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August 02 2010


Can Social Micro-Earnings Help Micropayments Work for News?

Would readers pay as little as a penny, or even less, for news? They would, if paying was combined with social sharing, micro-earning, virtual currency and a centralized banking system, according to doctoral students Geoffrey Graybeal and Jameson Hayes of the Grady College of Journalism and Mass Communication at the University of Georgia.

Graybeal and Hayes propose a "Modified News MicroPayment Model" as a way to implement micropayments for news. In this model, readers are not pushed to pay for content, but are instead given choices and incentives to nudge them to pay. The model consists of four key elements: Micro-earnings, socialization/sharing, local focus and a centralized banking system. The model is described in a detail in a paper [PDF] that the pair presented at the Annual International Symposium on Online Journalism in Austin, Texas, in April.

The pair determines the two-way interaction of the social web as a principle in the model.

"When you use people's social networks to share content, and get other people to pay for it, it should be a partnership between the media organization and the reader, not a one-way proposition," Hayes said in a phone interview. "People need to get paid back, and the social web allows that."

Micro-earn by Sharing

In the model, micro-earnings are combined with social sharing. For example, when a reader shares news articles with friends on Facebook or followers on Twitter, and a friend ends up purchasing the article, the reader earns points. The reader can exchange these points to pay for articles at a news outlet. Thus, the reader can transform their social capital into something with monetary value.


Micro-earning has already been experimented with on a small scale in journalism. For example, sharing platform YupGrade enables readers to earn points, credits or badges by sharing news stories related to a certain topic. Sharing can be combined with donating, as was the case when YupGrade partnered with the Hunger in America campaign for the SXSW Interactive conference. For every story about hunger, malnutrition, or obesity in the U.S. shared on YupGrade, a can of food was donated to the campaign.

Another example of micro-earning is crowdfunding platform Spot.Us, where community members can earn credits by filling out surveys or other activities. They can then use these credits to donate to pitches on Spot.Us. Thus, readers' time is given a monetary value that can be converted on the site.

According to Graybeal and Hayes, when a news outlet implements a micropayment system, they should also simultaneously implement a micro-earning system.

"Micro-earning would have taken away some of the shock when Time magazine recently implemented a pay wall," Hayes said.

Virtual News Currencies: Times Tender, WSJ Bucks

Evidence suggests consumers are more likely to spend more money when they use virtual currencies and credits, Hayes and Graybeal state in their paper. As a result, the pair believes media outlets should establish their own currency. The Wall Street Journal could offer "WSJ Bucks," the New York Times could have the "Times Tender," etc.

Earning 100 WSJ Bucks for sharing an article on Facebook is more appealing to the reader than paying one-tenth of a cent for an article, they argue. Readers could then cash out the micro-credits they have earned via a centralized banking system. The news outlets could also sell points to the readers.

How the Banking System Works

Hayes and Graybeal see a centralized banking system as being crucial when building a seamless user experience for paying for news. It is also needed to address the transaction costs that are associated with micropayments. The banking systems gives especially local news outlets more control over the pricing of the news, the pair says.

"If a big story breaks in Clayton, Georgia, and the local newspaper, the Clayton Tribune, is the only one who has the story on it, the newspaper should be able to leverage that for their business, and not have the price forced on them by the national news organizations," Hayes said. "The central banking systems allows you to maintain the local focus, have different prices on different products and different places, all that streamlined into one banking system."

Here is how the banking system could work, according to Hayes' and Graybeal's proposal. Let's say the New York Times' currency is called Times Tender, and the user pays $100 for 100 Tenders. With one Tender, the reader can get an access to 10 Times articles. The Times has partnered with a micropayment billing platform that enables the reader to purchase articles with one click.

The users' Times Tender profile is linked to their Facebook and Twitter accounts. When they share a news article on social media and somebody from their network purchases the article, the billing system recognizes this and gives the reader credit.

"The key is to have a seamless user experience," Hayes said. "It has to be easy to use so that it is appealing to the readers."

Micropayments as Part of a Revenue Ecosystem

Graybeal and Hayes emphasize the importance of local and hyper-local focus in journalism, and see their micropayment model that could work for local news.

"Local news has always been a bread and butter for newspapers, but often times when talking about business models we are talking only about big players such as the New York Times," Graybeal said. "But a large amount of newspapers don't fall into this category, and there is a big opportunity for journalism in the neighborhoods that nobody is really covering."

Graybeal and Hayes see micro-earning as one revenue model in the ecosystem of revenue streams that consists of advertising, subscriptions and micropayments.

"This is not the solution, but can be one of the solutions", Hayes said.

He said readers have to be given different options for how to pay for news, such as through subscriptions or one article at a time via micropayments.

"In a paid content environment, outlets will leave money on the table and do a disservice to readers if multiple options for payment are not offered," Graybeal said.

Tanja Aitamurto is a journalist and a Ph.D. student studying collective intelligence in journalism. She has studied innovation journalism at Stanford, and has degrees in journalism, social sciences, and linguistics. Tanja advises media companies and non-profit organizations about business models, reader engagement and community building. As a journalist, she specializes in business and technology. She contributes mainly to the Huffington Post and to the Helsingin Sanomat, the leading daily newspaper in Finland, as well as to the Finnish Broadcasting Company.

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