separate your comics by month. Compile the strips in an uninterrupted fashion and store them as ‘back issues’ like a magazine. Give a brief synopsis of the contents, and throw in a couple of extras for people to check out as they need. You could set up a subscription system that gives them an issue each month, or a pick and choose system to complete your collection.

    They’re not foolproof methods, but they allow people a certain amount of choice and do give you the freedom to manage your archives in order to get some value from them. For those readers who are new to the site and don’t want to invest in purchasing archives right off the bat, a simple synopsis page by story arc will suffice. If they decide to pick up the monthly issue, they’ll get all the additional strips that fall outside of the story arcs, but are still canon (current event strips, one-offs, etc).

    Just a few thoughts.

  4. Keith Drezz and Tyler have covered the bases. And Ken. heh. This is such a difficult issue. If people get used to getting something for free, and it’s taken away… whew, people go INSANE over the change. But you sure can’t come out of the gates as a webcomic and ask people to pay you for your content. You need to get them hooked first. Unless you’re Stan Lee or something. I think the biggest reason webcomics could do this, is because.. usually.. there’s such a connection between the readers and the creator. I really do feel that readers come back partly, if not mostly, because they like the creator as much as the comic. That’s where we have an advantage over the print comics. People like to support their friends, or those whom they feel they connect with. I know I have bought comics that I usually wouldn’t be interested in, or donated money, only because I like the creator as a person.. have met them in person… and wish to support them. There’s very few cases that I have spent money donating or buying a book from a creator I didn’t like or doesn’t connect with his/her readers. In fact, I have never donated to a creator I didn’t like… regardless of how good their content is. My donation is for the creator, not for the comic.

    That’s just how my cheap-@$$ handles things :0)

    • “If people get used to getting something for free, and it’s taken away… whew, people go INSANE over the change.”

      Just look at the uproar over Webcomics.com switching to a pay model for evidence of that.

  5. Micropayments and subscription paywalls have been tried several times, and every time they’ve either failed or driven away readership.

    Here’s why it “does not work for webcomics”
    1. Webcomics aren’t a game with static assets (reuseable content,free to visit,) the value in webcomics is being able to read the comic -now- and -here-, not going somewhere else (eg deviantart, blogger, or other ill-designed-for-sequential-reading sites) or bootlegging it. People pay to get ahead in free to play games because they want to, but that’s only 1-5% of the playerbase. This is quite similar to the amount of people who will click the Donate button in a webcomic. The amount of time spent playing Farmville for free is about the same amount of time spent reading a months worth of webcomic archives.
    2. Webcomics aren’t movies where once it’s produced (paywall-only), it only has one day to make it’s money before it’s widely pirated. Webcomics are quickly and easily pirated, hotlinked and emailed, with around 20% of the people reading your comic, never been to your site to see your ads. Graphic Smash, and Keenspot have both tried paywall systems, and have subsequently disposed of such schemes since the maintenance of the paywall is more expensive than revenue.
    3. Webcomics aren’t cable TV shows (ad supported/fee-based subscription), where they will be canceled if readership drops below target metrics. Print comics tend to cancel series after a fixed run and don’t continue ones that readership doesn’t justify the printing cost. Many webcomics that have gone to print have overestimated their readership’s popularity, and in some cases wound up with unsold inventory for years. Kickstarter is a good position right now to divide the print risk between the comic rights holder and the readership. If anything, a kickstarter campaign to print is like a IPO for a business, the initial pledges get what is promised, and the rights owner gets their book printed. If all the books sell, eventually, the rights owner makes a profit. If they don’t sell, they break even. There is however the risk of the rights owner just running off with the money and everyone who pledged getting left with nothing, but that’s same risk you get with buying stock in a company.
    4. Webcomics aren’t music, since comics can generate new content and even use different artists or writers, rapidly. Music and comics of all sort are easily pirated, but unlike music, you can’t listen to a webcomic while working on something else. In other words, webcomics have a low repeat readership level. Music artists make their money from much of the same ways webcomics can, tangible copies of their work (CD’s/Books) and merchandise. Bigger musicians also make money from royalties from radio stations (via licensing.)

