Nick Chowdrey is a business and technology writer and proud digital native. Currently based in Brighton, UK, he is a technical writer at Crunch Accounting and co-founder of Brighton-based bitcoin community Bitcoin Brighton. Here, he explores how bitcoin can play a part in the business of online content.
Making money from online content is hard work. A variety of different models and tactics have been tried down the years, but a solid solution is yet to be found. Could bitcoin be the answer everyone is looking for?
Before the Internet age it cost a lot of money and resources to publish content. Newspaper publishers, for example, have to pay for the paper, the printing press and the distribution. In contrast, the web provides publishers with a relatively inexpensive - if not free - platform, with very low production costs.
The result is lots and lots of free content, which is great for consumers, but bad news for content professionals because it makes it difficult to make any money.
Monetising online content
Advertising is one of the ways that digital publishers have tried to make money from their product, but it requires the site to get a viral amount of hits before the option becomes a viable one. Not only does this stifle competition, it clutters up sites with unwanted and often intrusive commercials.
Another option is the content wall. This allows users to access free content for a limited amount of time before requiring a paid subscription. Sites that do this currently are the Daily Telegraph, The New York Times and The Sun - each with varying success. The Sun lost 62% of its traffic after adopting its paywall. On the other hand, The New York Times reports that its own rakes in $150 million a year.
The paywall model is increasingly popular, but there are still serious limitations. It clearly doesn't work for every audience, which limits the amount of content publishers that can use it.
The main issue with this model is that web users consume content in a very disjointed way - being more likely to flit between all kinds of sites than loyally stick to just one or two. To many web users, a blanket subscription to a whole site may seem like a waste of money, especially when so much content is available for free elsewhere.
Bitcoin vs fiat paywalls
This is where bitcoin comes in. Micropayments offer an option much better suited to the way content is consumed in the online world, giving users the option to pay a very small amount for individual items, rather than a large amount for a whole box of content.
Micropayments have previously not been an option for online publishers for many reasons. Paying by debit or credit card requires the user to enter all their payment information to verify their identity, creating a barrier to entry that easily dissuades the fickle Internet user. Payment networks dealing in traditional currency also charge substantial transaction fees, making multiple, small payments an impractical option.
Conversely, bitcoin allows users to make instant, virtually fee-less, international micropayments with a single click of the mouse. Some companies are already coming up with solutions for online publishers: using BitWall, for example, you can implement a bitcoin paywall on your site with just a few simple lines of code.
This option was recently trialled by the Chicago Sun-Times, proving that big media companies are already showing interest, if not yet considering implementing such a solution.
Tipping and the bitcoin community
The question is: will users change their behaviour to engage with this idea? If you think of the process more like tipping, there's no reason why not. People are happy to tip in person using actual cash, so why would they not do the same online using bitcoin, which is comparable to digital cash - especially when the process is as easy as clicking a 'like' button?
Indeed, there's already evidence of the cryptocurrency community being very generous with micropayments and donations. The culture of tipping on the bitcoin subreddit has led to startup ChangeTip's developing platform for bitcoin tipping on Twitter, Github and soon, even Facebook - lest we forget the infamous Jamaican bobsleigh team fundraiser by the dogecoin community.
If publishers can find a source of revenue better than advertising, there could be a shift away from producing content solely for hits and shares, and back towards a focus on quality. It would perhaps reduce the amount of intrusive banner ads as well.
Whether or not the idea catches on relies on a number of factors, including how much more widely adopted bitcoin becomes, how bitcoin paywalls affect site traffic and how much investment goes into startups like BitWall. The foundations, at least, are laid - and as an online content professional myself, I'm certainly counting on a shakeup.
Payments image via Shutterstock