You Only Get What You Don’t Pay for… Blockchain; Micropayments and No More Free Lunches

Free Lunch

Good or bad, the culture of the internet has always been “free”! It’s the way the internet was built in the early days, where business models were very simple; create great content; give it away for free; draw the crowds, and ride the advertising tsunami that came with it. So many dot com websites had stratospheric valuations on exactly this basis. Sadly, the reality of these models came crashing down alongside the dot com bubble itself. So does “free” work?

Free works on the basis of an audience being willing to accept contextual or behavioural based advertising. If we get adverts delivered to our retinas that are relevant to our needs at that time, most of us, as reasonable people, won’t really object. We do, however, resent non relevant ads that we consider as spam – you know the ones – the next anti-ageing miracle cure or the next great set of abs that are magically available just by clicking on a link. The problem is that poor targeting of advertising affects all of us – by adding to the volume of advertising pollution we all experience.

Currently, there are now so many channels for advertisers to reach us as their “target audience”. Indeed, for those of us living in a city we are typically exposed to around 5,000 messages and brand exposures every day according to the often quoted historic Yankelovich report. That’s 312 messages an hour; five every minute!; and what makes it worse is this is up from 2,000 a day 30 years earlier. With so much “noise”, it’s no surprise that people are reacting against advertising, some more than others.

In 2006, for example, the city of Sao Paulo in Brazil with a population of 12m people, took the unprecedented step of banning all billboard advertising, linked to a wider anti-pollution campaign at that time. Billboards were taken down, and whilst meeting with broad disagreement from the business community the action continued and has been present even to this day.

Whilst this offline action might be considered a little extreme, online behaviour is beginning to mirror this behaviour. A Page Fair and Adobe report in August 2015 showed that

“almost 200m internet users were now employing ad blocking software.”

Perhaps motivated by rising identity theft, or even Edward Snowden’s 2013 revelations about the use/abuse of private data by the NSA, almost 10% of global internet users are now proactively refusing to accept adverts – and its 50% up on 2014. So where does this leave publishers?

Publishers are concerned – and with good reason. This increased use of ad-blocking software has led to an estimated $20bn reduction in advertising revenues for 2015, with this further predicted to increase to $41bn by the end of 2016. The publishing model is under attack, with its very viability increasingly being called into question.

Publishers survive on a very simple equation of economics; generate more revenues from content than the cost of producing and managing that content. The problem is that quality content costs more money to produce. With falling advertising revenues, the publishing model is broken, with layoffs becoming increasingly common. As a result, publishers are frantically scrambling around to grab on to business models that offer the vaguest slither of hope for nirvana. Even the subscription models once touted as the potential saviour of the space don’t seem to be performing as effectively as many thought.

In a Worldpay report in August 2015, in which they interviewed over 7,000 respondents, subscription models are potentially under threat, with the report concluding:

  •  39% Don’t want to commit to ongoing subscriptions
  • 34% Cancelled subscription services within six months
  • 30% Believe subscriptions are bad value for money

Whilst the statistics do add salt to already gaping wounds, there was one glimmer of hope that came out of the report that perhaps gives us some early insight into the zeitgeist of current content users :

 “58% only want to pay for what they use…”

Now whilst at first sight this might appear innocuous, by applying a bit of lateral thought – perhaps it could create an opportunity worthy of further exploration…

If you had an interesting newspaper article or video in front of you, would you pay for it? If so, how much? $2, $1, $0.50c, $0.25c, $10c? Given a subscription may cost you around $10 – $20 a month, the very low cost option of reading an individual article may have some appeal. At these lower levels of micropayments, however, the current financial models for credit cards payments online present a challenge.

The majority of credit card processors charge a minimum of 30c (plus a % of the transaction) for processing. The finance costs alone currently don’t make commercial sense for publishers for anything less than 50 cents. It is here that blockchain and cryptocurrencies could help.

The divisibility of cryptocurrencies (bitcoin in theory can be divided into 100 millionths) and the very low costs of processing crytocurrencies could enable the financial costs of micropayments to be reduced to a matter of a few cents. At this level, even a cost of 10c for a piece of content could have the potential for viability. Here at Veredictum, as part of the smart ownership and distribution platform for video content producers we are developing, we are working on a video platform that enables micropayments to be paid for videos. The question is are audiences actually willing to pay? Ask yourself “Would you be willing to pay a small amount for a video or piece of content?”

Perhaps by focusing on “what am I really interested in?” could determine your own propensity to pay for content – albeit with micropayments. For example, if you are working with or researching the leading edge material for Virtual Reality how much would you pay for an interview with the latest thought leader on the subject? $1, 50c, 25c? Or if you were an avid Geelong supporter, and there were some exclusive content? My argument is that if the material had value to you, the same content was unavailable elsewhere and it was cheap enough to buy, you would probably pay for it – especially if it was easy to use, easy to pay for and was of high quality. To see if this is the case – lets ask the Dutch.

In Utrecht in the Netherlands, there is a tech startup, run by ex-journalists, called Blendle. They have been focussed upon curating and selling high quality pieces of journalism. The people in Utrecht have shown they are willing to make micropayments for high quality content. Each individual article that is curated by the Blendle team, is available for download at a micropayment level – down to as low as 10c. So popular is the service, Blendle are said to have over 250,000 subscribers. Equally, such is the interest in this newly developed model, that The New York Times has invested $3.8m into the business and is launching the facility in the US imminently.

The publishing industry and other content providers are watching this experiment very carefully. For whilst the proof of the pudding will always be in the eating, especially in the largest market with a voracious and competitive appetite, could it finally mark the beginning of the end of the free lunch? Could it finally mark the end of free internet based content and get us all back to a semblance of commercial reality – where we actually get what we pay for?

Time will tell us. But without it or something like it, publishing will tend to gravitate towards the lowest common dominator with the competition for salacious gossip and crass gutter-press becoming the de facto standard; after all if it bleeds it leads. Is that a world we really want?

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If you are interested in understanding more about the Blockchain, its power and its challenges, why not check out my new book Down The Rabbit Hole, a book for business & non-technical people, like you, to truly understand the Blockchain & to capitalize on its power. Its available on :

Amazon –Amazon.com: Blockchain: Down The Rabbit Hole: (Discover The Power Of The Bockchain) eBook: Tim Lea: Kindle Store

Down The Rabbit Hole


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