    So in what ways can webcomics actually make money?
    1. Tangibles (Graphic Novels/Comic Books, Single-page prints, commissions.) This is where most of the money can be made if you have the time to do all the artwork. Toys and clothing will also make money, but is not something you’ll appreciate shipping. Tangibles are best sold at conventions and not shipped unless the shopping cart is online (payment, taxes, shipping costs, inventory.)
    2. Ad revenue, *hint* Project-Wonderful is not a revenue source. Google Adsense, and other CPM ads networks are. Be very careful as webcomics are considered non-contextable, so advertisements must be carefully setup on pages that transcribe or discuss the comic via moderation, and not pages that are unmoderated or contain no machine-readable text. Project-Wonderful works more like a cross-promotion-of-importance, if you advertise your comic on other comic’s update days, you will get more readership. If you set your price too low or put too many ad slots on your site, you devalue your site (why pay $$$ on adsense when you can pay $ on PW.) PW however is the only option for sites that would otherwise be rated R or MA since ad networks clients will cancel campaigns that appear on sites that endorse illegal or immoral activity. A lot of money can be made from ad revenue if your comic is “safe for everyone” but not a lot of comics are so.
    3. “Advanced” or “Bonus” content – This content is often pirated, which is why this should be setup as a reward for payment, or subscription. This type of payment system is used by online free media streaming. For example your webcomic might be 72dpi, but the advanced version might be 300dpi, printable, or shown a day in advanced. Bonus pages likewise might only be seen by advanced subscribers, but eventually everyone can see it.
    4. Master Paywall – Paywalls don’t work, as the first person who subscribes will simply page-scrape the entire site and then dump it on a file sharing site. Paywalls simply don’t work without draconian DRM measures, and it’s naive to think that 100% of your readers will pay. Rather, just flip it around and instead put the archives behind the paywall. If you’ve printed a book, just put that books worth of content behind the paywall. This way you disincentive people from scraping the site (the content has always been there.) That way people who want to read the archives, have two options, pay online or pay for print.
    5. eBook, iBook/iNewspapers, etc – Set this up in parallel with the printed tangibles or paywalls. It’s actually better that you set this up ASAP, because if you don’t, someone else will… with your content… in some other country. You can do it yourself, setup a PDF version of the comic with one books worth of comics (or by chapter/act) and micropayments via PayPal or Amazon (Amazon eBooks are simply html pages with images, just like your website.) You won’t make a huge amount of money from it, but at least it’s YOU that’s making it. You can also use it as an alternative to simply donations, as the buyer actually gets something.

    Why “micropayments” in general don’t work, and this has been stated frequently, but to repeat:
    1. Transaction costs – Up to 3% of the cost or up to 79 cents might be charged at a minimum for credit card and debit card transactions. This is the biggy. How everyone gets around it is by creating their own “point” systems (Next time you go to 7-11 check out all the point cards.) This results in the buyer spending more money than they would had they just paid for it in cash. 79 cents is nothing when you are paying for 5$ items, but it’s too much for penny-size transactions.
    2. Alternative currency exchange rates – Point cards might cost 10$ for 1000 points in the US, but might cost 12$ in Canada and Australia, despite their dollars being at par or higher.
    3. Taxes – Every state and country has different taxes. Once you make more than X amount in sales, you actually have to charge taxes (See “Amazon Tax”)
    4. Maintaining a database of sales for refund purposes. Enough said.

    In the end, micropayments have been evolving (Facebook, Amazon, Google, PayPal, Apple and possibly others) but they still haven’t arrived at a price point that is tenable for webcomics and more profitable than ad revenue.

    In my opinion the perfect price point for micropayments to be useful to webcomic publishers, is where the transaction fees are based on the gross payment value at the end of the month. Not a per-transaction fee unless the transaction fee can be measured in 1/1000ths of a cent.

    As a footnote to the transaction costs: The debit card fee will be capped at 21 cents + 0.05% of the transaction as of a ruling made by the Fed at the end of June 2011. What this means for micropayments is that you still can’t charge less than a quarter for something and accept a debit card payment.

