Paywalls block the Internet. Crypto can solve this problem

The web today is more like a crowded city with checkpoints on every block. You might be able to peek into a few store windows, or even be allowed to take a quick walk, but it won’t be long before someone asks you to identify yourself and buy a pass. spend monthly to stay. In practical terms, that means it’s become harder to read about everything from major news events to a sportscaster’s clever take on last night’s game.

That’s not a bad thing. After years of giving away valuable content for free — and later hoping that Facebook or Google would split a few crumbs of advertising dollars — web publishers have finally gained the confidence to ask readers to pay for their work. And that in turn has provided a revenue stream that directly funds quality journalism.

The problem is that readers are increasingly cut off from the web. Even though more and more people are willing to pay for their favorite websites, no one can expect to shell out in response to the dozens, if not hundreds, of paywalls they encounter over the course of a year. Worse still, many digital publishers are acting like 1980s record-of-the-month clubs, dragging users into subscription models where quitting feels like hostage bargaining.

The result is that websites are cutting off an increasing number of readers who might pay a small fee to read an article but are unwilling to engage in aggressive subscription tactics or who may simply not have a credit card in hand. first place. The result is that both sides lose: publishers leave money on the table while casual internet users turn to free websites that are often cesspools of viral crap.

This is not a new problem. The mixed blessing of paywalls has been debated since at least 2007, when The New York Times rolled out and discontinued its first version, TimesSelect. The difference today is that technology has taken a giant leap forward, offering new tools – based on blockchains – that could make the web feel like the open and free place it once was while still allowing publishers to earn a living.

‘Original sin of the web’

Julien Genestoux, a software engineer and self-proclaimed “open web fan,” worked on popular blogging platform Medium in 2017 when it launched a paywall that allowed users to become “members” and access a variety of content from different authors.

“It was a realization to realize that membership could have been the web’s business model all along,” says Genestoux, adding that the failure to integrate a payment model was “the original sin of the web”.

He points out that the original designers of the web envisioned a native payment tool. This is reflected in the existence of a browser error message describing a 402 error, which is analogous to the ubiquitous 404 error (“page not found”) but reads “payment not found”. But unlike the 404 error, the 402 message is always “reserved for future use”.

The existence of the 402 error page reveals that the web was supposed to have a web-native payment mechanism – one that would have allowed users to pay for content without disclosing much personal information – but that for some reason whatever, it was never deployed.

Genestoux has worked hard to try to redeem this original sin with a service called Unlock. The site uses non-fungible tokens – unique digital tokens stored on a blockchain – to allow readers to access content from different websites without having to worry about repeated credit card sign-ups.

Unlock’s model relies on blockchain smart contracts to verify whether an NFT owner is in good standing and, if so, grant them access to participating publisher websites. Unlike a traditional website subscription, membership can be transferred or sold. Publishers, on the other hand, can distribute revenue from NFT sales and resales through a smart contract or offline arrangement.

In the future, Genestoux thinks, Internet users will use NFTs to access sets of content tailored to their interests, perhaps one that will allow them to read dozens of sports or entertainment sites. He adds that in addition to convenience, the permissionless nature of NFT ownership reduces the potential for censorship. Concretely, controversial publishers like pornographers or radical political sites would be less at the mercy of payment providers like Stripe or Visa cutting them off.

Unlock is not alone. A company called Coil has received $250 million from crypto firm Ripple to expand a service that allows readers to pay $5 a month to “stream” content from various websites. The service is free to publishers, who charge a rate of 36 cents per hour for each user on their sites. A tiny sum, certainly, but which would become significant if it were multiplied by thousands or millions of users.

The latest company to attempt a crypto-based subscription model is news and research site The Block, which encourages loyal readers to buy and stake tokens in exchange for full access to its content. A company called Civil attempted a similar model five years ago, but the project fell apart – partly because readers, and even its own employees, found it confusing – but The Block is probably better placed to succeed given its crypto-native reader base. , and since global knowledge of crypto and tokens has increased exponentially in recent years.

Yet despite this burst of activity to link subscriptions to crypto and media, there is little evidence that the idea is taking off with consumers. Trade publication The Defiant conducted a detailed survey of available services last year and concluded in a grim headline: “Micropayments for Content Refuse to Take Off and Crypto Doesn’t Help.”

What is the problem? While it might be tempting to blame the complexity of crypto or its questionable reputation with many consumers, the biggest hurdle to adoption lies elsewhere, with publishers themselves.

“Not a technical problem”

Trevor Kaufman is the CEO of Piano, a company that made $80 million in revenue last year providing paywall technology to hundreds of media companies, including the BBC, Tech Crunch and Fortune. He says Piano experimented with micropayments and cryptography for years, including a system where publishers could barter with each other to provide access to content to each other’s employees.

But he discovered that the publishers didn’t want to participate in that.

“Believe me when I tell you that there is no [Piano] customers around the world saying, “Hey Trevor, that would be great if there was a micropayment option,” Kaufman said.

He notes that there are non-encrypted options that could make it easier for readers to purchase individual items, such as PayPal or Apple Pay wallets in the Safari browser, but publishers have shown no interest in adopting them. .

“There are ways to charge a little money for short-term access, but it’s not a technical problem. The worry is that they’re going to cannibalize the underincome,” Kaufman said.

He explained that many publishers are finally enjoying a significant revenue stream from subscriptions, which not only put money in their pockets, but provide a predictable cash flow that they can borrow against. Having finally developed a business model outside the vagaries of online advertising, they hesitate to get involved.

Indeed, some of the biggest paywall success stories are hesitant to even discuss micropayments. Both New York Times and Dow Jones (publisher of the wall street journal) politely declined to be interviewed on the subject.

This reluctance is understandable given that publishers are emerging from two brutal decades in which the Internet destroyed their print-based business model, and Facebook and Google sucked most of the advertising dollars they once earned. But it’s hard to see how the current landscape of paywall silos, which sees a third of readers cancel their subscriptions within 24 hours, is sustainable.

“Consumers want a Spotify model,” Kaufman acknowledges, even if publishers don’t want to provide one.

It should be noted that other industries, including the music and television giants, fought hard against streaming services that offered new types of content packages but, over time, came to appreciate the value of services like Spotify or YouTube TV. It seems inevitable that web publishers will one day adopt a system where readers can easily pay for their stories across different sites, using crypto or perhaps something else.

In the meantime, Kaufman predicts that NFTs and other types of crypto payment are unlikely to expand in the foreseeable future, but he remains open to it.

“Discover business models for content on the internet is one of the biggest societal challenges we have,” he added, “so the more innovation, the better.”