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AdBlock Plus + Flattr = the breakthrough for micropayments? Some considerations for news publishers

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AdBlock Plus + Flattr = the breakthrough for micropayments? Some considerations for news publishers

The way Flattr Plus will work is straightforward: instead of paying for individual articles or other forms of online content, its users set a monthly budget that is distributed to the participating websites based on users’ online media consumption. Signing up is possible already now, but the beta will start rolling out early this summer, with a stable release expected for later this year.

Flattr Plus is the latest in a long list of different micropayment systems that have been tried out, but it has one undeniable advantage: it will eventually be included in Adblock Plus, thus becoming instantly accessible to millions of users.

This alone will likely tempt publishers to join, even if some key questions still remain unanswered – notably relating to the “engagement” metric, based on which the user’s budget is distributed to the websites, as its methodology is not defined at this point.

Before putting micropayments to the test, here are some angles for news publishers to consider.

Revenue – how much and at what cost?

Flattr Plus might seem like an easy way to extract some additional revenue from readers. If some readers who otherwise visit your website for free are willing to donate through Flattr Plus, even if only modest sums, what’s not to like?

This would, however, contradict an approach that is becoming common sense in the media industry: that publishers should foster a close relationship with their readers, also in terms of making a convincing case why their content is worth paying for.

“Surely if a user wants to pay a publisher, it makes more sense to do this directly with the publisher, not through an intermediary,” said John Barnes, chief digital officer at Incisive Media, to Digiday.

To be clear, users of Flattr Plus are not buying access to content, because the content is already readily available online. Payments through the system could therefore be described as “charity” on the part of readers, and it’s questionable how much goodwill readers have in the way of paying for material that they’ve previously been able to access freely. Moreover, given that contributions will be shared among websites, and that Flattr itself takes a cut (10 percent), any additional revenue is likely to be marginal, especially if compared to direct sales.

Control – is it worth it to relinquish?

There is a growing awareness in the news media industry that publishers can’t afford to become a mere league of “content producers” for other platforms, but should strive to build a direct relationship with their audiences instead. Social media platforms are redefining the way readers find and read news content, with serious consequences to the producers of news.

If giving away control regarding content delivery is seen as risky, what about allowing a third party to handle some of the activities related to reader revenue? Potential points of friction are easy to imagine.

What if Flattr Plus changed the terms of the service in a radical way, seriously harming some of the participating publishers? To start with, the details on the algorithm that will be used to measure “engagement”, and according to which payments are distributed, are currently unclear. But even full transparency on the methodology would not protect publishers from future software changements.

Changes to the “engagement” metric could harm some of the participating publishers, depriving them of the additional revenue they’ll have come to expect. Moreover, how fairly will users’ activity over different browsers be accounted for, considering the huge challenge that audience measurement in a cross-platform media world represents?

Until there’s further clarity on such issues, publishers should at the least be skeptical about surrendering control to a third party.

Alliances – be careful who you make a deal with

Eyeo, the other company behind Flattr Plus, is the creator of Adblock Plus. Ad blocking has become a major issue for news media, the industry currently working together in an effort to respond appropriately to the topic.

According to one estimate, in 2015 ad blocking resulted in lost revenue of $22bn in total, with the number expected to double in 2016. As the biggest ad blocking tool out there, Adblock Plus is obviosuly not seen as a online publishers’ friend. Meanwhile Flattr, the other involved party, was founded by a Pirate Bay cofounder.

Of course, these facts in themselves do not discredit Flattr Plus, but news industry should be exceptionally careful when considering collaboration with actors that in the past didn’t arguably have the content creators’ interest in mind.

***

If one takes a generous view, Flattr Plus could be seen as a possibility to turn around the “implicit deal” readers have with online publishers. In other words, while it was previously understood that readers would accept advertising in exchange for access to media content, now the use of ad blocking is gradually lessening the relevance of ads. Donating through micropayments could at least compensate for some of the lost revenue.

Eyeo, the creator of Adblock Plus, said recently it expects Flattr Plus to have over 10 million users by the end of next year, spending on average $5 per month.

It seems to us that Flattr Plus will need to make a credible and strong case for additional revenue, and that even in that case, publishers should assess the implications of the deal thoroughly and carefully.

(Image source)

Author

Teemu Henriksson's picture

Teemu Henriksson

Date

2016-05-16 10:12

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