  6. “In my opinion the perfect price point for micropayments to be useful to webcomic publishers, is where the transaction fees are based on the gross payment value at the end of the month. Not a per-transaction fee unless the transaction fee can be measured in 1/1000ths of a cent.”

    I’m not sure exactly what you mean by this… either I am too tired or just not business savvy enough.

    I think one thing to remember is that with Apples involvement it literal changes everything. Before iTunes came along everyone was pirating music, but iTunes made it too damn easy to buy a song. One click and there it is. No need to worry that the song you just downloaded was a virus disguised as the latest Weird Al song. If Apple can deliver the same sort of simple solution for comics (I still think NewsStand is better suited to long-form comics) then I think it may have a shot.

    One definite disadvantage I foresee for NewsStand is that if it follows the same guidelines as iBooks then I need to use a Mac using quicktime to upload my comic to their servers. It’s just an ePub document, yet for some stupid reason I need to use a Mac? Seriously Apple?! /endrant

    • I think you’ve made a really good point that may be make-or-break: Ease of use.

      Most of the methods I’ve seen for micro-payments are not easy to use. Personally, unless I know with 100% certainty that I’m going to want to pay a bill, I don’t like stuff being auto-withdrawn from my account. ESPECIALLY since I know that STOPPING that automatic payment is usually a massive pain, and might have extra fees. With a luxury good, I want the freedom of choice. Automatic payments take that freedom away from me. Getting it back is not an easy task.

      At the same time, nobody wants to deal with that choice for a tiny amount over and over. I don’t want to be approve a $2.50 charge on a regular basis.

      iTunes makes it easy to buy a good with a small payment. It sounds like NewsStand is designed with a similar principal, but by selling a service instead of a product. If micro-payments for webcomics could be made easy to use, low-risk, and guarantee a good or service of quantifiable value, there might be potential for them.

  7. If I go into a comic store, they aren’t selling me pages. Because if I buy a 30 page book for $3.50, that’s $0.12/page. If I’m buying a 180 page graphic novel for $20, that’s $0.11/page. Of course, I COULD leave that comic shop and get that graphic novel on Amazon for $14 ($0.10/page). So why am I there?

    I am there because I like the owner. Or the feel of the shop. Or the news and community. Or the ability to browse (which I count as a service the shop provides).

    No comic shop is going to ask a customer to show up at their store daily, give them a dime, and (maybe) get a single page of content in return. Webcomics shouldn’t either, but setting up a micro-payments system for the COMIC does exactly that.

    But what about all those other reasons I’m buying in to that store, instead of buying from Amazon? If I was to set up a micro-payments system, it would be to get access to a community, exclusive content, deals, news, and other services. The goal would be to: 1) Enhance the direct interaction between reader and creator (accessibility), 2) Create a sense of community and exclusivity, 3) Provide valuable, quality content to a niche audience.

    Webcomics.com does this for the “I want to make money off of webcomics” crowd. They are very, very niche, and they don’t charge a ton for the service they provide ($2.50/month won’t buy you much these days). A niche for a specific webcomic is even SMALLER than that! And there will be different reasons they might want to be there. Are they interested in something behind the scenes? Words of wisdom? Friendship? Additional content?

    I guess the reason I struggle with micro-payments is that, while you COULD take many of these services behind a paywall, I think you hurt yourself more than help. Much of what we, as creators, can provide as a service is either already available online for free, serves to build our brand, or is better used as incentive to buy our tangible goods.

    That, and people don’t easily buy into the unknown. Take Privateer Press’ line of game miniatures, Monsterpocalyspe. They are sold in two ways. One way is as a two-player starter set. That are random. Upon purchase, you and a friend can shell out $50 to sit down and have NO idea what you’ll be playing when you open the box. Want to get something specific from the SIX factions you can play? Well, there’s boosters. For $14. Which are also random. So good luck with that.

    As you can probably guess, these didn’t sell well.

    How are paywalls different? How can you provide enough transparency to provide certainty? How can you convince people that what they’re shelling out their hard-won cash for is worth the investment?

    Can micro-payments work? I am sure there is somebody out there that will find a way, but they are going to have some VERY tricky problems to tackle in the process.

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