Late yesterday evening, it was announced that news business behemoths The New York Times and the investment branch of Axel Springer purchase 23 % of Dutch start-up Blendle for three million Euros (in Dutch). This is not only good news for Alexander Klöpping and Marten Blankensteijn, who founded Blendle – it is also an interesting turn of events for people interested in business models in transition and the sales of online news.
Blendle is a digital “magazine stand” where users can buy individual articles from Dutch newspapers and magazines through a micro-payment program. It’s often referred to as the “iTunes for News” as you pay for what you actually read. The price per article is between 0.10 and 0.80 Euros. Launched in April 2014, Blendle has grown rapidly and currently has approximately 130,000 registered users, 20 percent of whom convert to paying users (you get free access to articles for 2.50 Euros when you sign up).
The blogpost-like announcement on Blendle.nl frames The New York Times and Axel Springer buying their way into Blendle as a way of broadening the start-up’s scope of operation internationally – and today, you can even sign up for news when you can become a customer (“We can notify you when we’re coming to your country”). This dimension is, obviously, a most important part of the story.
But I think there’s more to the acquisition than just that.
Both The New York Times and German publisher Axel Springer have already proved themselves adequate in terms of monetizing their online content. Ken Doctor says The New York Times generated $150 million in revenues from digital subscription in 2013 and it can, according to Ryan Chittum at the Columbia Journalism Review, be expected to make $170 million in 2014, $200 million by 2016. Axel Springer, on the other hand, managed to get more than 150,000 digital subscribers to BILDplus on only half a year, for example.
What neither The New York Times, nor Axel Springer have (to the best of my knowledge) is a micro-payment program. They have things in store for people who wants to subscribe to their journalistic products online – but they don’t have an offer for the occasional reader who is just interested in reading only one or two articles beyond what is allowed in metered models and similar arrangements. Buying parts of Blendle – including its knowledge of what works and their functional systems – might be a step towards expanding the giants’ online operations in that direction and reaching out to this kind of audiences, who are more interested in noncommittal single copy sales than in the binding relationship of subscriptions.
Update October 27, 2014: In the discussion that followed on Twitter after me publishing this post, a number of good points and clarifications emerged:
1) Claes Holtzmann asked whether The New York Times and Axel Springer’s new-found belief in micro-payment wouldn’t jeopardize their use of the metered model. He is, of course, right. If The New York Times, for example, gets full steam ahead into micro-payments, it will have a hard time maintaining its current (functioning) subscription model. My point, however, is not that it will adopt micro-payment in a larger scale – rather that it might also offer micro-payment options to some extent. For example, the large archive of the 163-years old newspaper probably contains stuff that it will be able to monetize this way. That would be a sort of “long tail” approach. And it’s important to remember, that things don’t have to be old to be part of the long tail; on the contrary, large news organizations can use it as a strategy to get a little (which is better than no) return-of-investment on articles with only a little readership.
2) Mads-Jakob Vad Kristensen correctly pointed out that this was also about The New York Times and Axel Springer buying access to Blendle’s knowledge about consumption patterns of news. He, too, is of course right. I should have mentioned that in my original post – but instead of rewriting it, I’ll just direct everyone to Mads’ own blog-post “Blendle belønner læsere af dårlig journalistik” (it’s in Danish). He writes it better.
3) Søren Pedersen noted that the “Blendle model” cannot possibly generate large revenues to publishers. I think the jury is still out on that one (though there can be no discussion that large audiences are needed), so I’ll just mention that of the revenues generated through Blendle, the original publishers get 70 percent, Blendle 30.