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April 29, 2017

Paywall Tech Roll-Up Continues as Piano Courts TinyPass

The paywall tech industry has seen plenty of consolidation but another big merger may be in the offing.

Last fall, Piano Media’s acquisition of industry leader Press+ created the largest company in the trade (Newsonomics: The Piano/Press+ Merger, Creating the World’s Largest Paywall Tech Company). Now Piano Media is in talks with TinyPass, the next largest U.S. paywall tech company, with a purchase of that company possible within the next month.

While rumors of the next merger swirl around New York City, prompted by the visit of TinyPass C.E.O. Trevor Kaufman to Piano’s office there last week, there’s no definitive agreement yet signed. Both parties declined to discuss the details of the talks.

Roll-up. It’s a familiar word in any maturing industry, and paywall tech companies, whatever their greater visions, must deal with the realities of a cash-constrained legacy media market. It’s been Pekka Maki, the driving force behind Piano Media, who has been at the forefront of the rollup. As Bratislava, Slovakia-based Piano looked to grow beyond its European customer base, Maki began talking to competitors, including both TinyPass and Press+. Former Wall Street Journal publisher Gordon Crovitz and publishing entrepreneur Steve Brill launched their 2009 Press+ start-up (opened for business as “Journalism Online”), one year before Piano set up shop.


First published at Capital New York

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Last fall, Maki, a principal in 3TS Capital, a central European venture fund, and a prime backer of Piano’s start-up, moved to become the industry’s consolidator, paying R.R. Donnelley about $45 million for the New York City-based firm. Donnelley had bought Press+ for a similar sum in 2011, but the printer turned out to be a less-than-perfect home for Press+.

Now Maki is working through what it will take to pick up Tiny Pass, which along with London-based MPP Global and video-pay oriented Cleeng, populate the rest of the industry. TinyPass would add less than $5 million in revenues to the Piano Media, whose revenues now run close to $30 million, with about three-quarters of those deriving from former Press+ clients.

Most importantly, TinyPass has been able recently to pick up a number of larger enterprise clients, growing in stature beyond its early base, and tagging, as a blogger-centric paywall company. TinyPass gained its biggest public notice when blogger Andrew Sullivan innovated his paid model in January, 2013 and picked TinyPass to power it. In total, it counts about 400 paywall-powered sites. That compares to about 630 Piano/Press+-served sites, many of them larger in audience than TinyPass’.

A month ago, Time Inc. announced it had chosen TinyPass (over Piano Media) and has since launched metered paywalls at its Entertainment Weekly, Real Simple and Health.com sites, with plans underway to add additional ones. TinyPass also now does business with Scripps TV stations, News Corp. and NBC Universal, having launching a paywall for the CNBC Pro product.

Those wins certainly sent a message to Piano Media, which has been working through the many issues of integrating the larger Press+ since that acquisition and may have fallen behind in product flexibility. Piano has planned a new product launch for the fall, in part off of its announced partnership with Cxense, an Oslo-based company that’s been getting traction in the field of on-demand, customer knowledge-driven recommendation engines.

It may be those higher-profile deals that TinyPass has inked, or it may its technology stack, or both, that are driving the current talks.

The TinyPass solution suite, observers say, does a better job of breaking apart paywall tech offerings. Those functions now range the gamut of e-commerce, authentication, paywall setting flexibility (number of free articles offered before a visitor hits a paywall), marketing and messaging and all related analytics. Give publishers more a la carte choice in the paywall tech they’re buying, and you’ll sell more customers, goes the reasoning.

That argument takes into account publishers’ five-year love affair with paywalls. In the wake of The New York Times’ high-profile and successful launch of its paywall in 2011, North American dailies quickly adopted the idea; more than half of the dailies in the U.S. and Canada now restrict digital access without payment; European adoption has been slower, but is still growing. Those paywalls gave publishers the courage to price up print and All Access subscriptions of course, and small increases in circulation revenue followed.

As print advertising continues a steep decline, it’s been reader revenue that newspaper and magazine publishers can point to as a small growth driver. Then, this paradox: If reader revenue continues to grow in scope compared to ad revenue, publishers increasingly believe something so integral should be owned. Yet, most publishers don’t want to spend the time or money building out complete paywall tech systems.

Consequently, this evolving product model—by meeting publishers’ objections and giving them a menu of paywall solutions from which to choose—may be better suited to the 2015 marketplace. A Time Inc. can maintain its own direct relationship with customers, for instance, but use TinyPass’s algorithmic targeting technology to better identify those with greatest propensity to plunk down money for a subscription. Such advanced targeting will likely be the key to paywall tech growth, more consolidated or not, as these companies become as much analytics service providers as e-commerce ones.

As TinyPass sells it, “TinyPass AI is data for publishers, not just for editors: it reveals the traffic dynamics that result in higher advertising and subscription revenue.”

Piano’s own suite of products acts on a similar understanding of the business. Beyond providing product solutions, it offers “Content Monetization Consulting,” trying to develop new revenue streams beyond providing basic digital subscription services.

A consolidated Piano–TinyPass may be more efficient, though a next integration of technologies would cost time to market, and leadership would have to be decided. Would TinyPass’ Trevor Kaufman take on leadership of the company or would current Piano Media C.E.O. Kelly Leach, a veteran news executive who left a 12-year career at Dow Jones, run the combined company? And then there’s the name. Tiny Piano just seems too small for a merger.

Together or apart, these two companies face a wider question: Will they find media partners sufficiently open to innovation?

Paywalls 1.0 has been a great boon, helping add at least a half a billion in circulation revenue for the daily newspaper industry alone. Yet, that revenue, and that first-stage strategy, looks like it has stalled. The kind of audience targeting and niching that both companies would like to offer is what’s needed, not just for paywall tech fortunes, but for the media companies themselves. As Google and Facebook dominate digital advertising, getting more money from that small percentage of the audience that loves a news or magazine brand is imperative. And, in all things digital, acting smartly on data is the only way to get there.

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