Microtransactions And The News
Funding presents a major problem for journalism – could microtransactions create a solution?
Since the dawn of the internet, publishers and the journalism world in general have been struggling to find a solution for the sharp reduction in revenue and profits that the digital media revolution brought with it. From the old-school and somewhat stubborn approach of erecting paywalls on all content, to the more risky idea of simply making all content free and hoping to come up with a funding model based on traffic, nobody has quite mastered the shift. With that said, there are plenty of people and startups still trying.
How Do We Fund The Future Of Journalism?
There’s been a surge recently in the trend of “microtransactions”, or asking readers to pay a small fee for each article they read, thereby freeing publishers from being tied to advertising revenue. This idea seems to fall in and out of vogue with publishers, as the Guardian writes: “The idea of micropayments for journalism has been mooted for as long as digital media has existed, and largely rejected as unworkable or unacceptable to the new generation of readers. In response to the emerging mobile landscape, however, a few innovators are exploring whether the concept can be revived. As a journalist, it can be tempting to see them as the cavalry.”
The challenges facing publishers don’t just have to do with the shortage of advertisers willing to pay big money for digital ad space. Adblocking software, which was rolled out by Apple recently, allows internet users to view their favorite content free of ads, thereby preventing publishers from cashing in on the impressions their page view normally provides. Furthermore, the publishing of content on social media platforms via Facebook’s Instant Articles or Snapchat’s Discover function means that publishers are losing out on web traffic entirely, while still providing their content for free.
With all this tumult, you can see why the microtransaction method might be coming back to the fore. Here is a look at some recent models that have attracted attention—for better or for worse—from the publishing world.
Agencies Approaching Microtransactions
Blendle: The Dutch startup recently launched in America, persuading a range of high profile publications including The New York Times to sign up to its model. The publications signed up will “share with an audience of 10,000 test users articles for between $0.09 and $0.49 (9-49 cents),” according to TechCrunch.
Lumi news: Focusing on personalization, the founders of Lumi News use the same kinds of algorithms that advertisers use to automatically tailor your content choices to that which you are most likely to want to read. However, they have not yet announced their funding model.
Brave: Brave was created in response to Adblocking software. As the Guardian reports, Brave’s “new trick was to strip out ads sold with news content and replace them with ads of its own … to enable quicker loading of news pages, and to ‘protect the data sovereignty and anonymity’ of users.” Brave then passes 55-75% of their own ad revenue onto publishers. Unsurprisingly, they were promptly served with a lawsuit from a group of 17 American publishers, including the New York Times and Washington Post.
Flattr Plus: This is a partnership between AdBlock Plus and Flattr which allows readers to pay the publishers putting out the content they consume, but still allows it to be viewed in an ad-free environment. Users can set a monthly budget for how much they want to spend, and then their browsing activity is tracked to see what websites they visited and content they consumed. According to TechCrunch, the product is still in Beta testing, but its founder hopes “to earn half a billion dollars in revenue for publishers next year.”