The Digital Tip Jar: Is It Viable in the Ad Blocking Era?

Jun 22, 2016

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Article ImageDigital publishers continue to struggle with finding the right monetization method, with some pursuing subscription paywalls and micropayments, while others rely on ads or a combination of all of the above. In an era when ad blocking software is prevalent and consumers continue to insist on free content, however, these strategies may not be enough to keep digital content peddlers in the black. 

Interestingly, a new twist on an alternative revenue generator has emerged: the democratized digital tip jar. Sites like Wikipedia have employed an online tip jar for years in the form of regular requests for donations from its users via PayPal, credit/debit cards, and other payment methods. But now a major player in the digital donations space-Flattr-is partnering with AdBlock Plus to offer Flattr Plus, a browser extension/app that enables users to remove online ads from sites they visit while also contributing a monthly payment in an amount they choose that will be distributed proportionally to publishers of the sites they surf. Publishers who want to participate merely need to sign up for Flattr and provide their URLs and they will automatically receive the money that users spend via engagement with these sites-and without needing to place logos, tags, or donation request buttons on their pages. Flattr Plus plans to launch in beta this summer (date to be announced soon).

Unlike other digital donations, however, Flattr Plus won't let you select which particular sites get the cash; users don't click a Flattr donation button on the page of a site they like-instead, the add-on automatically tracks the sites they visit and dispenses the user's predetermined monthly donation amount according to engagement. "Flattr Plus rewards the actual quality of content instead of perpetuating a model optimized for clicks and eyeballs," says Laura Sophie Dornheim, public affairs director with Eyeo GmbH, one of Flattr Plus' parent companies. "Users don't want to be bothered with the decision of if and how to reward each single site they use-which is why we automated that process with Flattr Plus. But our algorithm still keeps the users in charge. They can set their monthly budget themselves and can always trigger Flattr (payments) manually as well as exclude sites from being Flattrd."

Dornheim adds that Flattr Plus was created because "users should not be forced into one business model but be free to choose how they reward content. For publishers, it will open a new option to engage these users as paying clientele."

Stacy Smollin Schwartz, marketing professor at Rutgers Business School, however, isn't convinced the Flattr Plus concept will make much of an impact. "I think it's an interesting pay-as-you-go approach to help publishers hold onto some revenue," Schwartz says. "But I don't think this will provide a meaningful replacement for advertising revenue because it doesn't address the core issue: audiences do not want to pay for digital content."

"They want content free, and ad-free," says Schwartz.

Andrew Frank, VP distinguished analyst for Gartner, agrees. "This has been tried before, in the Napster days. The lesson we learned is that voluntary revenue is very difficult to scale and unlikely to change the attitude of publishers toward ad blocking," says Frank. "Plus, (Flattr Plus) contributions are unlikely to amount to more than a tiny fraction of the ad revenue lost to ad blocking."

It's also difficult to determine exactly whom Flattr Plus would appeal to. Dornheim notes that Adblock Plus has a user base of over 100 million globally and says she's confident that "a significant number of them will also use Flattr Plus." But will they be motivated to donate by a sense of guilt or sympathy for the publisher, and would that pity-driven incentive dissuade self-respecting publishers from participating?

"I suppose it would appeal to people who consider the publishing industry worthy of their charity," says Frank.

Shame and pity won't be the catalyst that sets Flattr Plus contributions in motion, insists Dornheim. "It is rather a rational logic. Content can only be produced if the creators can afford it, so using Flattr Plus is a strategy to see the web thrive," she says.

(Image courtesy of Shutterstock.)