LaterPay is offering media companies a business model that goes beyond subscriptions and ads.
Cosmin Ene, the German startup’s founder and CEO, argued that while some publications are having success with paywalls and online subscriptions, it’s an approach that only convinces the most loyal readers to pay.
So LaterPay is trying to help monetize “the vast space” between subscriptions and ads, allowing publishers to charge for their content on an à la carte basis. That can mean charging per article or video, or asking users to buy a pass to their site for a limited period of time.
Ene knows that might sound depressingly similar to the micropayment models that have fallen flat, despite the hype that they might save journalism. In fact, he recalled being told by an investor, “Micropayments don’t work on the internet.”
Ene’s response was to point to the sushi dinner that they were eating. If they had to pay for each plate of sushi before they ate it, or if they had to pay “100 bucks before we see the menu,” well, that would be a crummy dining experience. Instead, they ordered the food they wanted and then paid the bill at the end.
Similarly, Ene said most micropayment platforms asked users to pay upfront, before they’ve read anything, or when they first hit a paywalled article.
LaterPay, meanwhile, is supposed to make the payment process as frictionless as possible. Users don’t even have to enter any payment information when they buy their first piece of content — they don’t have to make a purchase at all until their bill reaches $5. As a result, the company says that 78 percent of article purchases made through the LaterPay platform take 10 seconds or less.
Switching food metaphors, Ene added, “The vast amount of occasional users just want to buy a glass of milk, but not the whole cow.”
LaterPay has already signed up some big customers in Germany, including Der Spiegel.
Now it’s launching in the United States. To fund these efforts, it’s raised an additional 5 million euros (bringing the company’s total funding to 20 million euros). And its U.S. expansion will be led by Hal Bailey (formerly director of emerging business development at Google), who’s been brought on as the company’s new chief revenue officer.
Update: Asked about the investors in the new funding, LaterPay said the money comes from “private investors from Switzerland and Germany, with industry experience in finance and technology.”