Getting past the paywall: Comcast-backed Philly startup wants to help sell news

If you hit a paywall while trying to read this story, odds are you won’t pay to read the rest.

Typically, fewer than one percent of readers who hit publishers’ paywalls pay for a subscription, according to an August report by the Lenfest Institute and Harvard University’s Shorenstein Center. Surveys show that paywalls frustrate many readers, even as struggling news outlets increasingly rely on revenue from digital subscriptions while Facebook and Google dominate the digital ad market.

Nickl, a startup moving to Philadelphia, says it can help.

Launched in August, Nickl sells businesses a bundle of digital subscriptions from publishers like the Los Angeles Times, negotiating lower rates by leveraging a large volume of employees. Nickl has secured discounts as high as 70%, CEO Sumorwuo Zaza said, in deals that give news outlets more subscribers and Nickl a share of revenue from the sales.

The startup enters the media market as news publishers look for new ways to make up for the erosion of print-advertising revenue. One way media outlets do that is by locking their articles behind paywalls to collect revenue directly from consumers. Another strategy is licensing content to tech giants such as Facebook and Apple, which then distribute it to users.

“Helping them drive subscriptions and revenue through enterprise feels like a win-win,” Zaza said last week. “It’s a win for the employees, so they get what they need faster, but it’s also a win for the media company, so they just know that there are companies that are consuming their content but paying them a rate.”

Firms that buy the so-called Nickl Passes get past the paywalls of participating publishers through a web browser extension. About a dozen companies have bought subscriptions through Nickl so far, and nearly 100 media companies are participating, Zaza said. He would not name publishers except for the Los Angeles Times, which is identified on Nickl’s website.

Nickl is moving its three full-time workers from Brooklyn after participating in Comcast’s LIFT Labs startup accelerator program. Startups get guidance from Comcast and NBCUniversal mentors during a 13-week program that culminates with a “demo day,” when the companies pitch themselves to investors.

The idea of selling subscription bundles to businesses came after talking to Comcast employees, Zaza said. The startup was initially interested in developing similar bundling software, but for news distributors.

Nickl is the first firm to move to Philly as a result of the two-year-old accelerator program, which has worked with 21 startups, according to Comcast. The firm is working out of the Comcast Technology Center until the next class of startups arrives in 2020, when Nickl plans to look for a nearby location.

“That’s part of our goal with this, to get some of these startups to stick around and grow around us,” said Danielle Cohn, head of LIFT Labs for Comcast.

Nearly half of 212 news organizations surveyed this year by Reuters use some sort of paywall. In March, Apple unveiled Apple News+, a $9.99 monthly service that provides access to more than 300 magazines and a few newspapers. Last month, Facebook launched a Facebook News tab on the social media site that pays publishers to use their content.

» READ MORE: Mark Zuckerberg talks of Facebook News and hardships on local news in digital era

Ellen P. Goodman, a Rutgers University law professor, said Nickl’s model of bundling news subscriptions for enterprise teams is a good idea to address problems with paywalls, such as consumers not wanting to pay for news and the cost of subscribing to many news outlets.

“I happen to be in favor of experiments that pay for journalism. The more the better, and each one makes some small contribution,” she said. “They’re not solving the basic business model problem, I don’t think, but they’re helping.”

Nickl currently offers its bundles for $5 per month per user on its website. By comparison, the average price for a digital-only monthly subscription is more than $10 per month, with large metro dailies charging closer to $12.50 on average, according to the Lenfest and Shorenstein Center survey of 500 news outlets.

The Los Angeles Times, which charges $16 per month for a digital subscription, has “seen some encouraging results” since trying Nickl’s corporate account bundling service, “particularly in terms of sign-ups on the East Coast, outside of our core regional audience," said the news outlet’s chief revenue officer, Josh Brandau.

Zaza, a 30-year-old Newark, N.J., native who previously worked at Huffington Post, said sales have risen 70% week over week without any marketing since starting in August.

“We basically created a new product from scratch," Zaza said.