Micropayments Tavares

When asked what would the Big Idea of 2015 be, Walter Isaacson, the CEO of the Aspen Institute and the author of an award-winning Steve Jobs biography, argued that “digital currencies and micropayments are likely to be the disruptive innovation”. In his view, “frictionless coin systems that allow us to buy digital content on impulse would support journalists who want to cater to their readers rather than just to advertisers.” In short, they could help save journalism.

Whatever the indicator we look at – number of active newspapers, sales/circulation, number of active journalists, ad revenues – we are bound to conclude that newspapers are being hit by a severe crisis. In the Internet age and with the meteoric rise of social media sites, print and online newspapers have to compete with alternative advertising and communication models, bear diminishing reader interest, and face significant revenue cuts. There were 1,730 American newspapers in 1981 against only 1,331 at the end of 2014 (23 percent decrease). The industry’s print and digital ad revenue plunged from US$ 49.4 billion in 2005 to US$ 19.9 billion in 2014 (60 percent decrease). Newsrooms workforce is down to 36,700 from 55,000 in 2006 (33 percent decrease).

Thus far, journalism has built its business plan on paid print circulation or advertisement. When revenues go downstream the solution has been pushing readers to buy an online subscription. But all these mechanisms demoralize consumers. Ads and subscriptions are obstacles into a truly tailor-made and immediate way of consuming journalism. In media, supply and demand is not only an economical connection but represent an intimate and individual conduit between consumer and message that should be nourished and kept aseptic.

Digital currencies and micropayments (an online financial transaction involving a very small sum of money) answer that claim. In an effortless way, micropayments allow consumers to pay only for what they wish to read. They don’t need to get an annual subscription of a general newspaper when they only read the politics and economic sections and they don’t need to be hit by real estate ads when they just invested in a new property. It is taintless transfer of information.

Micropayments have grown in importance over the last 3-4 years but its application to news is very cutting edge. Canada’s Winnipeg Free Press may have been the first paper in North America to adopt the method (in 2015). It charges CAN $0.27 per article. Blendle is a Dutch online news platform that aggregates articles from a variety of newspapers and magazines and sells them on a pay-per-article basis. Launched in 2014 it was Europe’s first (to kick off in the United States in 2016). It charges around €0.25 (depending on the type of article).

Brazil

Brazil has until now stayed far from these trends. Newspapers have been forced to make massive job cuts. Printed circulation declined 13 percent in 2015 while digital circulation increased 27 percent. Printed media is expensive and part of the past. But the escalating digital media, most of it dependent on annual subscriptions, is still a far cry from the tailor-made experience consumers are increasingly pressing to have.

This is the context that led Pessoa magazine to first introduce micropayments in Brazil in March 2016. Founded in 2010 and with a track record of printed issues and free-of-charge digital version, Pessoa is the largest online platform on literature in Portuguese. The magazine still gives readers the chance to buy monthly, 6-month or annual subscriptions, but for the first time they can simply spend R$ 0,69 (US$ 0,28) to read the article they wish. Just like Uber or iTunes, they only need to sign up once and they are charged automatically.

It may actually be the first time micropayment is applied to literature. The application of a disruptive mechanism in a typically conservative industry may be a game-changer that brings benefits to everyone. This is what led me to make an individual investment in the magazine. Writers can immediately profit on their work and receive much-desired and prompt feedback from their readers. If their work is not purchased, authors know that it was not fully appreciated. Readers, on the other hand, have access to the literary creations they desire with no intermediaries or distractions. Micropayment undercuts brokers and foments proximity. The only go-between is the magazine itself that plays the role of quality-controller of what readers consume. Finally, for the magazine micropayments ensure a regular, even if fluctuant, source of income and by serving literature on a customized plate to its readers, it ends up stimulating and, often, even viralising culture. Micropaying for literature and news entails a behavioural change and a recalculation of individual comfort zones. For my generation born in the 1970s that listened to music played in vinyl and audio cassettes, the arrival of iTunes in 2001 was an oddity. Paying only for what you read in the press is the next normal.

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Notes:

  • This post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
  • Featured image credit: Screenshot of the home page of the Blendle news site 

Rodrigo TavaresRodrigo Tavares is CEO of Granito & Partners, an impact business management consulting firm in São Paulo, with representatives in London and Dubai. A former Senior Research Fellow at Harvard Kennedy School and at Columbia University (postdoc), he received his Ph.D. in Development Studies from the School of Global Studies at Gothenburg University.