Last year, my colleague Greg Piehota wrote, “research shows that micropayments are not the panacea for news.” 

I genuinely thought we had given up on micropayments as an industry — until last week, when it was raised by three separate people, two of whom are pro micropayments and believe they can help the industry. 

And then again on stage by The Washington Post, which is introducing this as one of the ways they are revamping the business under new leadership. This article was written before the announcement and we couldn’t coordinate times before this was published, but I’ve added a short note at the end about this. 

In the meantime, below is the information I have gathered.

TLDR: I think it’s hard to find a way forward for micropayments to work. 

However, I have been convinced there is a way forward for what I will call mini-payments.

What’s the difference? The amount of money. I don’t believe there is an official definition so for the sake of this blog post, let’s call micropayments anything in cents (not over US$1) and mini-payments US$1-US$3. 

The case for micropayments

• It’s easier now than it ever has been to make micro payments with the advent of Venmo (U.S.), ApplePay, and others. It’s exceptionally easy to click and buy. 

• Younger users are more used to small payments, especially in games where payments and tipping are commonplace (although tipping means paying afterwards, not before, which may be better for membership/donation models.) 

• Most news organisations offer a full subscription or nothing. Micropayments could open up revenue from those willing to pay something but not a full subscription. 

The case against micropayments

• Asking users to buy at the article level means constant buying decisions, which we know is a huge friction point — even if they know they can get their money back if they don’t like it. This is one of the big learnings from Blendle. 

• The user needs to know what they are buying. Is that words? Is it outcome? Is an opening paragraph enough to decide?

• We live in a world of too much content. Can the user find something similar that’s free? Probably. The propensity to pay for news is a relatively small group.  

• There are still too many steps. Buying is one click. But this has to be done at a platform level to recognise a unique indicator (usually e-mail) that gives access to that content. So most users are lost after two to three steps.

• The economics don’t stack up. For companies, there is a 1.5% fee or US$0.25 minimum fee. If you are charging US$0.50, you immediately lose half of that. And if it’s ApplePay, you don’t get the credit card information either. 

• There is a risk of cannibalisation of subscribers. How big is that risk for you? It might be too big to warrant the new revenue plus the investment in additional technology and upkeep needed for micropayments. 

• Most organisations already use a single sign-on solution. For micropayments to work, they likely need to be tied to one of the incumbents, and not too many news organisations want to give even more control to a tech platform. 

The gray area

Or as I’d like to call it, the rosy area — as it’s a touch more optimistic:

1. Offer a day pass. This could be seen as a micropayment or a mini-subscription. Either way, it’s a hybrid solution that means a single buying decision and gives a user a good flavour of your product. And more control. A few organisations, including The Washington Post, are playing with this idea. 

2. A semi-regular customer who is not a subscriber may be open to a wallet type solution to pay as you go. These users would be identified after the value exchange of information for free articles has been completed — such as already having their e-mail address and asking for two to three more pieces of information in exchange for articles or other benefits. They come frequently but not enough to buy. This is where there is the greatest risk of cannibalisation. But it’s a solution that is still worth voicing. 

3. Or perhaps there is an industry-wide wallet type solution. A few are trying this. That would require a high degree of partnership from news companies and therefore would only likely be executed by a large aggregator such as Apple. And in many ways, that is what Apple does now, curated rather than custom selected within Apple Plus for US$9.99/month. 

4. Paying through a social platform. Imagine seeing something on Instagram or TikTok but not wanting to leave the platform. Would users pay for it? Maybe. It could solve a problem of monetising off-platform. But social platforms don’t offer this (yet). 

Why is this a product discussion? 

Dominic Young of Axate told me: “The New York Times is the same every day. Apart from the content.” Change needs to come from the product. He believes we need to switch mindsets from paying for content to paying for product. 

How is The Washington Post looking at this?

Dylan Byers of Puck writes of the WaPo stance on micropayments: “For non-core audiences, such as younger news consumers who engage with Post content on social media, the Post will also introduce a pay-as-you-go option to access single articles or work from a specific author. This offering isn’t about netting a few quarters and dimes from passersby, of course; it’s about getting their e-mail addresses and credit cards and putting them in the marketing funnel, with the hope that they’ll subscribe down the line.”

I do not know the WaPo audience or subscriber numbers in detail, so I can’t run the numbers. I’m sure that they have, and they have some of the top people in the subscriptions business. I truly hope they prove me wrong in my belief that the group of people who would buy one-off articles is too small, and the risk of cannibalisation too high, to make it worth building and maintaining the tech for individual articles. 

Thanks to those that have spoken to me about this and also who commented on Slack and unwittingly contributed to this piece.  

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