Why micropayments will never be a thing in journalism

June 15, 2020
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It circulates every few weeks on social media, and gets thousands of shares each time—often when a news outlet has announced layoffs or losses. Why, someone asks, has the journalism industry still not made it possible to pay a few cents to read a single article, instead of buying a subscription?

There are many sites, advocates of the idea will say, for which they would not consider a subscription but would read the occasional story. But they are denied by a paywall. Given that demand, a simple cross-publication mechanism to pay, say, twenty cents for an article, or fifty cents for a feature, would surely be a revenue-raiser.

The idea has definitely occurred to major publishers across the planet. Publishers can be accused of being slow to wake up to the internet, but they’re not that slow, nor that likely to leave money on the table. 

But there is, it turns out, a long list of reasons you can’t pay for journalism by the article—and why you shouldn’t expect to see the idea catch on anytime soon. 

One of the core reasons publishers are reluctant to adopt this mechanism is that most publications are conceived as package deals. Premium outlets want to sign up subscribers, especially on recurrent payment plans. That means you decide once, and then the cost to you is invisible. If the subscription includes a print product, this also vastly increases your value to advertisers. A single new subscription might be worth, on average, hundreds of dollars of annual revenue to a publication.

At the moment, most users encountering new and tempting content on such a site will just click away when they hit the paywall—but a small fraction will subscribe. If a third option of paying twenty cents is added, some from each group will choose that. 

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But if a subscription is worth a hundred dollars a year to a publisher, then even one person clicking on the twenty-cent button instead means the publisher needs five hundred people to buy articles to make up for the lost revenue. The ratios are different for different outlets, but the math remains intimidating.

There’s also a philosophical objection. As noted, newspapers and magazines have been conceived as a package—a mix of the light and the heavy. Some stories cost far more to produce than others, but it balances out because you buy the whole thing. That logic dies if you separate them out. 

The difference between subscribing to a newspaper or a magazine and paying per article is, says Tony Haile, the founder of analytics tool Chartbeat and now chief executive of Scroll, a startup providing ad-free browsing of various publications through an app, best understood in terms of gym memberships.

“At Equinox or somewhere like that, you might pay a hundred dollars a month. Now, you do have the single-serving thing—Barry’s Bootcamp and Soulcycle and so forth,” he says. “They’re all ridiculously expensive, and that works. 

“If you would take the micropayments version of a gym membership, it would be like, ‘I can turn up and I can pay a couple of quid, and I can go into the gym whenever I want to use it.’ No gym works like that.”

If an outlet wanted to try to start itself up on a pay-per-article model, it might work—but the price point would likely be much higher than the handful of cents we generally discuss. That gets trickier, Haile says, because information is fundamentally different from other arenas.

Gaming is perhaps the greatest triumph of micropayments. But in games, you know what you’re buying in advance—three extra lives, a hundred coins, whatever. For a journalistic article, you’ll only know whether you enjoyed it after you’ve finished it.

And gaming companies only have to deal with a few large partners to make it work. Media companies would need to devise a low-friction method for users to pay across sites owned by dozens of different publishers, without new log-ins and usernames each time. That would require lots of sites to take the plunge at once, agreeing on a system and a payment provider—which would presumably need to take a cut in order to keep operating.

“It’s Haile’s first law of media,” he says. “The success of any project is inversely correlated with the amount that requires publishers to work together.”

In the UK, one company is attempting it. Axate was started by Dominic Young, who previously led Rupert Murdoch’s scheme to push industry-wide collaboration. But they found that the publishers most willing to take the risk in joining were those that were not yet making money from subscriptions. Axate launched with very few publications, and thus not many articles. 

Matt Kelly, of the publisher Archant (disclosure: I have a column in one of its publications), was the second to join. “In truth it did very little business for us,” he says. “We felt eventually we needed to try a different approach to get people to support us.”

There are more problems still—difficulties in delineating which content would be paid for versus free, challenges with advertising, problems with middlemen. But they all amount to a core issue.

Readers would like to pick the very best content and pay less for it than they would if they subscribed. But no organization—media company, television network, or record company—can produce only hits. Nor should they try. 

And so it amounts, ultimately, to a reduction in revenue when we all need more. We’ve been waiting twenty-five years for micropayments. And it looks, at this moment, like they may never arrive.

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James Ball James Ball is a journalist, author, and fellow of the UK-based think tank Demos. His latest book is The Other Pandemic: How QAnon Conquered The World.