The more I think about it the more I'm convinced that the use of virtual currency could help save the news media. Let me explain.
Online games are one of the brightest online sectors these days, these sites are making tons of money, and it's all thanks to virtual currencies. Gamers are exchanging real money for virtual cash so that they can buy new levels, gain access to special games, etc.
A lot of gamers get their virtual cash for free, but the sites still earn real money. Jason Bailey, CEO and co-founder of Super Rewards.
"Advertisers will pay virtual cash if a gamer does something specific such as sign up for Blockbuster or get an insurance quote. We have a platform that handles that transaction."
Super Rewards today launched what it calls a virtual currency monetization platform aimed at game sites but also games on social networks, and virtual worlds. The platform handles the entire transaction: it chooses an advertiser from a database of about 4,000, the advertiser pays Super Rewards if an action is completed, Super Rewards buys the virtual cash from the site owner and gives it to the gamer, taking a small cut (of real money) for itself.
This pays out far more than online advertising and Mr Bailey says some game sites have gone from a few thousand dollars to more than $1 million per month using this system.
This would be perfect for monetizing news media, which is in a heap of trouble because online ads don't pay nearly enough to support news reporters and all the other salaries.
The recent Pew Project's 6th annual survey
painted a bleak picture of the state of the news media:
- online ad revenue to news websites now appears to be flattening; in newspapers it is declining..
-nearly one out of every five journalists working for newspapers in 2001 is now gone
Pew says that 2009 will be the worst year ever for news media and that the news business model is broken. "It is now all but settled that advertising revenue—the model that financed journalism for the last century—will be inadequate to do so in this one."
Some in the newspaper industry are hoping micropayments might work, but micropayments haven't worked anywhere and are very unlikely to succeed this time around.
Virtual currencies could offer the best of both worlds, providing a surrogate micropayments system, and an advertising model that pays out more than CPM ads. And readers would rarely have to use their own cash to get virtual cash.
I proposed that:
- Local businesses could provide wads of virtual currencies to online newspaper readers, either in exchange for something such as survey data, or as a complimentary service to build goodwill.
- Businesses could also provide virtual cash that could be associated with reading specific sections in a newspaper, say furniture sellers to the "Home" section. Best Buy could provide virtual cash for reading the gadgets pages, etc.
- News sites could reward readers with virtual cash for contributing user generated content, such as a popular column, or for photos.
- Virtual cash could be exchanged between blogs and other online publishers for republishing great content. And there are a myriad other creative ways virtual cash could be used in news media.
The beauty is that the virtual cash would be purchased from the news media publishers with cold, hard cash by businesses, instead of purchasing online ads.
And the virtual cash then powers an entire dynamic economy within a news site that helps produce great content and provide other services.
Compare that to buying an online ad that just sits there, usually unnoticed on the side of the page.
It's these types of monetization technologies, borrowed from other publishers, in this case games publishers, that news media businesses would do well to investigate and adopt. What do they have to lose?
BTW, what would you call a virtual currency in the news media world? My suggestion is "lede" it rhymes with seed. It is very specific to journalism, it denotes the lead, or first sentence in a news story.
[This is a 5 lede article.]