Publishing has evolved drastically over the past two decades, proving to be one of the industries most disrupted by the advent and proliferation of the internet. Ever-lower barriers to entry for new participants have led to more competition for publishers, as well as more noise for consumers. The result has been a broad decline in publishing revenue and a user experience dominated by increasingly invasive advertising. Bitcoin, with it’s unique applicability for micropayments, may eventually be able to conquer this problem.
An Old Model Disintegrates
Historically, revenue generation for publications was straightforward. Publishers would sell individual copies or subscriptions to customers, as well as space in the publication to advertisers. With print media being near-impossible to directly duplicate and/or repackage in a timely manner, content producers were able to build strong relationships with customers, forced to deliver value for the price paid or risk losing the customer forever.
And then the internet was invented. With consumers now having instant access to content from around the world, a new paradigm of media was born. Instead of buying a full paper, individual articles became the more efficient and widely-preferred method of consumption. Instead of seeking trusted brands, readers wound up reading pieces that were easiest to come across – first in search engines and eventually via social media.
While most would agree the exponential increase in information availability has been tremendously positive on the whole, the breaking of age-old relationships between customers and publishers has had some less-frequently acknowledged impacts. Publishing revenue has fallen dramatically, with newspaper advertising revenues falling 50% in just the last four years. Content providers have found themselves in a race to the bottom, doing whatever necessary for page views and the related ad revenue, competing with entrants who can now publish at almost no cost in an attempt to take whatever piece possible of the total advertising market share.
Incentives are Misaligned
With advertising being a primary revenue driver, views by whatever means possible become the dominant goal, rather than creating content of high quality to build a strong enough brand to charge consumers. Sites like The Huffington Post, bought by AOL in 2011 for $315 million, have come to dominate this market. HuffPo publishes a new article every 58 seconds, or between 1,600 and 2,000 per day, by contracting with a network of freelancers in an attempt to maintain relevance in search algorithms.
While HuffPo arguably executes on this model the best, the success of this model has led to the creation of content farms, or producers of quick, generally low quality content, often directly taking from other sources in an attempt to drive traffic and generate ad revenue.
But, even ad revenue from page views is becoming less profitable. Ad-blocking users now average some 10% of total web traffic, meaning content providers aren’t even being paid for an increasing share of their views. On top of that, average Cost-per-Click (CPC) and Cost-per-Mille (CPM) have fallen 33% and 53% since 2010, respectively – largely a result of the growth of real time bidding.
Perhaps the most troubling to learn about for the uninitiated is the meteoric rise of native advertising, or placing advertisements in places where consumers are already looking. In the world of publishing this often means branded content, or pieces that are explicitly paid for by advertisers but look and feel like any other article. This trend is growing dramatically, with 72% of corporate marketers saying they believe branded content is more effective than traditional advertising.
Naturally, as this market continues to grow, it will inevitably lead to distrust as readers have to question what the incentive is behind everything they read: is it to provide the best, most thoroughly researched content or to generate positive views for an advertiser? For example, the research piece you’re reading right now will go on to list a number of bitcoin companies in a later section. As far as you know, one or more of them may have paid us for inclusion, skewing our tone and your perception of their brand (this is of course not the case; TGB has never and will never produce paid content).
The problem most publications face is two-fold. First, most simply don’t have the brand equity to support paid subscriptions or readership. Producing content that has monetary value in itself means the company must have expertise in the subject matter beyond that of their readership, enabling them to provide insight and analysis that cannot be found or is merely replicated elsewhere. This is likely why The New York Times was able to grow by 40% year-over-year in the first half of 2013 to 738,000 subscribers and paywall revenue of $150 million, while the San Francisco Chronicle recently felt compelled to remove theirs altogether.
Second, even if a brand has the respect of its audience, facilitating paid a-la-carte views to match the trend in consumer behavior simply hasn’t been possible. Established companies like the New York Times or Wall Street Journal can produce enough quality content to support their $25 per month price, but smaller companies would run into disproportionately high credit card fees charging just a few dollars per month. Moreover, the notion of charging just a few cents for an individual article would be simply unfathomable with average credit card fees of 30 cents plus 3% of the sale price.
So what then is a publisher to do if they have strong brand equity and loyal readership, but don’t have the scale of the New York Times? What if they want to avoid tarnishing the user experience with invasive advertisements, as has been proven true by the increased adoption of adblock?
The Bitcoin Solution
In today’s world, quick payments online with little or no cost are readily available via bitcoin. Recognizing the potential this provides are a number of entrepreneurs looking to capitalize on what could be a game-changing industry update.
Micropayments of just a few cents per piece would offer greater incentive to consistently produce content worth paying for rather than optimize for headlines and SEO, since the probability of someone returning to a site where they didn’t receive ample value is low. Micropayments also reduce or eliminate the incentive to subvert the paywall, since the time to find a way around it may actually be economically more expensive than the few cents spent on the article. Enabling this are two companies that recently launched, offering bitcoin paywalls to solve this problem.
The company synced its product with Coinbase for seamless transaction processing and can generate a unique payment address for use with alternative wallets as well. If the user has a BitWall account, they can even set up trusted domains with which they automatically pay for content as its viewed to create a completely frictionless experience. BitWall is currently free to merchants for the first 1,000 transactions and costs 20% of revenue thereafter.
CEO Nic Meliones informed us BitWall is targeting written publishing first, but sees potential for nearly any form of media, including video and music. For an example implementation of BitWall, see Boost co-founder Brayton Williams’ blog.
Taking an alternative route is BitMonet, founded by Ankur Nandwani, who was Meliones’ partner on BitWall at the Hackathon before the two split ways. BitMonet elected to use the BitPay API and also offers a series of payment options. Like BitWall, users can view a single article, or opt to pay for unlimited access for one hour or one day.
At just a few cents (or potentially fractions of a cent) per article, the annual cost per person to support better content would be nominal. Realistically, we’re probably still years away from wide enough proliferation of bitcoin for these to work on their own for most publications. Until that becomes a realistic scenario, bitcoin paywalls may prove more immediately beneficial in tech publications or alongside traditional paywall payment methods as an additional option for the most forward thinking consumers.