Kachingle: contributing cash to the news sites you enjoy

Will people voluntarily pay to read news that they could easily read for free? Cynthia Typaldos, founder of Kachingle is convinced that they will. Kachingle proposes a novel solution to the news industry's revenue problems: encourage people to donate money to their favourite sites, whether these are major news outlets or small-time blogs. The Editors Weblog spoke to Typaldos to find out more about the scheme, which is due to launch in late July or early August.

How it works

Kachingle users, who the company are calling Kachinglers, need to sign up once to set up their subscription, which, via PayPal, will charge them $5 a month. When they go to a news site that is participating in the venture, it will display a Kachingle 'medallion', which the user can click on to indicate their support for that site. The reader can choose to highlight as many or as few news sites as it wishes, and Kachingle will track the number of times that they visit that site in a month. At the end of a month their $5 will be divided and distributed proportionally between the sites which they have flagged, according to the amount of times visited (with a 15% cut going to Kachingle and 5% to PayPal.) "The algorithm is meant to be a proxy for value received the consumer," Typaldos explained.

Why will people pay?

The main reason Typaldos thinks people will be prepared to offer this $5 is not because they have a strong desire to help save newspapers but because of the social advantages of using Kachingle. Contributors create a profile that shows which sites they are supporting, which they can post to their Facebook profiles or send on Twitter, Typaldos suggested. There will even be a Facebook application. "It becomes a very real view of the things I value, part of my online persona," she explained: something which she believes is "very important" to people as their online existence becomes more and more complex. Essentially, "there's a very powerful peer pressure recognition element to Kachingle" which is what she thinks will drive people to become involved, she feels that users will be "getting something back" in the form of social recognition. The more altruistic wish to help support news would come second to this, she believes.

Another reason Typaldos gave for why Kachingle will work is simply how easy it is: a crucial factor for such a venture. Registering involves providing just basic details, and thereafter, a Kachingler's job is straightforward, marking the sites, without having to consider how much they would like to contribute to it. "There just can't be any mental transaction costs," as Typaldos put it. And the system still allows people to move freely around different publications without encountering pay walls, which Typaldos is firmly against. "Pay walls are just the kiss of death for newspapers," she claims, "we just think it's the wrong economic approach." Those who are trying to implement them "are trying to take the old business model and stick it on the Internet," which she believes is a doomed approach.

To start with, anyone who registers as a Kachingler will make a $5 a month payment. It is fixed thus because Typaldos did not want the decision of how much to contribute to be a barrier for users. The company plans, however, to allow people to give larger amounts in the future, and to encourage them to do so by suggesting amounts based on how many sites they have chosen to support. Typaldos hopes that the typical amount given will rise to about $20 a month. Unsurprisingly, content providers would like people to contribute more money, she said.

The start-up has been in contact with many major news publishers, Typaldos clarified, and these have been by no means only US based: publishers in Germany, the UK, France, Italy, Brazil, Hungary and across Scandinavia, for example, have been in touch. "We are not country specific," she confirmed. For news organisations, the benefits are clear, and the medallion button is extremely easy to install: a simple Java script widget which "you can put on your site in three minutes."

Will it work?

So how much could Kachingle actually raise for newspapers? Could it make a difference? "I think that we will bring enough revenue to sites that are very high quality with original content," Typaldos asserted. She is not under any illusions that such an effort could save a major newspaper that has "debt, so many overheads, print, a huge staff," but she is confident that Kachingle could have a highly significant impact on smaller publications such as MinnPost, which has low overheads but respected journalists. "We will be very powerful for them," she added.

The idea is a good one in the sense that it manages to combine the notion that people should and can pay for news, without putting up paywalls that would block off sections of newspapers and seem incompatible with the idea that news readers should be able to jump around as they please online. It is also compatible with an advertising model. Typaldos described it as "not like tipping, not like micropayments, but we have taken the best elements of both." The fact that readers can choose what they think its worth paying for is likely to appeal to many, and the cost is sufficiently low to not be a deterrent. It does seem that quite a substantial marketing campaign will have to be carried out to spread the word and persuade people that it is worth making the effort to sign up: social pressure alone might not be enough. Once they do so, however, they will probably appreciate the service.