Canadian newspaper tries radical experiment with iTunes-style micropayments

One of Canada's last independent big city dailies is pioneering a radical new way to help pay for original journalism, writes Don Pittis.

Winnipeg Free Press tries 'iTunes model' to help pay its bills

As print subscriptions and ad revenue decline, Winnipeg Free Press publisher Bob Cox is trying a radical experiment to cover the cost of independent journalism. He's asking online readers to pay for stories the same way they pay for iTunes songs: one at a time. (Winnipeg Free Press)

Despite its name, regular readers of the Winnipeg Free Press can no longer see articles for free.

Paywalls are nothing new in the world of online newspapers, but this summer, the "Freep," as it is affectionately known, introduced a method of charging for online "print" media that everyone thought was dead: micropayments.

After a free trial period of one month, anyone interested in reading the Free Press has two choices. As with other papers, readers can buy a subscription at the standard rates.

You go to Amazon, you buy one at a time. You go to the Apple iTunes store, you buy one at a time. This is the method people use online for purchasing things.- Bob Cox, Publisher, Winnipeg Free Press

Or, they can do something regular daily newspaper readers have never been able to do before. They can pay a one-time fee for the individual article they want to read. 

"There are all these readers out there who want to read what we have," says Free Press publisher Bob Cox. 

"You go to Amazon, you buy one at a time. You go to the Apple iTunes store, you buy one at a time. This is the method people use online for purchasing things."

Buying stories by the piece

When Cox attends international media conferences, he faces crowds of interested questioners. How does the system work? And is it paying off?

Part of the reason for all that interest is that micropayments were once supposed to be the brilliant system for paying for online print media content that just never took off, says George Goodall from the London, Ont.-based research group Info-Tech.

"In certain ways, micropayments are alive and well," says Goodall. "Just not in the way we thought they were going to be."

In the early days of the internet, there was a notion that the micropayment concept could painlessly pay the cost of all fresh content on the web.

The idea was that you kept a few dollars in an account — maybe something like an iTunes card — and when you clicked on a story, a small amount of money would be transferred from your account to the person or company that generated the content.

Whether a fraction of a cent or a quarter of a dollar – the ideal amount was disputed – all those micropayments from thousands or millions of people would add up, creating lump sums that would cover the cost of producing the original journalism.

In theory, the best and most essential journalism would be rewarded with more and larger payments.

Painless payments

The Winnipeg Free Press, one of the last papers in Canada not to be part of a national chain, began publishing 143 years ago. (Ruth Bonneville. Courtesy Winnipeg Free Press)
The reasons the system wasn't used for online news remain unclear. I mean, besides the fact that generating stories about cats and cat videos would be even more lucrative than it is today.

"The model gets complicated from a technology perspective and from an execution perspective," says Goodall. In other words, someone would have to spend a large amount of money to build a complex payments system, and then get publications and the public to agree to sign up. Neither happened.

Another part of the problem was that with so many sources of news, the marketplace would mean payments would fall to their natural price. And that price was zero.

"That was the miracle of iTunes," says Goodall. He says Apple was able to figure out the price of music that was close enough to free to get people to buy in. "For music, it was 99 cents."

For a select group of online products, big companies such as Google, Steam and Amazon followed Apple's lead, creating proprietary sites for apps, games, movies and books, though the "micro" nature of the payments had changed. They were no longer a few cents, and only vendors who offered a cut to the online seller could play.

The Winnipeg Free Press thinks it is ideally placed to revive the system for online newspapers. The paper provides unique, detailed content about Winnipeg and Manitoba. Its audience, says Cox, includes a huge diaspora of former Winnipeggers who have relocated to other parts of the world.

Unlike larger national or international media organizations, the Freep's readership is too small to subsist on online advertising revenues alone. And yet sales of the print version and the ad revenue it formerly generated have been collapsing.

"You just have to think about newspapers. They used to be filled with classified ads. They're not anymore."

Not only that, Cox noticed that the most avid online readers were people who had let their print subscriptions lapse.

"Okay readers, if you want this, you have to pay for it," Cox told his online audience. And it worked.

Limits to 'freemium'

Some papers, such as the New York Times, give you 10 free stories a month - the so-called "freemium" service - just for signing up. The Freep limits readers to only three stories for a lifetime.

After that, readers, who must sign up with a credit card, pay 27 cents per story, billed at the end of each month, up to the full price of an online subscription, which is $16.99.

Not only that, readers can opt out of paying for articles they don't think were worth the price by clicking on a button and explaining why.

The draconian story limit means that most of the new business since the summer was from online readers signing up for full service.

But the micropayments system is working, too. Cox says casual readers now number in the thousands and a couple of dozen new casual readers sign up every day.

"We're selling a substantial number of articles every day online," he says.

Currently, the Free Press has no plans to expand the service. But would it consider becoming a pay-per-view clearinghouse for other publications, like the Dutch-language service Blendle?

"Maybe. If there was interest and we could set that business up, we would," says Cox.

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Don Pittis

Business columnist

Based in Toronto, Don Pittis is a business columnist and senior producer for CBC News. Previously, he was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London.