Q&A with our Crowdcube investors
In September 2021, Axate ran a Crowdcube campaign to raise funds to be ready to launch with a large scale subscription publisher, add more features to our system and increase our presence in the USA and India. The campaign was a huge success and we were delighted to raise £543,427 and welcome 523 new shareholders to the Axate family.
In the process of the campaign, we had some really interesting discussions with long-term Axate users and new investors alike. We’ve catalogued some of the questions we were asked, and our answers, below. Take a look - they might answer some of the questions you have about Axate. If you have any further questions or comments, we’re always up for a chat: about our product, about how it works for publishers or readers, the media more generally, or our vision for the future of the industry. Get in touch on our social channels or at publishers@axate.com.
Question: Ad free content
Hi guys,
Perhaps like many others, I've invested a small sum in Axate by way of cheering on a service I've wanted for several years.
I accept that quality journalism needs reader support to fund it but can't afford to subscribe to all the publications I'd like to get news and comment from! Hopefully Axate will deliver the solution.
One situation I expect you have considered is when publishers offer free access to articles but surround the content with distracting adverts. I'd be willing to pay a small fee each time to read content without adverts.
What are your thoughts about this.
Is it easily possible technically to suppress adverts for some readers?
How does a small fee (say 10-20p) compare to the money publishers make from adverts?
Other comments?
Answer:
It's certainly technically possible to suppress ads and, while it's obviously up to each publisher, our advice to them is to make sure ads don't spoil the experience for readers. That doesn't necessarily mean completely getting rid of them (although some publishers choose to do so) but keeping them unobtrusive and restrained. Some publishers who have a mixture of free and paid pages make the paid ones "ad-lite".
Asking people to pay to get rid of them doesn't work. We don't offer that functionality but it has been tried by others. I personally think that any consumer offer in which the payment is to make your product less awful is bound not to work - you ought to be selling the quality of your product not deliberately making it hostile to customers and then charging them to make it less so.
I'm no expert on advertising but 20p, as far as I understand it, is way more than the ad revenue on a typical page. The opportunity for consumer revenue to exceed advertising is high, getting wide adoption of your paid product is key to success. Axate helps that because it reduces the barrier for consumers, and because consumers with a wallet can use it anywhere, so you don't have to persuade everyone to sign up to your site individually.
Hope that helps. And thanks for investing to you and everyone else who has!
Question: how does Axate apply to media other than news?
Explaining how Axate will finally open up news media to the digital reader is like a breath of fresh air: then you talk about music and video, etc. and that's when I begin to scratch my head. You've mentioned elsewhere in these discussions how other media work very differently from journalism; so how do you expect to achieve overlap across such different media? or are you proposing to splinter the network into Axate Music, Axate TV, and so on, which would seem to be missing the point of Axate in the first place?
Answer:
Well... there’s a MUCH longer conversation to be had here. But, for example, take TV. It's very hard for any new player to enter the market and achieve large scale success with yet another subscription VOD service. Being fourth in line behind Netflix, Amazon and Disney in many households is a tough sell.
That’s not to say (just like for news) that people would be unwilling to pay. Some of the broadcasters, for example, have a subscription option to get access to an ad-free version of their streaming service. It’s definitely true that ads on streaming are irritating (and un-skippable) but that doesn’t translate to a wide willingness to commit to a monthly payment.
A spontaneous, impulsive, payment, on the other hand, is an option many would take. In other words, Axate addresses a clear need for both users and broadcasters and opens up a currently closed part of the market. Sharing users with other media – newspapers, magazines etc – would also create new synergies and opportunities.
I agree music seems less obvious, because subscription works well for users (pay £10 per month, get all the music). However we have been approached by niche players who are disappointed with the return they get from those streaming platforms and perceive markets for, say, a higher-priced option specifically targeted at fans before the music is released to the streaming platforms. Others want to focus on un-signed acts. There are conceptual, exploratory conversations and definitely not yet a development focus; for me being able to see a concept which is a viable opportunity is energising.
We’ll look at things like this in detail later in our scaling, and look to test the concept. Likewise with gaming (the specific query which led me to think about it was the idea of a “coin in the slot” model for paying to play certain games – I think there’s the seed of a good idea there).
Question: Will Axate cannibalise subscriptions?
Hi Axate,
Isn't there a danger that this will cannibalise newspaper subscriptions and therefore make the broadsheets reticent to join ? For example, if I am paying a £10 monthly fee for full access to The Times (or whatever), and I can get just the articles I want from Agate, I would likely cancel my Times subscription. So doesn't that mean that the top broadsheets are unlikely to join ?
Answer:
Certainly you're right that subscriptions are hard-won and highly valued. You're also right that a proportion of subscribers consume relatively few articles and therefore find (or would if they did the maths) that the subscription is rather expensive. So there is a risk that some subscribers might be tempted by a lower cost, lower commitment offer.
Weighing against this, though, is the fact that most newspapers never manage to persuade more than (being generous) about 2-5% of their audience to sign up to subscription. As time goes by it gets harder and harder to sign them, and harder and harder to retain them. Witness the increasingly low-cost and long-lasting "flash sale" prices for many subscription publications. I am personally paying the NY Times £1 per month for the next year.
