Journalism funding is in crisis. As the industry shifts to digital and its meagre click-based ad revenues, something in the model needs to change if quality news sources are to survive.
Alternatives are emerging, however.
New attention, for example, is being paid to alternatives to traditional ad models. Major publishers including Time and The New York Times are increasingly keen on accessing the feasibility of micropayments models.
Amidst the rising demand for blockchain projects, the two ideas are now becoming more intertwined.
Less well-known is another more niche use of cryptocurrency as a new media strategy: the issuance and trading of custom tokens as a way to raise funds, reward audience engagement and grant privileged access to premium content.
This technique is already being pioneered by bloggers and blockchain enthusiasts on a smaller scale.
Higashi explained the idea:
"Say I write an article, update my blog and tweet about it. If someone retweets it I follow up and say, 'You retweeted my article – if you can create a Counterparty wallet and tell me your address, I can give you X amount of my coin.'"
The attention received from this idea has helped Higashi to bootstrap the blog, even though the token had no real-world value at first.
However, as readership and interest in the blog grew, he started to create premium content that could only be accessed by readers holding more than a certain amount of CNPCoin.
From then on, CNPCoin started to take on a demonstrable value as an access token, which let Higashi move into the next phase: setting up a system where readers could tip him in bitcoin if they enjoyed his blog posts – and receive CNPCoin in exchange.
“It started off as a pure experiment, just to see what would happen, but I actually got quite a lot of tips from it," Higashi said.
Higashi said one unknown reader even tipped him 1 BTC, a significant amount no matter when it might have been sent over the last few years.
The cost of 'free'
The idea has other proponents as well.
As an early mover in the field of using tokens as a media promotion strategy, Adam B Levine, CEO of Tokenly and creator of the "Lets Talk Bitcoin!" podcast, began distributing a currency token called LTBCoin to contributors and participants of the LTB network in 2014.
Levine said that underpinning LTBCoin was an initial idea that whatever is valuable in the currency ecosystem should be rewarded with a payout, but this could extend beyond the process of mining, the method by which contributors to the bitcoin protocol earn for participation.
"I realized that if you didn't need to pay miners, you could reward people for other things. So, in our case that was podcasting, commenting, participating in the forums,” he said.
Each week, new LTBCoins are created and distributed, up to a limit of 510 million coins over a total time span of 260 weeks.
But rather than computational hash solving, 'mining' is done through content creation, audience participation and platform development.
LTBCoin has been popular with the show's following (as product marketers have long known, giving any kind of free tokens or coupons is a great way to build interest), but in some cases it can also be a double-edged sword.
"What we learned from the rewards programme is that it's hard to get people to value something when they're used to getting it for free," said Levine.
The initial problem was that LTBCoin was trying to create value, while being perceived as 'free money', he said.
Levine explained that some recipients of the coin, particularly those based in poorer countries, would try to immediately sell up on exchanges, creating a negative feedback loop that depressed the value for other holders of the coin who wanted to keep a vested stake.
To combat this, it became clear that what was needed was a supporting ecosystem that allowed coins to be used in a broader range of settings than just direct monetary exchange.
"At first we couldn’t do e-commerce with it, we couldn’t do anything with it ... Over time, that's what I've spent the last several years of my life doing, building out the infrastructure and the different end user applications that you can easily make tokens valuable in."
In practice, that meant developing services like Swapbot, a system that creators of a custom token can use for automatically issuing and redeeming tokens against other forms of cryptocurrency (an example is the Tokenly bot).
But even with additional services, developing a community token is fraught with problems.
Recently, LTBCoin holders were disappointed by the decision of Poloniex to delist the coin from its exchange due to low trade volume, adding more friction to the process of conversion to and from other cryptocurrencies.
For media producers outside of specialist cryptocurrency circles, distributing custom currency tokens is unlikely to be a big revenue stream for now.
The fact of the matter is that cryptocurrency as a whole remains obscure to much of the mainstream media – as an illustration, consider that even in a time of declining revenue, most major news organizations have not made any progress toward accepting bitcoin donations.
But success stories from solo entrepreneurs like Koji Higashi suggest that tokens could be a better fit for independent bloggers or small networks, which are often more open to experimentation beyond conventional channels.
Cryptocurrency alone won’t provide a big enough patch for holes in revenue left by the decline of print publishing, but it’s still one of many possible income streams that have been underexploited by the mainstream so far.
As with many applications of blockchain tech, time may tell how it will come to fruition.
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