beyondbrics

Publishers desperate to find a way of making money out of the web could do worse than look at little Slovakia.

As big news organisations like the New York Times and the UK’s Times – and our very own FT – erect paywalls with differing levels of success, a Slovak startup which earlier this year persuaded several local publications to go behind a common paywall barrier is now thinking about expanding into new markets.

Piano Media announced recently that it had received €300,000 in new funding, raising the market valuation of the company to €1m ($1.3m).

The company set up its paywall project in May for nine Slovak publications including Tyden, the leading weekly, and Hospodarskie Noviny and Sme, two of Slovakia’s most popular dailies.

Monthly subscriptions cost €2.90 and the annual rate is €29 and gives access to all the publications behind the pay barrier. The site generates about €40,000 a month, of which 30 per cent is kept by Piano and the rest divided by Slovak publishers. (Apple recently announced that it would take a 30 per cent cut of iPad subscriptions from publishers via the App Store.)

The goal is to attract about 1.5 per cent of Slovakia’s 2.5m internet users.

“Piano has proven remarkably successful for participating publishers: we have increased their online subscription revenue while only having a small impact on readership,” Tomas Bella, Piano’s CEO, said in a statement.

The Slovak market was a good test-bed for such a paywall, as the local press market is small and has natural linguistic barriers which make it easier to keep internet users from finding similar news for free elsewhere on the web – something that plagues publishers in more widely used languages, especially English.

The common infrastructure also makes it easier for publications without a lot of resources of their own to use Piano’s pay barriers and collection systems that would be prohibitively costly to create on their own. By joining together, publications had less fear of losing online readers – and advertising – than if they had set up pay barrier unilaterally.

Similar linguistic and financial conditions exist in most other central European countries, which could prove to be fertile ground for Piano’s expansion. The company says it plans to launch in a second market early next year.

Related reading:
FT business blog: paywall file
CEE: TVs on, beyondbrics