The emergence of micropayments in the e-commerce market has long been anticipated due to the rising number of online shoppers. Defined as any online transaction up to $10.00, micropayments allow for a la carte service on the web, replacing subscription models.
The history of the Web has seen many micropayments startups that tried to give consumers an easy way to pay for online content à la carte. But despite the rapid rise and fall of startups such as Beenz, BitPass and Peppercoin, new players and publishers are not letting go of the micropayments dream.
Blendle for example is an “iTunes for news” app and website that allows readers access individual articles for $0.13 to $0.38. It launched last year and has not only roped in all the major Dutch publishers, but also grabbed the interest of The New York Times, The Wall Street Journal and The Washington Post, which are interested to put their own content on the service. Germany’s Axel Springer together with The New York Times also led Blendle’s $3.8 million funding round last fall.
“There’s something intriguing about the model, it’s almost an E-ZPass for content. You don’t have to think about it,” said Kelly Leach, CEO of paywall service Piano Media. “But the experience so far is that it doesn’t necessarily work well for consumers.”
To understand the challenges it faces, follow the money — or the lack thereof People have little interest in paying for news in the first place. According to a report recently from IAB, adults in the U.K. are willing to pay just $1.36 a month subscription for news sites, less than they would be willing to access video, search engines and even their email.
Consumers not willing to pay for news stems from how the Web has changed the basic economics of content creation and consumer behaviour. Due to the tons of free options available to readers, it’s hard to convince them to pay for content.
Micropayments are mentally taxing for users as they have to think hard about every article they want to read. “When you meter this stuff, you’re asking readers to think before every article whether it’s important enough for them and worth the money, whether the writers are good enough and a host of other things,” said Gene Hoffman, CEO of subscription service company Vindicia, echoing Clay Shirky, who called the world “micropayment” a “trope for desperation.” Not forgetting the credit card fees that eat into each transaction, Hoffman added.
“I don’t believe that people are willing to pay 10 or 30 cents to purchase one story at a time,” said Frederic Filloux, founder of The Monday Note. “We are in desperate times. When someone shows up with a neatly packaged model, everybody is afraid to miss a possible train.”
Even Blendle sees limits to its model. It doesn’t see users handing over cash in exchange for breaking new stories, for example. “It’s not about news for us,” said company co-founder Alexander Klöpping. “The short stories don’t work on Blendle at all because that information has become a commodity.”
Klöpping said that on the other hand, Blendle’s users have been on the other hand far more willing to pay for longer features and analysis, which can go for over a dollar. The site has 200,000 users, 20% of which have paid for content, he added.
“A lot of the previous problems with micropayments have been due to bad implementation,” Klöpping said. “This is end a product question. But our whole point is that if you implement it well, it can work.”