There’s actually a startup that is making micropayments for journalism work

The newsstand of the future.
The newsstand of the future.
Image: Blendle
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The Dutch micropayment platform for articles is taking off in spectacular fashion. Its foray into the German market delivers another proof of publishers’ interest in the kind of business model Blendle embodies. But, down the road, Blendle sees itself as the main transactional infrastructure provider for quality journalism. In this first of two articles, we’ll look at Blendle’s key success factors.

In the span of about a year, Blendle has opened numerous doors for Alexander Klöpping: In Europe, in the US, and elsewhere, he now gets CEO-level access. Pitched by its hoodie-wearing, 28 year-old CEO, the Utrecht (Netherland) startup is hotter than ever. Media executives struggling with their business models all seem interested in Blendle. Many are willing to give it a shot.

On Sept. 14th, in its first deployment outside of its home market, Blendle made a big splash in Germany: it showcased 100 large publishers on its platform (see Marten Blankesteijn’s—a Blendle co-founder’s—piece in Medium, and Joseph Lictherman’s article in Nieman Lab’s blog.) In addition, Blendle’s platform is now hosting English speaking publications: The Economist, The Wall Street Journal, The Washington Post, and within a few weeks, The New York Times (the company got further momentum last year by signing up The New York Times and Axel Springer as shareholders).

For those who never visited Blendle, it is a website and a web app that lets users purchase any story for a price—ranging from 0.20€ to 0.99€ a piece ($0.22 to $1.01). Blendle’s execution is absolutely remarkable. Its engineers and designers take great care to scrupulously render newspapers and magazines layouts, licensing hundreds of original fonts down to the pixel to respect every aspect of the publications’ look and feel. With a frictionless registration process, the transaction system benefits from the same Apple-like sense of detail. Once registered, you start with a €2.50 wallet that will be debited from one article at time. It works fine on a desktop or a tablet, and on mobile devices that represent 60% of Blendle’s traffic (ten points more than many news outlets).

In just one year, Blendle signed up 450,000 customers in the Netherlands. Scaled up to Germany’s internet population, this is the equivalent of two million users; for France it would be 1.4 million. This is many times larger than the meager number of paying news customers in these countries today.

Last November, in a rather blunt way, I expressed my reservations regarding Blendle’s model (see “The New York Times and Springer Are Wrong About Blendle). My concerns ranged from the abundance of free content available on the web (especially in English), to the damage inflicted to the “cross-subsidy model” in which baseball coverage pays for the Kabul bureau, to the risk associated with the “unbundling” of news (and its impact of publishers’ average revenue per user—or ARPU).

To their credit, Blendle’s co-founders Alexander Klöpping and Marten Blankesteijn seized on my questions and engaged me in an ongoing discussion focusing on business models that could ensure the survival of quality journalism. This could be a crucial factor in Blendle’s fate: this company has been created by journalists who fervently defend quality journalism and believe that great editorial must be paid for.

In spite of my initial reluctance, the more I explored its model, the more I came to believe it should be tested and carefully analyzed, essentially because it is much more sophisticated and carries more potential that a first look might lead one to believe.

Blendle benefits from exceptionally favorable trade winds. The traditional advertising model is crumbling under the pressure of programmatic buying and of the pervasiveness of ad blockers. In addition, Blendle also takes advantage of limitations in paywall models that mostly target the heavy, affluent users segment, but exclude the younger audiences that are Blendle’s main target (today two-third of Blendle users are under 35). From the legacy media perspective, this makes the paid-by-the-article system more attractive than ever. In an email interview, Julia Jäkel, CEO of German publishing giant Gruner+Jahr GmbH now sees Blendle as a true component of a monetization arsenal:

Putting single articles on sale meets the needs of the iTunes generation used to picking singular pieces that interest them right there and then. They are also used to making single payments—which is good news for publishers. Even more important: starting off, Blendle showed it doesn’t cannibalize existing subscriptions but attracts young target groups that haven’t turned to classic media offerings so far. So we hope to have opened up an additional channel for our audiences as well as an additional revenue stream for publishers.

In a interview posted on its Facebook page, Wolfgang Blau, director of digital strategy for The Guardian, also support Blendle’s model while discounting the reference to iTunes:

Spotify might be a more fitting analogy. Where iTunes and Blendle meet, though, is the ease of transaction they provide me with and in their vast portfolio of music or journalism. Yes, if Blendle would give me the option to only buy the FT’s coverage of EU affairs or to only buy Sueddeutsche Zeitung’s foreign and opinion pages for less than what each of these two papers’ subscriptions cost, then I would certainly prefer Blendle.

It is still too early to assess Blendle’s potential impact on the publishing industry’s current subscription models, metered or freemium. User consumption habits and subscription prices will determine the level of cannibalization. If you have succumbed to an expensive subscription for a publication that you don’t read that often, you’ll be more likely to cancel and switch to Blendle—a move that could seriously affect publisher ARPUs. Instead of getting, say, €30 a month for a business newspaper, someone reading only five stories a week priced at €0.50 each will yield only €10/month (minus Blendle’s commission of 30%), a much better deal for the light user, but difficult to accept for the publisher.

Fortunately, Blendle positions itself as a free conversion funnel to transform occasional readers into subscribers. First, when a user, purchasing one story after another, reaches the full price of an issue, this automatically unlocks that full issue. Then, the reader might get subscription offers pushed by Blendle on the publisher’s behalf. If the reader converts into a paid-for subscriber, the publisher wins and Blendle doesn’t take a fee. That is a calculated move: the idea is to retain the customer on Blendle’s platform thanks to the single sign-on (SSO) features currently in deployment. Put another way, if I subscribe to the, I should be able to read it through Blendle. Whether reading a publication via a subscription or a pay-per-article system, getting the customer to circulate within its platform is essential to Blendle’s vision.

This post originally appeared at Monday Note.