Micropayments For News Stories Make a Comeback. (Maybe.)

    by Matt Carroll
    July 28, 2015
    Photo by jessamyn west on Flickr and used here with Creative Commons license.

    Journalism has a revenue problem  — as in, not enough. News companies are desperate for solutions, scrounging pennies and quarters from the back of the couch. Paywalls this month, pay-to-play events next month. A little here, a little there. And when one solution doesn’t work, news digs up an older idea and tries it in a different flavor.

    Such as micropayments. The idea has spluttered and failed in different incarnations for 20 years, at least. My old college roommate worked for a micropayment company (failure, natch) back in the mid-90s.

    "Tipsy features an intriguing twist, making it interesting (and promising). It works like this: Instead of paying a fixed amount for every story read, like a typical micropayment, readers volunteer to pay a flat amount  -- say $5, $20, or whatever a month. The user picks the amount and the time frame."

    An ‘intriguing twist’ on micropayments

    Now micropayments are back again, generating at least moderately positive news. For instance, there’s Blendle, which has attracted interest with its “one paywall, many publications” model.

    And here comes Tipsy, a Chrome browser extension created by MIT Professor David Karger and his students. Tipsy features an intriguing twist, making it interesting (and promising).

    It works like this: Instead of paying a fixed amount for every story read, like a typical micropayment, readers volunteer to pay a flat amount  — say $5, $20, or whatever per month. The user picks the amount and the time frame.


    The money is then divvied up by publishers. The default is to divide the money by time spent on sites which use Tipsy, but that can be changed at any point by the user. It’s somewhat like Flattr, another micropayment site, but easier to use.

    The fixed amount structure is a major change from past systems. Before, readers would worry about impact on their wallet: “Wait  —  how many articles have I read on this site? How much do I owe?” Tipsy takes that question totally out of the equation; it’s a non-factor. The reader decides how much he or she wants to pay; no more worries about accidentally burning through the kid’s college fund.

    Tipsy doesn’t take a cut, either. All the money goes straight to the publications, using a payment system picked by the user. It doesn’t even touch the money at any point. The cash goes through either PayPal, which collects a transaction fee, or Dwolla, a payment system with no transaction fees.

    Nor is Tipsy in the data collection game, which is an increasing point of conflict with users everywhere. (With this important caveat: Tipsy asks users if it can collect anonymized data about what sites are visited, so those sites can be approached about using the tool. Users can decline to participate. The key word is “anonymized”  — specific users are not tracked.)

    If making money is not the point, what is?

    So Tipsy doesn’t take a slice of the cash pie and doesn’t sell your data to marketeers who call at midnight. How does it make money to support itself?

    It doesn’t, said Professor Karger, who works in MIT’s Computer Science and Artificial Intelligence Laboratory, or CSAIL. Tipsy isn’t about making money, he says. He’s doing this for altruistic reasons. He also feels Tipsy will discourage users if it takes a transaction fee. He says this is about helping support institutions  —  like the news media  —  which face serious financial pressure. Will everyone use Tipsy? No, says Karger, but he thinks there are enough people out there who will that it can make a difference, pointing to the many who willingly and happily donate each year to nonprofits such as NPR.

    The system doesn’t need much to keep it going. Tipsy was created with a grant from the Knight Foundation’s prototype fund. It doesn’t run on a server, or need infrastructure, or staff. It will need some minimal upkeep as a browser extension, but Karger is not worried about that.

    Because it is open source, he believes that if it takes off, people will step forward to maintain it  —  or people could use it as the standard and create a better tool. He would be happy either way.

    Perhaps more importantly than the tool itself, Karger hopes the open-source tool can become a de facto standard for other micropayment companies. He hopes other tools using the standard are developed, making the payment system more widespread. The more people and sites who use it, the better its chances of succeeding.

    But signing up those users and content providers is a major hurdle. It’s a classic chicken or egg problem: Users won’t sign up if there are no content providers , and content providers are reluctant to participate without a user base.

    Photo by Chapendra on Flickr and used here with Creative Commons license.

    Photo by Chapendra on Flickr and used here with Creative Commons license.

    Karger is tackling the content producer side first, figuring it’s easier to get users if a number of interesting organizations participate. He has only one organization so far, but it’s a good one  — Pro Publica, the nationally recognized, nonprofit news site.

    Will other content producers try it? We’ll see. On the plus side, it’s low risk. It involves adding a two-line file to their code. That’s about it, unless they have a particularly complicated sites with different organizations that might need to split the money among themselves. They don’t even give up data on their customers.

    Can Tipsy make a big financial impact for news organizations? It’s difficult for me to imagine huge swathes of readers voluntarily signing up to give their money away, especially to for-profit news companies. But I suspect that Karger is right when he says there are some  — probably a fractional percent —  readers who are worried enough about the financial viability of news and what it means to our democratic system that they are willing to fork over a few bucks every month. So maybe Tipsy adds a bit to the bottom line. Maybe it’s not a ton, but who’s to complain? And who knows  —  maybe Karger is right. Maybe a bit turns out to be a bunch.

    Tipsy might work better for nonprofit organizations, such as public radio and TV, where the readers are already conditioned to give. They might see this as a friendlier alternative than getting dunned on public radio or TV every few months. Karger notes that charitable giving last year was about $335 billion. (BTW: This is a system that can work with any type of content producer, not just news. But news is my background, and Karger’s interest, so that’s my focus.)

    Can Tipsy save the news industry? Nope. But it might provide a few more dimes and quarters from the back of the couch. And every little bit helps.

    This post originally appeared on Medium.

    Matt Carroll runs the Future of News initiative at the MIT Media Lab. He also publishes a weekly newsletter, “3 to read,” about trends in the news media.

    Tagged: blendle Dwolla flattr micropayments MIT’s Computer Science and Artificial Intelligence Laboratory paywalls Tipsy

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