Are micropayments a viable way to support the news business?

Journalism is in an existential crisis: revenue to news organisations has fallen off a cliff over the past two decades and no clear business model is emerging to sustain news in the digital era.

In the latest in our series on business models for the news media, journalist and academic Jane Singer looks at the use of micropayments.

Once upon a time, the gap between the relatively low supply of something in high demand – timely and trustworthy information – generated enormous profits for news publishers. But over the past 15 years or so, the digital, social and mobile revolutions have all but obliterated that gap.

In response, publishers have scrambled for new revenue streams, and much recent attention has turned to “micropayments” – the payment of a very small amount to access a comparably small bit of content, such as a single story.

The traditional media world is one of bundled information, with a lot of diverse content in one package that aims to provide something for everyone. The digital world, though, is an unbundled one. It enables each individual to select one item at a time from among the billions of things on offer. Are we willing to pay for this content? Sometimes yes – see iTunes.

But the question for news outlets is whether personalised news can follow the lead of personalised entertainment in generating interest and – in their fondest dreams – income.

Blendle is poised to take on the US market. Blendle

So far, news micropayment initiatives are – at best – a work in progress. The most buzz has been around a Dutch service called Blendle, which claims half a million registered users in Europe and is poised to tackle the US market. Most items on Blendle, which come from diverse outlets, cost between 10 cents and 90 cents and come with a money-back guarantee: you only pay for stories you actually read – and if you then don’t like them, you can ask for your pennies back.

The slick interface appeals to fans, as does the lack of advertising (and advertising’s attendant clickbait). But others have flatly predicted the concept is doomed to fail. News consumers want to pay nothing, they say, and even a very small amount of money is not nothing.

Who pays the piper?

But perhaps the model here is not an “iTunes for journalism”, if by journalism we mean big-name branded content. Perhaps a crowdfunding site such as Kickstarter offers a better template – the ability for users to stack their coins behind ideas they want to see developed rather than existing stories they want to read.

Experiments with crowdfunded journalism have proliferated. One flavour is essentially a low-cost membership model that allows its member – or donors – to steer journalists to topics of interest. MinnPost, a non-profit site in Minnesota, has made good use of this approach. For instance, a New Americans beat, which covers the state’s immigrant and refugee communities, was launched last October based on pledges from interested donors.

In Scotland, a new investigative journalism site called The Ferret also pursues topics that its users say they want; fracking was an early example. And in the Netherlands, de Correspondent drew donations of more than a million euros in just eight days simply on the promise of delivering high-quality stories about important topics rather than “the latest hype”.

The other approach reverses the process, in a way, and is closer to the familiar crowdfunding concept – journalists propose ideas they would like to pursue and users back the ones they like. Stories that meet their funding target get written; those that don’t, don’t. Perhaps the most innovative example came from a British site called Contributoria, backed by the Guardian Media Group. Over a period of 21 months in 2014 and 2015, Contributoria published nearly 800 articles on topics from urban regeneration in Beirut to a day in the life of a bookie; its writers earned a total of £260,000 over that time, most of it built up from quite small individual payments.

Sustainability

However, such experiments have proved hard to sustain. Contributoria closed in October 2015, with its co-founder declaring that crowdfunding was just one piece of the puzzle. What the initiative really showed, he told journalism.co.uk, was that people have a “voracious appetite … to be part of the journalism process, including the way it gets financed”.

Perhaps that is, for now, the takeaway point on micropayments. The desire being given voice is less about paying for journalism than for having a stake in it. News organisations fervently hope that stake will be financial, but for users, “ownership” of the news seems more important than the payment involved.

As information proliferates wildly, consumers are saying they want a sense of control over it. Digital media gives them the ability to be reporters, but mostly, they seem to want to be editors: the gatekeepers who decide what news they will see by commissioning a freelance article, or steering an investigative team toward a topic, or engaging with this niche news app but not that one.

Getting the mix right

For news organisations, then, micropayments are just one option among many in a fragile and fractured digital ecosystem – something to add to the revenue mix if doing so requires only small investments of time, effort or money.

While experimentation is all to the good, the pay-off from this option seems inherently small. The vast majority of online users do not pay now for digital news and have no plans to change their ways. There’s no evidence of a massive demand from users for the ability to pay upfront to read news content – and, even if there were, the small amount of revenue generated on any given day would fluctuate considerably depending on what was on offer. This is not the most desirable funding model for organisations that need a stable financial base to support staff, infrastructure and the ongoing ability to hold the powerful to account.

The reverse option – enabling news consumers to steer the direction of journalistic investigations – seems more plausible and the various non-profit enterprises I’ve mentioned are among those offering examples of ways this might work.

But news users aren’t the only ones who like to be in control. Journalists tend to be fiercely committed to the notion of editorial independence – which is another way of saying that they like to decide for themselves what is and isn’t news. Whether they will be willing to share that control – and, if so, what they might be able to extract from users in exchange – remains to be seen.

Jane B. Singer is affiliated with the Online News Association and several academic organisations in the field of journalism studies.

Jane B. Singer, Professor of Journalism Innovation , City University London

This article was originally published on The Conversation. Read the original article.