Taking another look at micro payments, donations and paywalls for publishers with tibit.

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I was asked to take an initial look at tibit in relation to the company expanding into the publishing market as a way for them to bolster growth and possibly secure a next round of funding.

Here’s an intro to tibit:

Background and challenges of the donation button model

I don’t necessarily believe that publisher integration through article based sites with the product as it currently stands holds the key for tibit. This is especially true if they’re purely relying on the donation style tib buttons to be added into articles.

It strikes me as a product that’s likely to grow from fulfilling a need perhaps a complimentary one to begin with for businesses and individuals where an ad-funded approach isn’t currently making much sense for them and neither are they solely focused on converting visitors into sales.

There is a whole spectrum of use cases where tibit could add value as a simple donation button with the tipping for the internet ethos being the main reason here for usage. They’ve been implemented as a donation option a few times already like here on Etherpad an open source collaborative editor and it’s a nice fit for tibit.etherpad tib

One issue here is that unless a user already has a tibit account set up or they understand the concept or brand it’s not clear for people what this option is or why they should use it and so uptake is likely to be pretty low initially. Reviewing how they can get more out of these embedded buttons and calls to action which will often be the first time anybody hears about the brand could become a key growth question for tibit.

The Paywall

tibit mention a paywall on their video and I can actually see a simple micro payment funded paywall working well in a huge variety of situations. Getting users to pay small sums for product access in business and research situations where you might currently offer your email address in return for a whitepaper for instance.

With tibit or any other digital currency you now have the option of purchasing a product at a negligible cost in a way that was previously deemed impractical with bank and card fees. The advantage tibit has is that even though it pays out in bitcoin people can use traditional payment methods such as Mastercard/Visa to load up their account, spreading the fees out across multiple transactions making them much more palatable in micro payment contexts.

PayPal currently charge sellers 2.9% + $0.30 per typical transaction meaning it’s not really worth while for these smaller items but they also offer micro-transactions charged at 5 cents plus 5% making more sense for slightly smaller still transactions, but still nothing that would enable you to to sustainably pay for things worth just a few pence or less.

The challenge for tibit here is that the user initially needs to load up their account. At this stage they do face a card fee unless they add it through bitcoin. In terms of the typical consumer at this stage if they want to spend £0.20 on a single access to a piece of content or tib they now (as tibit’s interface currently stands) have to commit a minimum of £3.27 on creating an account in the first place £3 in credit and £0.27 in bank fees.

This is a serious barrier to entry as they’d spend £3.27 on a single micro payment of £0.20 especially if there is no clear ecosystem in place where they can spend their remaining £2.80 worth of tibs.

Let’s break down a few examples of real costs using a tib value of 20p and a current Visa/Mastercard banking fee structure that varies depending on amount added.

£3.00 uploaded equating to 15 tibs (£0.27 fees)= Actual cost per tib of 1.8 pence

£10.00 uploaded equating to 50 tibs (£0.48 fees)  = Actual cost per tib of  0.96 pence

£50.00 uploaded equating to 250 tibs  (£1.68 fees) = Actual cost per tib of 0.672 pence

 

Forgetting the barrier to entries for now (bank fees ) I also think that micro-payment paywalls if done correctly could open up the doors for other media/music companies and individual artists/creators who can start to take back control of their catalogue from services like netflix/spotify. This will allow users to pay one time for individual pieces of content at a rate that suits both consumers and creators. This change is already being demanded by Artists like Imogen Heap and potentially game changing products are being created in this new white space in an attempt to do specifically this. An example here is http://ujomusic.com/

ujo screen

From personal experience of trying to stream movies or TV shows that weren’t yet out I’d be happy to pay both for the convenience and guilt free/ethical nature of paying content producers directly. With a service like tibit you wouldn’t need users to sign up to a subscription service on just one site which they’re unlikely to do if they were just looking for one individual show, song or episode. However this could become useful if tibs get adopted on multiple sites where they can be easily spent sort of like a more open form of iTunes.

