Post-Peak Attention and the Case for Micropayments
Success in new business paradigms involves wasting what is abundant to capture what is scarce. The Industrial Revolution did this by taking advantage of technologies that used the finite resource of human physical labour (steam, electricity) and made it considerably more efficient, allowing for bigger factories and the advent of mass production. Web 2.0 similarly took the explosive rise in ubiquitous information and content accessibility to stretch human attention to its limits. Now that we have reached ‘peak attention’, what happens next?
MIDiA has been extensively covering peak attention for a few months now. For those unfamiliar with our work, a brief definition as described by my colleague Karol Severin:
Before the smartphone revolution, consumers had lots of available ‘dead-time’ (attention to allocate).
- Attention-seeking propositions (in large part entertainment services and apps) entered the market in increasing numbers. Initially, consumers keenly adopted many of these propositions. However, there are only 24 hours in a day, limiting the attention consumers are able to allocate to each app. The more apps, the less attention each one can receive.
- This means the media game becomes zero-sum as consumers hit their attention limits and start to prioritise between the apps, instead of adopting them on top of each other. In doing so, consumers have decreased their engagement with certain apps and abandoned others entirely to free up attention until a new equilibrium is reached.
Enter micropayments. Micropayment solutions have been mooted as a solution for online content monetisation since the 90s, yet it is only with the advent of emerging technologies such as Blockchain that a path to implementation has emerged. Adoption challenges arise in migrating an audience accustomed to free, and streaming services will find themselves in a situation where they want to seek revenue outside of advertising and subscriptions for the following reasons:
- A pivot from advertising: Advertising was a goldmine of revenue for early internet companies, especially while consumers remained cautious of revealing payment details online. And yet 2019 felt like the year this model came to a head, as publishers currently do not earn ad revenue on articles that they distribute on social media and continue to pay Facebook to reach their chosen audiences. While they generate ad revenue through referral traffic (where consumers click through the publisher’s own service where they can host their own advertising), the introduction of instant articles on Facebook a few years ago was catastrophic for certain news brands, which saw their traffic cut in half after the feature was introduced. The wave of digital media consolidation witnessed in the past two years is symptomatic of this trend. Subsequently, while the advertising industry is desperate for alternatives until an improved ROI is visible, they will continue to spend an increasing share of their budgets on Google, Facebook and as a result of their ascendant media business, Amazon.
- The streaming business model is running up against the inelastic pricing issue of $9.99: Pricing remains problematic for streaming subscription services, the issue being that the price has reduced the auxiliary spending of the most valuable music buyers – those who would otherwise have spent considerably more monthly on music and other media offerings. Streaming services have sought to combat this with a combination of telco music bundles and aggressive price discounts exemplified by free streaming offerings bundled with platforms, such as those from Amazon and TikTok. However, these tactics create longer-term pressure on the $9.99 price point as they engender the consumer perception that streaming music should be cheaper. Given that music streaming services, for now at least, create their own content like in the Netflix model, competing on price is inevitable. The next wave of innovation in music streaming monetisation requires, therefore, alternative revenue streams outside of subscriptions and advertising.
Micropayments are typically defined as payments of less than a dollar (and in some cases, a fraction of a cent) that are usually made online. Where these types of payments would exactly fit remains a more pressing issue. As the internet was not built with a payments network in place (something the world wide web founder Tim Berners Lee has lamented in recent years), payment facilitators, therefore, arose as a huge business opportunity; firstly PayPal in the 90s and later Stripe and Square. However, they are still embedded within the current banking system with its legacy of clearinghouses and centralised finances. Conditioning consumers to freemium models has also meant individual purchases of products behind paywalls will require re-navigating user behaviours. This is problematic in the era of what the 1970s futurist Alvin Toffler originally termed, ‘the prosumer’, that of the dual consumer and producer which has already begun to play out in the business models of everyone from Google to Spotify. Every search on Google incrementally improves the algorithm, and each playlist created improves Spotify’s ability to serve their users music they like. People are not presently paid for this service, at least outside of conventional advertising. The use of micropayments would allow the utility of information to be quantified and upvoted through tokens, a method already employed by the new crypto service Steemit and utilised informally on platforms like Reddit.
For now, micropayments remain the great promise of the next wave of Web 3.0, one that finally throws off the shackles of pure ad-supported media and avoids the winner-take-all effect of platform economy subscriptions. The issue remains if and when the technology reaches mass adoption soon enough to bring these new entrants to the market, or whether platform economics have now become so influential that the technology struggles to get off the ground.