The Bitcoin solution to newspaper business woes
Last Saturday, the Chicago Sun-Times, the ninth-largest newspaper in the U.S, launched an interesting, somewhat gimmicky experiment: For one day, the newspaper let Web visitors pay for content with bitcoin, the digital currency that everyone’s talking about but no one quite understands.
The move was a bit unusual and forward-thinking for a newspaper that’s been around since 1844 and is still evolving its digital approach. Julian Posada, svp of marketing and strategy of Chicago Sun-Times Media Group, told Digiday that a big part of the move was showing that the newspaper could be a faster, more nimble operation. “It’s certainly not normal for a company like us to do something like this,” he admitted.
While Bitcoin is still tough for most people to fully understand, it’s attractive to the Chicago Sun-Times — and potentially other publishers, too — because it’s well-suited for low-fee, frictionless micropayments. Because the currency can be split into small fractions, and because its transaction fees range from 1 to 3 cents, bitcoin is particularly handy for paying for one-off digital content offerings like Web articles.
You might be forgiven for dismissing this as nothing more than a quick PR hit. But others aren’t so sure. Marc Andreessen, the noted Silicon Valley venture capitalist, recently held a rollicking discussion on Twitter about the future of the news business. While ticking off the components of a workable business model for journalism, Andreessen was very enthusiastic about bitcoin.
(7) Bitcoin for micropayments. Easy to get started now (@coinbase); as consumer use scales up, easy to ask for small $ w/low or no fees.
— Marc Andreessen (@pmarca) February 6, 2014
That might be the case in the future, but in the present, it’s not very practical, as the Sun-Times discovered. While bitcoin gets a lot of media attention, its notorious instability makes mainstream adoption increasingly unlikely. The story is similar with micropayments, which, outside of mobile and PC games, has never taken off among average consumers. So there was very little reason to suspect that what the Chicago Sun-Times would work on any level.
And yet it largely did. According to numbers from Bitwall, the company that ran the Sun-Times bitcoin paywall, the experiment attracted 713 bitcoin donors, who shelled out as little as $0.01 and as much as $1,000 in some cases. Most people — 63 percent — gave 25 cents, a number that Bitwall CEO Nic Meliones said is a good benchmark for where publishers can expect down the line.
None of those numbers are mind-blowing, and that the Chicago Sun-Times didn’t disclose the donation total is also telling (“We could have always raised more,” Posada said). Early bitcoin users — vocal, dedicated bunch that they are — might also have skewed the results upwards.
The Sun-Times, however, has very little to lose here. The newspaper, which reports say isn’t profitable, laid off its entire 28-person photography staff last May, a move it said was due to readers “consistently seeking more video content with their news.”
Regardless of the Chicago Sun-Times’s finances, Bitwall’s CEO said that the focus of the experiment wasn’t to raise a lot of money but rather to show, in the most basic way, that bitcoin could one day be another revenue stream for publishers. This was closer to a proof-of-concept than the foundation for a business model.
Posada had largely the same reaction on the publisher side. “This is by no means a silver bullet. I have no illusions about it dramatically changing the world,” he said. “But it does let us see how the future could look.”
Image via Flickr/btckeychain
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