The other advantage tibit has is it allows the non technical general public who haven’t yet created a digital currency wallet to feel the benefits of micro payments for the first time. This message I believe could become part of their marketing and back story.

Now I believe tibit are aware of all this potential in the market already but I’d like to return to answering their original question for now.

The original question was this:

How can we expand tibit into the publishing sector in a way that might prompt another round of funding?

I honestly believe the best way to answer that question is with another question which I’d like to pose to the tibit team.

How can you add instant tangible value to publishers in a mutually beneficial way?

You really need to be ruthless and focused on positive financial outcomes for the publishers because no product manager is going to implement or suggest anything, even as a trial unless there is a business case for it. The dev queue for simply maintaining, repairing and gradually working on the roadmap for these larger sites is always subject to a big backlog of high priority changes and only definite wins will make it through.

Think about how you could convince a product manager on one of these sites that implementing your product is more beneficial than a creative campaign worth £50k that’s already signed off or a feature that’s going to really benefit overall user experience.

Hearst and any other established media company will probably like the idea behind tibit but they’re unlikely to be the ones to spearhead its adoption as a donation button for instance unless it benefits them financially. Similarly if customers have to spend a minimum of £3.27 opening an account they could just implement their own in-house credit based system where users get access to 15 articles  each time they upload £3 worth of credit.

One possible solution

tibit could potentially create a lucrative business model if they’re able to semi-white label their paywall solution and get it implemented ridiculously easily across a variety of premium content. They should also think carefully here about whether they aim to charge for this as a one off solution or whether they allow free integration so it can be easily tested.

My gut feel based on the success of companies like http://www.outbrain.com/ would be to go with scaled revenue share models with no initial outlay for publishers. This has the advantage of being tiered so that with smaller content creators tibit would be able to take a greater cut and as volume increases publishers never reach a financial point where it’s worth them trying to implement their own solution on similar technology.

As an example and ignoring bank fees for now if you’re charging 20p for one piece of paywalled content on a small blog 17p could go to the content creator and 3p to tibit. Smaller content creators would still feel the benefit of that model and it’s unlikely that they’d reach the scale where they’d try to invest in their own tech. Bigger publishers are likely to be more demanding as volume grows and so finding a suitable rev share model, perhaps where 18 or 19p goes to the publisher and 1 or 2p goes to tibit.

Those successful smaller bloggers that then grow into larger volumes could also benefit from this sliding scale type model. The key is finding an appropriate balance here, where it’s free to implement but the costs are low enough that it’s not worth the hassle of companies trying to copy the tech.

It’s also been thoroughly researched that softer paywalls tend to be more successful for companies http://www.theguardian.com/media/greenslade/2014/nov/07/paywalls-charging-for-content and so a good way to get initial user adoption would be to go along with providing a set number of articles for free, where to get access to the first one they have to go through the sign up process. This is a good motivator for getting initial traction and gets people used to the concept.

tibit are already encouraging initial tibs quite well on their site with this model of giving it a try in regards to donating to charities.

tib try charities

The current set up for Hearst and most other content producers is the traditional ad-funded approach and more recently brand extensions.

Hosting content behind pay walls is a long debated issue with a variety of things to think about for publishers in terms of reduced SEO visibility (if they’re not careful with how they set this up) and potential social sharing issues. However they do have recognised brands and the potential for premium content sitting behind a paywall that users would potentially pay for if it was easy enough to do so this just might be the simple solution they’re looking for in terms of implementing that.

I very much doubt at the moment there would be any immediate benefit for established publishers adding a tib button alongside the social sharing buttons because tibit’s current user base is not large enough for them to deem it necessary and publishers wouldn’t necessarily make any money or gain extra exposure for their content by having a tib button on those articles. The exception might be where journalists are writing in favour of a good cause and want to encourage donations, here tibit could be used as a relatively easy way for people to donate and make multiple small donations to different causes at one time.

Currently JustGiving has a minimum contribution of £2 or £1 through operator texts. tibit could in theory enable someone to tib multiple good causes a small amount in one go.

With other journalists working for themselves or on their own blogs it’s a different story altogether as any potential extra revenue

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