There isn’t an Uber for news and why micropayments for news are unlikely to work. | News Product Made with Humane Club

There isn’t an Uber for news and why micropayments for news are unlikely to work.

Published Sep 11, 2021
Updated Sep 12, 2021

Since 2014, I have been part of at least 4-5 discussions about building an Uber for news and journalism. In one case, I even saw a pitch deck for impact investors. These ideas are part of a more significant trend called ‘Uber for X’ in which an app or service would give consumers a specific service when they need it. It was a fad that picked up after Uber became an instant global success. However, can there be an uber for news and journalism? No.

Let me elaborate with definitions from AZ16 blog post on marketplaces.

Marketplaces

marketplace is a platform that connects the buyers and sellers of goods or services and provides infrastructure (such as reviews, payments, or messaging) to facilitate a transaction. In return for facilitating the transaction, the marketplace charges a commission.

media marketplace would connect audiences with specific content, for example, articles, videos, and podcasts. Media marketplaces that we know of are Netflix, YouTube Premium, Substack, Medium, Audible.

Supply-pick marketplaces serve à la carte products for a micro-payment

Companies like Swiggy (delivery), UrbanCompany (a gig marketplace for handymen like electricians and plumbers), and Uber of course are supply-pick marketplaces, are supply-pick, i.e., suppliers choose whether to give service.

In such models, a consumer (passenger) requests a known commodity product or service (a ride from place A to place B). The consumers do not care which supplier (driver) provides the commodity. Hence, the marketplace (Uber) sends the consumer’s request to the nearest supplier (driver), who gets to choose whether to serve it or not. Suppose the nearest supplier (driver) isn’t available. In that case, the marketplace asks the next available driver (supplier), and so on. 

We micro-pay in supply-pick marketplaces. So even though our annual expense on transportation and cabs might be 100 units, we are okay to micro-pay 0.1 or even 0.001 for each Uber ride.

Media is a supply-pick marketplace only if the content is a known commodity. Well-known movies, songs, and books are commodities with well-defined expectations. You can buy such products from any convenient supplier — Apple, Amazon, Netflix, Google, or Spotify. And for such products, you are willing to micro-pay. 

YouTube charges ~$2 for a movie in India
YouTube charges ~$2 for a movie in India

Payment-worthy news and journalism are not a commodity and hence there cannot be an Uber for News.

Companies like Coursera (education courses), Netflix (movies), and Etsy (artisanal hand-made products) are demand-pick marketplaces, where customers choose what to buy.

But the news and journalism are inherently demand-pick. For a given topic, the consumer (audience) decides which publication to read. In fact, within a publication, too, consumers choose which article to read for a given topic. Similarly, Airbnb is a demand-pick marketplace. Fashion is another industry that is demand-pick. Hence, publications and reporters invest heavily in their brands.

Hence, there are pick-me-up, click-bait headlines but no pick-me-up Uber drivers.

A news marketplace must surface the heterogeneity among its participating publications and writers by highlighting their unique attributes. Apple knows this. Hence, iTunes does not allow Metallica and Taylor Swift to change the fonts of their listing, but Apple News does. Therefore, Apple News constantly shows the logo and typography of the publication, even while aggregating articles from many publications. Even more fundamentally, they visually treat different types of articles differently. 

Anyone who has built a website or a mobile app would know including multiple fonts while retaining performance is a pain. Apple took that headache for a reason.

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If the price per product is very low, demand-pick marketplaces tend to be all-you-can-eat buffets subscriptions.

Demand-pick media marketplaces struggle to charge micro-payments. Before reading an article, how would you know if the piece is worth paying 0.1 or 0.001? At least in an Uber car ride, the measurement can be standardized based on distance. One way around this could be that the author or publisher could set a fixed price for any article, say 0.1. But since it is impossible to define a news article’s expectation, readers can feel that they overpaid or the publisher left too much on the table.

