Nicholas Watson in Prague -

Has a small start-up in Slovakia found the hidden grail of newspaper publishing: how to get more people to pay for content on the web?

In June, Bratislava-based Piano Media reported that revenues generated by its media subscription payment system, which groups different publishers under one roof, in its first month of operation had exceeded the monthly target in only a matter of days. The results were so positive that Piano is already in talks about expanding the system to other countries this year and next.

"We thought we'd have to wait until September to see if the system was working and whether we could launch in other countries, but we are already talking with publishers in other countries such as Scandinavia," Piano's chief executive, Tomas Bella, tells bne.

The concept behind Piano's media paywall is that the mental transaction costs of paying for content on the web - ie. finding a credit card, inputting the details etc. - are much greater than the monetary costs of €2 to €3. Therefore, by grouping publishers together and allowing people to pay just once for all the content of those publishers in any country rather than paying for individual websites and having to keep track of passwords, payments, accounts etc., Piano believed that more of them would be willing to stump up the nominal amount. It's a similar concept to that of a cable-TV subscription.

And indeed, Piano found that, for the first month at least, this was true. From May 2 until June 2, revenues generated by Piano's media subscription payment system of €2.90 per user netted over €40,000. Small beer perhaps (even so it's the most revenue ever earned through any publication subscription on the Slovak internet), but this was a trial service with many newspapers allowing only some of their content on the system and others opting to stay out altogether.

However, several trends within the small total figure give cause for hope. For example, according to figures compiled by the Association of Internet Media, unique visitors on Piano publishers' websites, a key indicator of whether the public accepts paying for online content, actually increased, with the readership of more than half of the media that joined Piano rising after entering the payment system. "In fact, in May they were doing even better than a comparable group of publishers that stayed out of Piano," says Bella.

Bella also cites the example of the two publishers in the Piano system that were already charging for their content on an individual basis. Tyzden, a newsweekly, saw the number of its subscribers multiply by six in one month of joining Piano, while the daily Sme recorded 14 times more people paying for the same content on the Piano package than on an individual basis.

So what now?

Virtual dreams

Publishers are clearly pleased with the results. "I am pleasantly surprised by the reader's interest in Piano. We are getting 10 times more traffic than I thought we would [after Piano went live]," says Alexej Fulmek, CEO of Petit Press, owner of SME.

Bella admits that many of the publishers first approached had expected little from the venture, so had either opted to stay out or only offer a smattering of content. But with these positive results, he expects more will join up and existing ones to offer more content.

In the immediate term, Piano - which takes a commission of 30% in the first year and a lower rate thereafter, out of which it pays the fees of, for example, the mobile phone companies - needs to fine tune the system and is looking to add more payment options in the near future, such as a weekly Piano subscription via SMS. "Piano is the first system that handles payment transactions and content encryption on a majority of a country's news sites, so there were significant technical issues to solve before the launch," Bella says. "The implementation of Piano's system was largely trouble-free, even though there were a few bugs that could only be worked out after the system went live."

Over the medium term, the firm's eye is on expansion into countries where the content market is larger and potentially more lucrative, such as those in Scandinavia. "Even for much richer publishing countries than Slovakia, they look at the results very positively," says Bella. "We are hoping to open in a second country in the autumn or winter, and a few more countries next year."