Newspaper and content providers on the Internet are getting increasingly antsy about how to make money. Kachingle announced its solution in February, and it has gained so much interest, the founders say, that the launch is being delayed while the team builds out the service so it can support what they think will be a popular offering.
Here's the basic idea of Kachingle: Users contribute a small amount, currently $5.00 per month, voluntarily. While surfing they select content sites they like and want to support. At the end of the month, their monthly fee is distributed to their sites, based on how much time they spent on each site.
Founder Cynthia Typaldos created the idea five years ago, but says it was too early. "Content providers weren't desperate enough," she says. They are now, but Kachingle isn't yet ready. It should launch in July. At the moment, some parts of the original product don't scale, Typaldos says.
Kachingle has had over 250 unsolicited inquires to use its service, of which 75 percent are from the U.S. and Canada, and 25 percent from the rest of the world, according to Typaldos. So far 80 percent of the queries are from bloggers and 20 percent from other content sites like newspapers, some of which have multiple sites and millions of users.
"We're going to have at least three, probably five or six major newspapers signed up by the time we launch," said Fred Dewey, CEO of Kachingle.
Typaldos is convinced that Kachingle's model is much closer to the way the Internet works than standard micro-payments, tipping or subscriptions, because it's easy--users decide just once who they want to pay; the service doesn't create "walled gardens" (the content is still free for viral and social distribution); the total amount of money is limited; and above all it's voluntary.
She has support from Paul Romer, economist and senior fellow at the Stanford Center for International Development. "It doesn't try to solve the underlying free-rider problem. It tries to use volunteerism, altruism, and good citizenship instead. I like this aspect of the model. Economists and the policy makers who listen to them frequently underestimate the potential for this kind of motive to solve problems," Romer says.
But really, will people pay continuously for free content? Here's the hook, according to Kachingle: pride. Users will be able to show publicly which Web sites they support, both on the website and with a Facebook application.
"It encourages contributions by well-understood peer-pressure behavior," Typaldos said, referring to scientific studies (pdf). "It's kind of the lubricant that makes social relationships work. People are building an online persona as they built off-line personas before the Internet, by the kind of car they drove, the books they read, and the clothes they wore."
Valuing original content
This is also why Typaldos believes Kachingle is interesting, even for big media companies. They could argue that splitting up $5 on dozens of websites, multiplied by millions of users, wouldn't create relevant incomes for them.
"Over time we'll give (users) social messages that say things like 'people like you, Kachingle-ing 100 sites, typically give $50 a month'," Typaldos says. "Our goal is between $30 and $40 a month, which is what you pay for a newspaper subscription."
"And we don't believe that people will have a hundred sites. We think they will be discriminating, and choose sites that they value highly, and particularly that they will value original content."
For content providers, participation is free. Web sites just need to publish a "medallion" that users can click on. Kachingle will take 20 percent of the revenue collected and distribute the rest to its publishers.
"We don't want little sites to be swamped by The New York Times," said Typaldos, explaining that initially the algorithm for distributing the money won't count page views, but rather the number of days the user visited a site.
She said that the algorithm will evolve, but points out: "We're always on the user's side, and we will only implement algorithms that distribute money based on the users' value systems, because this is a voluntary contribution, and we won't achieve anything if we do something that doesn't feel fair to users."
If Kachingle becomes a success, the model could be applied not only for text-based content but for other content. For the moment, the focus will be on the embattled publishing industry. "They're kind of desperate right now, so they're just happy" to see this solution, Typaldos said.