No such thing as free love — but free content? Maybe
Can micropayments firms from Sweden and the Netherlands really be the saviours of the newspaper industry? Read all about it, writes Steve Dempsey
Published 31/05/2015 | 02:30
There's been a lot of bad news for newspapers in the last few years. There's been an international trend of dwindling circulation, falling ad revenues and sluggish digital revenues. In short, it's been tough going.
But, in its recent global entertainment and media outlook, PwC predicted that the newspaper industry's global revenue decline would finally end this year. And now a new self-appointed saviour of newspapers has appeared.
Maybe things are looking up?
Klarna is the media messiah in question. It's a Swedish payments company that processes 250,000 payments every day. What does it do that's so revolutionary? It delays the act of payment; customers enter very little personal information at the point of purchase, but confirm their purchase and choose how they want to pay later via email. This approach improves conversion rates, according to Klarna, and is perfect for newspapers that want to use micropayments to monetise their content. This is where readers pay small amounts for each individual article, rather than buying a whole paper, or a full subscription.
Klarna's deputy CEO, Niklas Adalberth, believes that the typical registration and subscription solutions rolled out by news media outlets don't turn readers into paying customers.
"Klarna's solution can save online media from its current technology shift shock," he says. "We have been simplifying buying in e-commerce for 10 years now, by removing friction such as registration processes and by only asking users for top of mind information.
"The absolute key to get readers to start to pay for content is to simplify their experience, both when consuming content and when paying for it."
So does it work? Well, it seems to in Sweden, where Klarna accounts for 30pc of all online purchases. And now, thanks to a partnership with the Bonnier Group, a publishing giant that owns hundreds of companies in 16 countries, Klarna is trying out its methods on the media. The plan is that online readers of Bonnier Group papers will be able to pay €1 for a day pass and will soon be able to buy individual articles for small sums.
"We're collaborating very closely with Bonnier to run tests and we're very impressed by their ability to adapt and embrace new technology," Adalberth says. "Aside from making it easier to buy online content, we're also helping media outlets customise content and improve their ad targeting."
But Klarna isn't the only dog that's barking up the micropayments tree. There's also Blendle, a Dutch company that hit the headlines last year when the New York Times and German publisher Axel Springer invested €3m in its product.
Blendle is the original poster boy for micropayments. It was originally launched as the iTunes of journalism - just as iTunes lets you unpack albums and buy individual tracks, Blendle allows readers pick and mix their favourite articles from a range of publications.
However, Duco van Lanschot, Blendle's head of International, says it's more like the music subscription service, Spotify.
"Before Spotify, a lot of my friends were used to music being free," he says. "And let's be honest: it's still free - because you can find every song in the world for free on YouTube. But still, my friends gladly pay €10 per month for Spotify. They pay because they like the product: they can see what they're friends are listening to, they get great recommendations, all the songs are there and it looks fantastic. Spotify is just a great product. We try to make a great product around journalism."
Blendle offers an ad-free reading experience. It also offers readers their money back if they're not satisfied with what they've read. In return it offers publications 70pc of revenues, and allows them to set the price. But they've also developed a social element to help users discover content.
"Your social graph is on Blendle," says Van Lanschot. "So you can see what your friends have recommended. And there are curated topics, so you can see what interesting people have recommended in categories like tech, music and politics."
Blendle is currently working on other markets, but according to Van Lanschot it has done the business in the Netherlands.
"We have 300,000 users in the Netherlands and growing," he says, "with nothing spent on marketing. Some 70pc of our users are under 35. And revenue doubles every six months."
Good news for Blendle. But is it good news for the newspaper industry?
Well, Blendle faces a particular dilemma; the more successful it becomes, the more it may undermine the publishers it's trying to help. Sure, it works hard to replicate its partners' brands on its platform - each publication's look and feel is replicated via a custom-built cascading style sheet - but I can't help thinking that brands that sign up to Blendle are outsourcing their relationship with their readership. The media shouldn't need an intermediary. And publications should be wary of a tech firm that lets consumers pick apart their brand.
Regardless, there's a bigger challenge for the likes of Blendle and Klarna: the abundance of information. There's a lot of free writing out there on that damn internet. And while some people are undoubtedly willing to pay for quality journalism, a whole generation has grown up expecting it to be free online. No matter how frictionless the payment method, or how ad-less the platform, if consumers don't want to pay - and aren't used to paying - they ain't gonna pay.
Let's go back to PwC and its global entertainment and media outlook. Sure, the prediction was that the news media's revenue slump would end this year, but PwC doesn't think paywalls or micropayments are going to play much of a part. By 2018, it expects digital circulation to make up just 8pc of total global circulation revenue.
Consuming content for free is a hard habit to break.
Sunday Indo Business