micropayments guardian 5 cents

What happened to micropayments and the media?

Subscriptions are isolating the web — and (almost) everybody's losing out

It had to happen: The Financial Times, The New York Times, The Washington Post, The Daily Telegraph, The Times and many, many more. Here in Denmark major newspapers Politiken, Berlingske and Børsen are doing it too.

The paywalls are coming up around the internet media — and it’s no surprise. Even if you have millions of visitors each day, sustaining a professional journalism-based business on pay-per-click advertising is simply not possible.

The Guardian in the UK is still trying to find ways around it but is losing around £30m a year while trying to do so. They survive only through the means of a profitable mother company that deals, amongst other things, in investment management.

It’s simple really. Media needs to monetise their traffic in order to stay in business. But are paywalls really the best solution?

Blogging is not journalism
Here in Denmark, a few years back, a well known commentator in the industry declared that putting up a paywall would effectively kill off that media as users would simply go elsewhere. It was, after all, Web 2.0. We all create content so it’s freely available. Tons and tons of it. Content everywhere. So nobody will pay for it, he said.

I told him he was wrong.

The thing is that we don’t consult bloggers for news on the latest advances of ISIS in Iraq. Or on political analysis, business news, reports from the weekend’s games, the upcoming election, advances in science or news from the city hall.

There is indeed tons of free content out there: Images, videos, posts, reviews, comments, recipes, how-tos and what not.

The blogosphere, the droves of small content producers out there, is a treasure trove and a jungle at the same time. They produce millions and millions of worthwhile, and not so worthwhile, pieces of content every day.

But they are not professionals. They are not ‘media’ as such. Two things:

1. Small bloggers very rarely have the resources to spend days on a piece and go off to Iraq with a photographer to report on current sunni and shia clashes. Or to do serious political analysis. Or to report on all Saturday’s games.

2. There are millions of them. They are fragmented by definition and when I go to read “the news”, I need a few one-stops, not 100,000,000 blogs. I don’t know what I want to read when I want to read the news. Because I don’t yet know what news are there for me to read about.

The issues here are quality and discovery of content.

So there is indeed a future for the online news industry. In fact one of the pioneers in paywalling, The Financial Times, now has the highest paying readership in its 126-year history! More than 650,000 subscribers to be precise.

The Financial Times is a specialised media and it makes the game a little bit easier for them. Quality financial news are particularly hard to come by for free and a higher percentage of the target group is willing to pay for them.

For many others it’s harder and they very often can’t get it quite right. They struggle to get enough subscribers to make the media profitable and to balance the paywall with the inevitable loss of readership. Most grant free access to a few articles a month before the wall comes up. But the fewer free articles are on offer, the more readers you lose with consequent loss of “reach” and advertising revenue. The more the reader can get without paying, the less incentive to actually subscribe to remove the wall.

A world on a screen
An issue at hand here is that in the days of print only (and it’s not that long ago) a lot of us would subscribe to one newspaper and that was it. It would be lying there by the door in the morning and would constitute a holistic view of the world taken in over tea. Or coffee.

But these days, of course, the whole world, almost literally, is right there on the screen. On social media I get links to, say, Financial Times, The Economist or Danish newspaper Børsen and I click to read but are blocked by the paywall and simply leave again. I don’t want to pay for a monthly subscription to read a couple of articles a month in Financial Times. And another one to read a couple in The Economist. And another one to … you get the picture.

We all lose out. I don’t get the content. My friend who posted the link won’t get a debate going because few can read this particular piece of content that he can. And the media lost me as a reader and possibly as a paying customer.

Subscriptions, subscriptions
So the simple question here is: Whatever happened to micropayments? That wonderful idea that the internet should basically be pay-per-view. It was much talked about a few years back but has been quietly sidestepped in favour of subscriptions. Tons of them. And not just for the media. Cloud based software is now usually subscription based too — even if we only use it sporadically.

Businesses love subscription-based business models. Subscriptions provide recurring revenue and a solid foundation instead of having to chase sales on a single unit basis. Old print media relied on subscribers too. Usually more than 90% of a circulation was sent out to subscribers. The rest, the ones on display at the newsstand, was mostly a way of attracting more subscribers.

But now this old fashioned business model is isolating information channels instead of making full use of the internet’s global mesh.

The Danish newspaper Børsen (the Danish equivalent of ‘The Financial Times’) normally operates a tight paywall but recently realised the sharing issues and introduced a free-from-social concept. Basically, if you arrive at an article by clicking a link posted by a subscriber on his or her Twitter or Facebook page, you’re allowed to read it even if you are not a subscriber yourself.

This is a good idea. Børsen will get more of a debate going which is good for the brand and they’ll probably end up with a few more subscribers because of it.

But they could have done even better with micropayments. And so could The Guardian, The Economist, The New York Times and all the others.

Subscribe to music, pay for journalism
The system proved itself with iTunes which in a sense is a micropayment system. You don’t have to subscribe or buy a whole album but can pick the songs you like and pay very little for each of them. Pay-as-you-go. You are already logged in and don’t have to pull out your credit card, type in numbers, passwords, security codes and other nastiness. You just click and the song is yours. The payment is automatic.

Today, subscription based services such as Spotify are tough competitors to iTunes, but these only work because they have everything, or almost everything, on offer. You don’t need to subscribe to Spotify and five other services to get access to all the music you want. One will do. If someone recommends a song to you on Facebook, chances are you’ll find it on Spotify.

That’s not the case with journalistic media which is why the pay-as-you-go solution is much better suited here. Not only would it make it possible to access whatever content you may come across without worrying about who you subscribe to — it would make all this content infinitely shareable.

Everybody wins
Predictions of this nature are tough, but I am convinced that also the media would win with micropayments. Content would be shareable to everybody and the readership would be bigger meaning better ad revenue and more users to monetise. You could even install algorithms that optimised revenue by adjusting the price of an article according to its demand.

Of course, there’s nothing to say that media can’t operate with both a subscription and a micropayment solution. After all, subscribers equal steady revenue, and pride is at play here as well, of course. Selling by the gram is not as brand and ego boosting as selling tickets to the show. And for those who still prefer the holistic world view over tea in the morning, one all-you-can-eat subscription would make good sense.

So while micropayments as a structural tool has dropped off the radar the past few years, I feel convinced that it will make a very strong comeback at some point, even if it still has a long way to go. The tech simply isn’t in place yet. While Silicon Valley is busy funding apps that go “yo” or share photos really quickly, not much is currently being put into developing a micropayment infrastructure. Bitwall is one of a few very small enterprises that is trying to swim upstream.

For micropayments to succeed, we need a ubiquitous system that is super easy to use. It could work like this:

  1. Through your bank, you hook your account up to a micropayment service that in effect works as a micro direct debit service. We could do away with the bank here, but let’s keep it simple.
  2. You install a plug-in in your browser.
  3. The next time you arrive at an article you’d like to read, its price is displayed. It could be, say, €0.05. Want to pay that to read it? Simply click “read” and 0.05€ is deducted from your account. You can always check your balance in your browser and a breakdown of what you’ve paid for on your personal page with the micropayment service.
micropayments mock-up

Mock-up made with an article on the front page of theguardian.com. See the price and length of the article before clicking.

Micropayments in browser

The beauty of the system, of course, is that the dedicated blogger that writes thoroughly researched articles about unreleased Ramones recordings can use exactly the same system that The New York Times and everybody else is using. One account. Access to everything. Micropayments is the way to satisfy both content producers and content consumers in both the mainstream and the long tail.