Newfangled #15: Saving Journalism One Wordle At A Time

On micropayments & newfangled business models

Photo by Annie Spratt on Unsplash

The Business Challenge:

Journals current business models suck (technical term). And the war in Ukraine is showing us how important journalism is to shine a light on events.

With most people consuming news digitally, here’s how our for-profit media is currently funded:

• Advertising (driven by traffic = clickbait)

• Subscription (either via paywalls or crowdfunding/ voluntary subscriptions like the UK’s Guardian)

• Sponsored content

• Rich tycoons

• Philanthropy (e.g. Omidyar network provides some grants as part of their fight against disinformation)

Emerging revenue streams:

• Affiliate marketing (kickbacks when you buy that pair of shoes that has been stalking you around the internet)

• Shift to audio and podcasting (with advertising)

• Selling online courses, e.g. BBC Maestro, Guardian Masterclasses, presumably taking inspiration from subscription masterclass.com

• Platform subscriptions e.g. Apple News ¹

The challenge with digital advertising for journalism, as we all know, is that it values clicks over quality of content.

Subscription is growing and becoming the answer for some publications - the New York Times has nearly 6 million paying subscribers.²

However, there is a vast untapped audience that never uses these services. According to a survey by Statista on news consumption and media trust in 2020

…respondents from most countries around the world never used any kind of news subscription service, with 57 percent reporting that this was the case, compared to just ten percent who did so every day. News consumers in Brazil, India, Malaysia, and Sweden were the most likely to subscribe to a print or digital news service and read news this way on a daily basis, whilst over 75 percent of Japanese, British, and Canadian respondents said that they never used such a service to read news.

Let’s pause and think about that. 57-75% of your audience are not going to subscribe. And how many are going to subscribe to multiple publications? So, you either give non-subscribing readers content for free, or you throttle your traffic by putting content behind a paywall.

But what if that sizeable potential audience paid something, some of the time?

Start-up ‘Axate’ to the rescue

How does it work? It’s a digital wallet that works across multiple publications to enable you to pay for what you want to read. I would call these micropayments. Axate prefers “casual payments” because they believe that the payments do not need to be minuscule. Some of their customers are charging more, depending on the content.

This short video shows the concept.

This business model enables a whole variety of potential pricing options. A little brain dump off the top of my head:

• Pay for an individual article

• Pay for access for 24 hours to all paywall content e.g. The Yorkshire Post charges 50p per article or £1 per day

• Pay for access for a week

• Some articles can still be free, some for subscribers only e.g. Popbitch puts their archive as chargeable: 25p per issue and a 50p weekly payment cap.

• Pay for early access to content that later becomes free

• And, you can still subscribe to a publication funded via your Axate wallet

The argument against casual payments is that it cannibalises subscription. However, I would expect that to be surmountable by clever pricing. I would also say that subscription and retention are heavily driven by discounting today. This makes it a smart move to use casual payments as an acquisition path to subscription and/or a retention path for people clicking the unsubscribe button. More people paying something more of the time.

Publishers need readers to pay for content and readers need a convenient way to do that e.g. via Axate. The challenge is the same as for the introduction of the credit card - solved by the legendary Fresno drop, explained here. In the small town of Fresno, everyone was mailed a credit card with a $500 limit. This broke the deadlock and paved the way for both mass usage and mass acceptance of the now ubiquitous credit cards.

What does this have to do with Wordle?

The New York Times Company bought Wordle for a seven-figure sum in 2022. At that point, it had 2 million daily users.

If you’ve never heard of Wordle, then where have you been? It’s like online Hangman³, where you all guess the same word and then brag about it on social media.

Photo by Joshua Hoehne on Unsplash

So, when and how will the New York Times decide to monetise it?

My view: Wordle could be to micropayments what the Fresno drop was to credit cards.

The thought exercise: how much would you be prepared to pay?

1cent a day = $3.65 per year which is a revenue of $7 million per annum. So, for the price of a large Caffe Latte at your favourite coffee shop, does that feel like a fair exchange of value? Maybe.

But the value here is in building the consumer base for casual payments. So, if the NYT played the long game, if 2 million users paid $0.50 per year, that would be 2 million users with funded Digital Wallets - and that then opens up a whole world of possibilities to monetise other content.

It’s tempting to keep payments behind a walled garden for each publisher but the value here is to change the wider relationship between the audience and paying for content. A classic candidate for “Co-opetition”.⁴

Or am I too idealistic? Would you ever pay for Wordle or by article for news? Add in a comment and let me know!

1. I would argue that the revenue model isn’t structured in a way that is going to save journalism. It is inevitably going to drive more click bait as publishers need to have traffic to capture revenue. And Apple takes 50% of subscription revenue as its cut, which seems excessive. More on this another time, perhaps.

2. U.S. newspaper industry - statistics & facts | Statista

3. Thank you, Katy Bishop, for cutting through the BS on this one.

4. The Rules of Co-opetition (hbr.org)