Flattr – Could This Be a Solution? — BP #58

{10 Comments}

I watched a documentary last weekend about the world’s biggest bit torrent search engine, The Pirate Bay, called TPB AFK. Here’s a link to the NSFW movie on YouTube. During the film, one of TPB’s co-founders talks about a different project: Flattr, a social micropayments website. A user of Flattr first loads an amount onto their account each month. Let’s imagine $15. Then, as the user surfs the internet and comes across great content (e.g. one of TimelessFinance’s amazing posts), he finds the “Flattr” button nestled among the other social media buttons on a site and clicks it. (Sorry, no button here at the moment.) The content in question could be a news article, video, podcast — you get the idea. By clicking the Flattr button, the user adds the content creator to a monthly roster along with all the other sites he’s “Flattr’d” during the month. At the end of the month, the user’s account funds (minus a 10% administration fee for Flattr) are divided up among each content creator on the monthly roster. If he loaded $15, there’d be $13.50 available for distribution to content creators; if he clicked 30 Flattr buttons during the month, each creator would get 45 cents.

Flattr micropayments

Maybe this particular model will work, maybe it won’t. It seems to have stagnated somewhat in the years since its announcement. In fairness, this may be due, in part, to market manipulation by evil companies like Apple (thanks iFans for giving them free reign to ruin everything). To really take off, both users and publishers must adopt it en masse — but that creates a classic “chicken and the egg” conundrum.

Large-scale adoption will probably need to be grassroots or at least based on the participation of new media. Most old media industries remain complacent; not because they’re immune to a shakeup but simply because they’re composed of reactive not proactive companies. Television has flourished over the last decade thanks to premium TV channels and, lately, services like Hulu Plus. Music has done quite well at $0.99 a song, coupled with growth in value-added experiences such as concerts. $20 copies of movies for home consumption are dead-and-buried, along with Blockbuster, but theaters are more packed than ever and RedBox makes it cheap and easy to rent movies.

Newspapers haven’t done quite as well. Every time an elderly person dies, the total number of newspaper subscribers irreversibly drops by one. Advertising revenue alone is too flimsy to support a creative endeavour as labour-intensive and local-oriented as a newspaper. Why do I care about these paper artifacts? They deliver better investigative journalism, higher-quality content, and more in-depth stories than any other type of media (well, at least when the Toronto Star isn’t busy writing press releases for the Liberal party). Unlike TV or radio, newspapers offer much more than sound bites. Oh, and paper journos are held to vastly higher standards than bloggers (only stated in case the recent plagiarism scandal hadn’t made this abundantly clear).

Sadly, rather than adapt to the new reality of how people consume media, newspapers are trying to change that reality. Look at the paywalls recently put in place by Canada’s biggest newspapers and many of their local brands. By my calculation, it’d cost at least $60 a month to access the Toronto Star, the Globe and Mail, and the National Post. That’s way too much. I don’t need the printed paper copy; digital is just fine for me. I refuse to stick to a single news outlet; I won’t pay for TO Star’s biased coverage of provincial politics just to get their federal opinions. Non-subscribers can still access actual news stories from Google News, so $60 a month is way too much for the marginal benefit of subscription (that marginal benefit being the extra stories and analysis).

But I’d definitely be willing to pay something to access the Star, the G&M, and the National Post. My willingness to pay would be about $15 – 20 a month. Maybe $20 – 25 if the editions downloaded automatically to my Kobo by WiFi every morning or something awesome like that. Keep in mind that the variable cost of my digital-only subscription would be pennies. And they could still stuff my face with ads (in fact, they could even target these better because they’d have my demographic information and reading patterns). Each company could be paid a flat portion of revenue (e.g. based on current subscriber bases) plus an amount based on digital readership.

Don’t worry, I’m not delusional. I know there’s no way those three national newspapers would ever offer a combined digital pass. It’s even less likely that they’d adopt a system like Flattr (or develop one of their own) even though this system could help non-committal readers like me support newspapers. (e.g. If I left a “Flattr” tip on the Globe and Mail’s website, they could add an extra article view to my maximum monthly allowance of free views. But I digress; it’s useless to discuss such logistics because Old Media companies don’t think in such revolutionary terms.)

Thus I leave this Friday’s post with an even less satisfying conclusion than usual: I wish Canada’s newspapers would offer a combined digital-only service for a reasonable price or another unique solution to their revenue problems. But they never will and in the long-run Canada’s greatest newspapers will succumb to market pressures or get gobbled up by integrated media chains.

Luckily this post’s real conclusion is pictures of Cat.

//Cat//

She actually sleeps like this I see what you did there What're you doing? Trademark grin Sees Wal-Mart greeter. Wal-mart greeter fawns. Cat smiles. We're only watching the skies Pretty eyes loves sitting in the seat

And I lied. The conclusion is a YouTube video.