Add to the increasing difficulty in signing new subscribers, the reality that there is always some background "churn" (people cancelling subscriptions) and that the majority of people on low priced trials will churn when the price goes up, and the picture is perhaps more complex than it seems. Expanding the market means appealing to more of the 90%+ of readers who are currently outside the paywall.
To the specific cannibalisation point, there's a danger in those low priced offers for new subscribers as well. Any long-standing subscribers who are aggrieved at paying more than anyone else might decide they would prefer to pay less - in which case they'll phone up and cancel in the hope (which will certainly be met) of getting a lower price.
Which highlights two things.
First there is always a cannibalisation risk if you have very low priced offers in the market, and publishers are taking that risk themselves right now. Axate's pricing, which effectively discounts the commitment rather than the price, means that for engaged users a subscription should always be more appealing, but sets the bar to sample and occasionally read the product low.
Second, many loyal subscribers actually don't spend their whole time checking the price and trying to trade down. The core readership is more robust than feared.
We have always known Axate is a market-expending opportunity. Just offering it to ex-subscribers and churning users opens up a pretty large market for most publishers. Offering it to new readers who don't yet (and may never) want to subscribe opens things up even more. Ensuring that subscription remains strongly appealing to highly engaged readers (and enabling subscription upgrade with a single click) keeps that market open without shutting everyone else out.
For any publisher for whom subscription growth is becoming challenging. Axate offers a way of expanding market, audience and revenue without putting existing success at risk.
Question: Onboarding process for publishers
hi Axate Team,
I have used Axate to read boxingnewsonline.net both on the web (chrome) and mobile (safari). It works well and is smooth. That is impressive and that is exactly what I need as a reader )))
Could you please describe how the onboarding process looks like for publishers (newspapers) to start using Axate?
How many "software-engineer" hours are needed to onboard one new publisher (on Axate side and on the publisher side)?
Thank you!
Answer:
The on-boarding process is pretty quick and simple. The fastest we have done it (with a non-technical customer) was under an hour. Some publishers with complex internal systems might need a little longer but on the whole it's easy.
The work on our side is also minimal, we obviously have to issue credentials and so on and obviously we offer hands-on help if needed. The non-technical work takes more time, on the whole - deciding on pricing, "call-to-action" messaging and so on. Obviously the Axate team can advise on this and we have plenty of templates to get people going.
One of Axate's great advantages for publishers is that it's easy to test and then iterate your approach. Virtually all our publishers have tweaked their pricing, their sign-up offers, the design and wording of their calls-to-action. It's easy and quick to do and makes getting started really easy.
So the short answer is technical implementation is generally quick and simple. If you want a more technical answer I'll ask a more technical person to respond!!
Question: Competition
Hi team, interesting idea. Would like to hear more about:
(1) Who are your competitors and what competitive advantage do you have against them?
(2) Do you have any indication that you will attract any big logos (FT and the likes)? Based on your pitch deck this seems like a prerequisite for your future growth
Answer:
Hello, thanks for the question.
There are a number of other companies looking to address the business model challenges of the media, using a variety of approaches. One was mentioned earlier, Brave with the Basic Attention Token. There are various crypto-currency based projects we're aware of. I know about a couple of more traditional "micropayment" businesses in the States, Germany and Singapore. And there are a couple of big players providing the paywalls you see around the internet. If you contact me direct (dominic@axate.com) I can talk you through it a little more.
In short, though, I am not aware of anyone else who has come up with a solution which is as good a fit as ours for the challenge. That reflects in the feedback we get from publishers and users alike.
On the pipeline, I obviously can't talk about discussions-in-progress. I would say it's a definite advantage for Axate that we have really good access to the key publishers, thanks to our contacts and background, and we have a wide range of conversations ongoing. The pandemic has had a significant impact on the big subscription publishers, driving a large and (for some) unexpected surge in subscription sign-ups which they pursued aggressively with lots of promotion and discounts. The more recent news-aversion has seen this tail off, we are told... new subscribers are harder to find. You can see this in the deeper and longer discounts on offer, but the proportion of people who continue as subscribers post-discount is generally quite low.
All this means that expanding the revenue base means offering a wider range of options for readers not ready to subscribe. This explains the increased energy in many of our conversations.
So, while I can't make a firm promise of one or more big "tentpole" brands, I am confident of success. I don't think our success depends on those brands, by the way (the conversations we have with new "disruptor" businesses entering the market are in some ways more exciting), but they will have an accelerating effect...
Hope that helps
Question: Internationalization
hey. are you planning on internationalization? if yes, market barriers might be high due to legal barriers I would assume? so it is a somewhat limited potential market?
Answer:
Hi, thanks for the question. Yes, we are, and we already work in GBP and USD. Adding currencies is usually simple (although payment systems vary in different countries) and, yes, there are regulatory hurdles in some places. Our current focus is on the Anglophone world and Europe and we have continued interest from many other countries, notably India. We don't perceive legal or regulatory hurdles to be a major limiting factor on our ability to scale, although obviously the analysis and cost will vary from country to country. Consumer media markets tend to be quite national in character so a country-by-country approach makes sense. Obviously, as we grow we will aim to roll out in more territories simultaneously.
