Micropayments: Say Goodbye to Subscriptions

The internet is about to become a more affordable place with higher quality content.

Subscriptions are Expensive 

In the world of online media, to read an article or watch a movie, consumers are subjected to either viewing the content for free with unsolicited advertisements or being required to sign up for a monthly or year-long subscription. Subscriptions are unaffordable and getting out of control. Subscribing itself is a tedious process of typing in credit card details and personal information. A new report from West Monroe reveals that the average consumer spends $273 per month on subscription services, amounting to over $3,000 a year. In 2021, 89% underestimated what they spend each month; nearly half of those surveyed underestimated were off by between $100 and $300. The amount of money consumers are spending on subscriptions has consistently risen by about 15% each year. This paywall model is sufficient for the average consumer to subscribe to a few favorite media services, creators, authors, charitable organizations, etc.. Still, it should not be the only option to unlock content. Media outlets have been forced to lay off employees as they struggle to find a business model to generate steady revenue that appeals to consumers. 

Free Content is Subsidized by YOUR Personal Data 

The alternative to a subscription-based model is the advertising model used by Youtube, Facebook, Google, and most news publishers. These companies make billions in revenue with this model, but recent trends show consumers are becoming more conscientious about their privacy and data. An iOS update by Apple crippled companies reliant on ad revenue by giving users the choice to share or not share their data. 

The advertising business model is horrible. News publications are incentived to produce clickbait content as the amount of money they’ll make is dependent on the number of web page views. They’re putting out quantity instead of quality to drive web traffic. The ad-supported model is an awful way for news publications to operate and is part of the reason for the rise of disinformation.

When consumers visit ad-supported websites, each ad gathers valuable data to sell more targeted ads or hand it off to data brokers who will do god knows what with the data. Consumers are suitable to grow increasingly wary of their data. Information has value that’s why companies like Facebook and Google are so valuable.

Micropayments are a Key Element of Web 3.0 

We need a frictionless micropayments infrastructure to produce an internet that’s based on content, not advertising. The solution and one of the fundamentals of Web 3.0 are micropayments. Micropayments are a unit of currency less than a dollar that can facilitate the monetization of digital goods and services without dependence on advertising and the sale of personal data to propel revenue. Its essential micropayments operate with a digital currency as even the most cost-effective online payment processors, such as Stripe, charge $0.30 plus 3% of a transaction. Implementing micropayments doesn’t make economic sense when the transaction itself is more expensive than the goods or services being sold. Blockchain technology, an immutable digital ledger to record transactions most commonly used for cryptocurrency, can validate payment transactions for a fraction of the cost and much faster, which would make the need for an expensive and slow payment intermediary obsolete. 

Inventor of Javascript and founder of Mozilla Firefox, Brendan Eich, is operating a new web browser called Brave that can facilitate micropayments with a built-in browser wallet that allows users to send micropayments to its verified creators (publishers, personalities, etc.). The payments are sent using Brave’s cryptocurrency, BAT (Basic-Attention Token) that users can earn by signing up for Brave Rewards, which gives users 70% of the ad revenue in the form of BAT for each advertisement they view. Platforms like YouTube offer ways to tip creators, but they take a 30% commission. 

Micropayments will receive mass adoption during this decade. It’s uncertain if they’ll be powered by a CBDC (Central Bank Digital Currency) or a cryptocurrency. For the latter to happen, cryptocurrency values need to stabilize. People don’t want to spend their cryptocurrency. The dogma in 2021 is that crypto prices will keep appreciating, and everyone will become a millionaire ;). The concept of micropayments is not new. Before the internet, there wasn’t a free way to get the news; people would need to spend 25 cents for a newspaper from a vending machine. The concept of all the information in the world being free with ad support is new and is not an effective way to distribute information on the internet. 

The Future of YouTube 

One of the most popular media services is YouTube which is currently free with many advertisements. There’s a paid version called YouTube Premium, but that costs $11.99/month. It’s my prediction Youtube and its creators will offer select free content, but most will be hidden behind a paywall that can be unlocked with micropayments for individual videos or by having a paid subscription to a specific channel. I’m subscribed to dozens of YouTube channels because they’re free and have watched thousands of videos I would not have viewed had they required a payment. The paywall is a good idea because it will improve the recommended algorithm since a video must be good enough to warrant payment. YouTube would create a much higher threshold to gain a mass following, and the content quality would substantially increase. Intrusive advertisements would become a thing of the past since YouTube would rely on commissions from payments for most of its revenue. 

Popular YouTube channels often have sponsors integrated into their videos. The metric delivered to advertisers would become more accurate, valuable, and insightful since users willing to pay for a channel are much more likely to care about the sponsors in the video and engage more with the creator. Advertisers are currently over and underpaying creators, but it’s hard to tell when the price of a subscription and viewing a video is free. 

The Problem with Substack 

Substack is an excellent platform that makes it simple for writers to start an email newsletter that makes money from subscriptions. Once the infrastructure for Web 3.0 is built, it will become essential for Substack to offer micropayments since the average consumer cannot afford to spend $5+ a month on multiple subscriptions just for writers. I agree with the belief of Substack’s CEO, Chris Best, that the advertising-supported business model is not sustainable. However, a business reliant on subscriptions is not sustainable either. Companies will have to offer a combination of subscriptions and micropayments to succeed in the future. 

Today, it feels like we have the same payment process online as we do in a brick-and-mortar store. The Collison brothers who transformed online payment processing with their company, Stripe, cite the absence of effective payment methods online as the reason that the web went from being open source and rife with opportunity to an “oligopoly controlled by five companies now worth more than $3 trillion.” Micropayments will make the internet a more affordable place.