The Big Future of Micropayments: What You Need to Know

Business.com / Finances / Last Modified: February 22, 2017

Blendle allows newspaper readers to pay as they go in very small amounts. Might its micropayment model save the money troubled newspapers?

The newspaper industry is dying a slow death.

Even industry leaders such as The New York Times are still struggling to figure out a way to make digital platforms profitable as print revenues continue to decline.

Tess Saperstein in the Harvard Political Review comments, “Print readership is steadily declining, newspapers are closing, and journalists with decades of experience are being laid off…In this new age of technology, newspapers aren’t sure of how best to respond to many of the challenges they face today.”

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The Blendle Approach

A possible answer may be software startup Blendle, which according to The Wall Street Journal, promises to do for journalism what iTunes did for music—allow users to buy one article at a time, rather than a subscription to an entire publication.

Blendle’s business model of employing micropayments, “or the ability for readers to quickly buy individual articles with a minimum of form-filling, have long been a hope for a beleaguered news industry struggling to make ends meet online,” writes Ravi Somaiya ofThe New York Times.

Currently only available in Europe, with an expected beta launch stateside in early 2016, the purchase of a single story runs from roughly 22 cents to a little over a dollar. Pricing is set by the publisher and Blendle receives a 30 percent commission on each sale.

You start out with a wallet that holds a small amount of cash from which to debit and a single account to browse full issues of your favorite publications that appear online exactly like their print counterparts.

In addition, you can follow specific subject and journalists and receive email notification when an article relevant to your interests is published. You only pay for the articles you read, and even get your money back if you didn’t like it.

How and Why It Works

According to Frédéric Filloux in Monday Note, “With a frictionless registration process, the transaction system benefits from the same Apple-like sense of detail…It works fine on a desktop or a tablet, and on mobile devices that represent 60 percent of the world’s traffic (ten points more than many news outlets).”

Based in the Netherlands, where it currently has some 200,000 users, Blendle is the creation of co-founders Alexander Klöpping, a television technology journalist and former magazine writer Marten Blankesteijn. The New York Times Company and German publisher Axel Springer have together invested $3.8 billion for a 23 percent stake in the startup to fund expanding the app to additional markets. Blendle has also signed up national publishers as The Economist, The Wall Street Journal and The Washington Post to provide content.

Blendle users are typically younger, between 20 and 35 years old, with those aged 20 to 25 representing the largest block. Articles that sell the best are long-form, in-depth journalism, analysis and commentary. According to Medium:

The regular news doesn’t sell well...people tend to see that as a commodity. What the startup also sees is that gossip magazines get much higher refund percentages than average, as some of them are basically clickbait in print. People will only pay for content they find worth their money.

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Will the Micropayment Model Catch On?

The concept of micropayments, defined as any online transaction of less than $10 that allows “a la carte” service instead of a more expensive subscription commitment, has been around since the 1990s when ecommerce first started getting off the ground. As a Stanford paper, “Micropayments: A Viable Business Model?” points out, “The reason the micropayments have yet to catch on in an industry is because of the various implementation issues. Micropayment schemes need to make their systems fully reliable, secure and easy to use.”

Could Blendle’s “iTunes” interface and, perhaps more importantly, easy refund system, change all that?

Skeptics point out that Blendle has yet to prove itself on a widespread scale. Even in the Netherlands, its user base comprises only 1.2 percent of the region’s population, and only one out five users actually pays for content. Will Federman questions the notion of how to price an individual article, which is a little more complicated than a music track off a record.

[It] will expose publishers to the fact that their content is worth far less than current market value. I find it difficult to believe publishers could ever possibly reach consensus on how to uniformly price news content. Is a long-form article honestly worth the same amount as a piece of spot news? Do we discount content with no original reporting? Once the burden of pricing is put on the free market, it becomes a race to the bottom.

Even if the Blendle model works, at least for a news content application, there is a non-economic reason to be concerned of the effects of widespread adoption. Micropayments may inadvertently be putting blinders on readers. According to

According to University of Tennessee School of Journalism and Electronic Media study, “The findings demonstrate that while individuals are willing to purchase news via micropayment, they become less likely to select news from opinion-challenging sources.”

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Consequently, the financial success of the micropayment model for the newspaper industry may come with the high cost of degrading its core mission to inform readers through comprehensive and unbiased coverage that incorporates a spectrum of opinions and beliefs.

The counterargument is that readers already do this both by selecting what publications they read and the specific articles that draw their attention. The model, if successful, would impose a filter more difficult to see through, precisely because you’re paying for only what you want.

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