//YouTube//

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10 Comments… Share your views

  1. I handed out $5 using a service called Tip the Web, which sounds somewhat similar to Flattr, but as you say, mass adoption is key. There’s a good chance that most of my tips went unclaimed, as the blogger has to claim their tips, which is probably not worth it, since I was giving out only a few bucks over numerous websites.

    If only one guy is tipping your blog, the revenue stream is more like a leaky faucet… dripping molasses… at the south pole.

    A better option would be if Paypal or Google offered such a service, and gave out little coupons or something when you gave money to websites.

    Media company paywalls turn me off. I can get by on the monthly freebies, but I’m careful about the links I click, mindful that I might waste my free articles.

    • The PayPal / Google idea makes total sense and I hadn’t even thought of it. In fact, Google could be an even BETTER fit than any of the other services. They own Feedburner which most bloggers rely upon to deliver their articles to folks’ RSS feeds and emails.

      And exactly — paywalls surely hurt their online advertising income. I’m sure they make up for it with online subscriptions, but I doubt they’ll make up for dropping paper subscribers — that latter dearth is what they need to fill to stay sustainable. If the current paywall system is their longterm plan to fix that, I see no hope. Unless they can get folks like you and me — people who don’t mind paying for something but it needs to be an exceptional value and there’s no way in heck we’d pay $60 a month for online newspapers — then they’re done. They’re literally spurning the very consumers they desperately NEED to be attracting. If it meant I could extend that paywall and I had to pay $0.20 an article beyond my first 30, I would absolutely load $20 a month on an account.

  2. A tipping system is pretty easy to overlook… a lot of websites have “donate $5 with paypal” buttons but I doubt those see a lot of action. The mythical micropayment system used as a paywall on good sites would be interesting. Paying anywhere from $0.10 to $1.00 for an article would be so easy that PF gurus would start writing about the paywall factor instead of the latte factor. The subscription could then be seen as a bulk discount/convenience for regular readers.

    That said I would think local newspapers could be the last to go. They have information that’s probably more relevant and unique than anyone else, and their advertising can be profitable direct-response stuff for local retailers that know they’re reaching the right market. They may have a demographic decline but otherwise they sound like the most defensible part of the media (and Buffet’s buying them). I thought subscribers were one of the weakest revenue streams so as long as they have good ads they might have a chance.

    • Buffett is right “there is no substitute for a local newspaper that is doing its job.” But that doesn’t protect them from losing money and going out of business. A lot of newspapers have hacked away their local reporters and do far more reprinting of stories from the Associated Press than investigation. There’s so many free alternatives developing… I’m bearish on most. With that being said, I own Winnepeg Free Press because I think it’s got a uniquely entrenched local readership; their civic support for local institutions just seems to far exceed that of most cities. Their continued strong cash flow seems like enough of a competitive moat to me, but I could be wrong.

      • Yeah, I remember a lot of talk of micro-payments as well. Doesn’t seem like it would be that daunting to set up. Kind of like pre-paid cell phones vs getting flogged for 36 months with a cell contract. Deposit $10 with the Globe and Mail and access 30 articles. Deposit $20 and get 80. The way it is now, I can just read what I can for free without bumping into the paywall. Works for me, but the Globe gets nothing.

        • True. I’m sure the only reason they won’t let individuals view it on that sort of pay-as-you-go plan is that regular subscribers paying an arm and a leg would get angry about (relative) free riders. Classic market segmentation problem.

        • A broader micropayments system would be more useful. I don’t think our national media adds much that I can’t get elsewhere but if I had a “general news” account I might pay to read the occasional article covering something that’s not in the FT or The Economist.

          Micropayments seem easy but the infrastructure cost could be a comparatively large percentage. I’m not sure if fraud issues would be smaller because of the size of the payments. If so that would definitely make them cheaper to offer.

  3. The newspapers simply don’t get it. I’m amazed that to run a classified ad in our local paper costs around $60 for a few weeks and isn’t half as effective as Craigslist. Their website sucks and the last I heard, they wanted to charge a subscription fee to access that too. They haven’t figured out that Free Content, big audience = big revenue dollars. It wouldn’t surprise me if they eventually become a Sunday Edition only.
    Flattr seems interesting. But how many readers want to put money into the system to reward good articles? Maybe bad posts should be charged a fine to fund the “tipping” pool (JK). Maybe they should combine the tipping concept with a virtual currency like bitcoin that could be used to buy advertising or something else of value to a blogger. Just a thought.

    • PayPal is money but I agree it’s not as useful as some forms of money (given the nutty fees at every step).

      Also agree that classifieds are just long dead. I don’t know how the heck they still make a go of it, excluding perhaps some of the bigger focused ones like home sales (realtors employ a shotgun approach to marketing and love being in print) and AutoTrader (very “ambidextrous” between online / offline).

  4. I concur re: Canadian newspapers. Access to several papers (that I want to read) for around $20 a month is within my WTP. Access to one for that price is laughable.

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