Hence, most demand-pick media marketplaces are all-you-can-eat buffet subscriptions. NYT, Netflix, Spotify, Apple Music, and Medium are all subscriptions. These publishers focus on building a relationship with their audience. The promise is that the audience will get their money’s worth from the overall spread. But, the audience must decide which exact to consume and that the publisher can only suggest. Audible takes it a step further. It says you can listen to 24 books in a year. But in case you do not like a book, you can return it.

FAQs

Isn’t Substack micropayments, demand-pick media marketplace? Substack is a ‘software-as-a-service company first, marketplace second. Substack, and other creator economy tools, are selling shovels in the middle of a gold rush. In return for the technology they offer, they charge a 10% commission. The writer still needs to have a huge enough fan following to monetize meaningfully on Substack.

What about Twitter with its tipping functionality? It is worth noting that social media — Facebook, Twitter — aren’t primarily a marketplace. Their primary goal is to promote social interactions without any buying or selling. So despite Twitter’s Tip Jar introduced monetization, the media marketplace is a ‘feature’ on top of its core business – social.

Does this apply to news products?

A news publication isn’t a marketplace. So would it work for a news publication? Raja Ramamoorthy R, the head of products at Vikatan, talks about his experience in a LinkedIn post on the topic. He says, “When we put a price tag on an article, a reader subconsciously adds more expectations and value to the content before buying or reading it. The higher the expectation, the more the judgment. Nothing will kill a micropayments product than disappointing users after consuming the value.”

“While micropayments might be a long-term volume game for publishers, it’s a short-term value game for readers.”

Raja Ramamoorthy R, the Head of Products at Vikatan

One reason for the lack of consistency in news and journalism articles is that writing ‘well’ remains a high-skill activity, unlike taxi driving. In this YCombinator article titled Read This Before You Build Uber for X, they share this graph that shows how as skill required increases, the volume reduces. Good beat reporters take years to build a deep understanding of a topic and are specialists.

Credits: YC blog – Read This Before You Build Uber for X

But any news product will always have a mix of average quality articles and good deep articles. One way to overcome this expectation problem is to be like Holloway.com and only ship high-quality paid editorial products, thereby setting an expectations benchmark.

Even more fundamentally, micro-payments are on the wrong quadrant of the 2×2 matrix.

There are only two variables to focus on: 

  • How frequently do customers purchase, and hence is the product sticky or habit-forming
  • What is the value of the transaction

Let’s take few examples. Uber charges a low transaction value (0.001) but with high frequency (multiple times a day) and is habit-forming. On the other extreme, you have Airbnb, which one would use twice a year but would end up shelling out hundreds of dollars per transaction.

Between these two extremes are most media products:

  • Most news product subscriptions, Medium, and Netflix charge a small monthly fee and have weekly active usage.
  • Audible charges a higher annual fee, $150 per year, and provides 24 audiobooks.

Types of marketplace businesses
Types of marketplace businesses

Micropayments for news would be a low-value, low-frequency product.

  • Low value because you can only charge a small amount per article, considering NYT’s monthly subscription costs, at least in India, is less than a dollar.
  • The news would also be a low-frequency product because it is a demand-pick market with many free substitutes.

Now add to it the risks that Ramamoorthy raises of disappointing audiences and cultivating a target audience that only wants to play short-term games with you.


Personal notes:

  • How do I know some of this? Unfortunately, I spent 12 months of my life chasing a low-frequency, low-value mirage of my own. In 2011, I had just quit my job with Amdocs and returned to India. I started TracksGiving, a service (SDK) that e-commerce companies could integrate at check-out, allowing shoppers to donate change to social causes. 
  • My frequency of writing isn’t as good as I would like it to be. August was a month with a hectic news cycle — Olympics, Independence Day, Taliban 2.0, Paralympics, India-England series — and staying on top of the news cycle is exhausting.

Related read

Since news and journalism are demand-pick, editors at Apple News write persuasive pitches for curated articles. More on this in the article below.