Hope that helps
Question: Key Publishers
Hi, i think the concept you have is great and would be sure to sign up and use it once it’s relevant to what I want.
Who are the main key publishers you want/need and what could prevent them from coming onboard with you?
Thank you
Answer:
Hi, thanks for your interest in Axate. You have hit on a key question.
We have a pretty broad target group when it comes to publishers and our current mix includes magazines, hyper-locals, news organisations and big media groups. Our other conversations and trials include huge international subscription brands, video on demand, even record labels. Wherever users want access to media we have an application.
We are a good option for publishers introducing payment for the first time, and we have a lot of traction in this area. Also, increasingly, with new publishers entering the market with new product offerings for whom existing models are a poor fit. Some exciting ones are in the pipeline and I hope to be able to talk about one or two of them publicly soon, even before we launch with them.
Of course, the big subscription publishers in the UK and USA (and elsewhere but that's our main focus right now and where we have active conversations) have a huge audience of people who don't make it past the paywall and so are locked out. I can't say (obviously) specifically who we're talking to among them other than it's those you would expect.
I think the biggest barrier to adoption by them (I am slightly putting words in their mouths here, but I think this is accurate) is the growth of subscriptions - as long as new people are signing up to an open-ended commitment, they are very focused on that. When growth starts to slow, and new subscribers have to be incentivised with bigger and bigger discounts, attention turns more to our approach - and I think it's fair to say that many publications which saw a subscription surge during covid are now finding it hard to sustain. We offer a number of ways to implement Axate which don't get in the way of new subscribers, but target never-subscribers and "churning" (cancelling) subscribers with a different way to pay.
You can see Axate already alongside subscriptions on sites like The Yorkshire Post and Boxing News Online and you'll see it on more in the coming weeks and months.
Hope that's what you wanted, but feel free to contact me for more detail.
Follow up question:
Alongside to big news outlets (many of whom have their own subs, what incentive do they have signing up?) would Axate be rolled out to academic literature? There is a whole market here which is not being tapped into.
Answer:
Big publishers are indeed very useful because they bring large and frustrated audiences (the huge majority of readers won't subscribe, so go away disappointed) and subscription products are generally higher quality than free. Those discussions are always more complicated, but they're ongoing with many of the bigger subscription publishers many of whom are finding that subscription growth has slowed or even stalled in the last few months, so are keen to look for new revenue sources. You may also have noticed that Axate has launched our own subscription function as well, this is so that casual users of a publication can upgrade to a subscription through Axate without having to go through a whole separate sign-up process (and anybody who doesn't want to, or who wants to cancel, can continue to have access on a pay-as-you-go basis).
But don't under-estimate the value of smaller, local or specialist publications. They tend to serve very focused communities and interest groups, often on their own. The value of what they do for those communities is high and it's appreciated. Subscription models get limited traction for a number of reasons and a better model is badly needed. In an era when the trend is towards smaller and more focused products, they're in a sweet spot. And we have already seen it working - when Axate was introduced on one regional title whose audience overlapped with another nearby, we saw immediately users moving from one to the other, spending money on both. Big networks of publications like JPI Media can take advantage of the dynamics of what Axate can offer as they reduce their dependence on (and exposure to) the advertising market.
As publishing moves towards a network model of distribution as well as remuneration, Axate's role as the facilitator of both networks is the defining opportunity for both our company and our customers. That's what drives customer engagement (and I really wish I could be more explicit about pipeline, but you can understand why I can't) and it's what drives the really scalable opportunity which in turn explains our valuation and engagement with existing investors who include a group of angels and also some media companies.
On academic publishing it's very much in our roadmap alongside other media such as streaming video. There's an obvious use case for both, and they share the central user appeal of Axate ("I wish this worked on xxx site which locks me out with a paywall" is the universal response from people seeing it). News first, then video, and others after that or sooner if circumstances favour it.
Question: Apple News +
Hi Axate Team!
How what you are doing is different from Apple News+?
They already provide access to 300 titles for 9.99/month subscription...
And it should be pretty hard to compete with Apple (((
Anyway I wish good luck and success to your project!
Answer:
Hello, thanks for your question.
When I was working in Newscorp, we developed an idea which was not a million miles away from Apple News+ (although, in my view, ours was better!). An aggregated product, where users got access to a range of publications for a single subscription fee. So I have some pretty in-depth knowledge and thinking on this topic, and it's that thinking which led me to Axate.
Although the detailed answer to your question is probably quite a long conversation (one I'm happy to have if you like... I love talking about this stuff!) the short answer is that Axate is implemented within publishers' own sites, at prices they set, and forms a network within which more user activity drives better outcomes for everyone. It's not an aggregated product, it doesn't restrict spend to a set amount (9.99 per month, to be shared between everyone), it's not limited to a single platform and it doesn't require any commitment from users. Also it's not restricted to any one platform.
Thanks for your good wishes, in the end the way to compete with big platforms like Apple is by having something better. I think we do.