Media Entrepreneurs: Could micro-payments be as simple as dropping a tip into a jar? Tibit’s Carl Beetham discusses the challenge of making it easy for people to pay for content

London-based Tibit is out to test a theory of micro-payments: If you can make it as friction-less as tipping a busker, would readers do it? They want users to decide just how much to pay for a piece of content. And if the model works, it could also help deliver payments to charities. Carl Beetham (email him at discusses the psychology behind payments and how this could work.

Q: How did you end up as an entrepreneur? Take us through that journey.

CB: By mistake! I think back to the old joke ‘How do make a small fortune out of tech start-ups? Begin with a large one!’ I was fortunate enough to start my own business, in the late 1980s, at 24 years’ of age, and, in growing it to £10m, we had both good and bad times. In the good times you feel invincible and that you can’t make a bad decision but it’s when the chips are down that you really learn how to build and lead an organization.

We lost almost everything on at least two occasions. Having sold the business to a management buy-out, I didn’t do much for several years before deciding to get back in the fray to prove the first time wasn’t a fluke. As it’s turning out, I suspect it was!

Q: At what point did you feel confident enough to take that step forward?

CB: Sometimes there’s no choice. Back in the 80s the organization I was working for (before setting up my own) put themselves into receivership and I felt I had absolutely nothing to lose. In the early days of any business a level of self-confidence, belief and ‘fire in the belly’ goes a long way. Any level of achievement can only be experienced through a combination of effort and ability, so make sure you’re up to putting in the hard-yards.

Second time around you should be slightly more knowledgeable and wise and you’ll (hopefully) have a far better, more incisive way of dealing with the various scenarios.

Q: How are you currently funded?

CB: Tibit was initially bootstrapped by the two original founders before raising £225,000 via a crowd-funding initiative and private investment. This has enabled us to build a solid, robust micropayment product that is now being used by over thirty customers, and we’re just about to go out on the investment trail to ensure continued growth and development for the next eighteen months.

Q: How big is the team?

CB: Tiny. Two founders, two developers, two people selling it (I’m one) and a brand-design guy. The development team has been larger and was responsible for building and deploying the product platform. This is entirely where the money has been spent. As you’d immediately realize if you ever visited the office in Peckham, South London!

Q: Did Tibit start out as a solution for media, or something else?

CB: Yes, to both. It was envisaged as being a solution for the ‘consumption’ of all online content and Tibit is a micro-payments business with a difference. It solves a problem that has existed since the dawn of the commercial internet — how to monetize small pieces of online content, any content, in a frictionless and cost effective way. The monetization of great journalism is the ideal use-case but just think of the content you access on a daily basis (software, downloads, music, images, etc) and you’ll see there’s a ubiquitous and real need to pay or reward the creators of this content.

It is virtually impossible to pay online in a manner appropriate to the way that much content is consumed today.

Q: What were the signs you saw in the media market that made you feel that this is a viable solution for publishers?

CB: Micro-payments for granular content (the digital era naturally brought about the unbundling of published content into small, individual, ‘granular’ items — one article, one post, one video, one download) do not work, and have never worked in a way that is seamless, painless, and effective. It is virtually impossible to pay online in a manner appropriate to the way that much content is consumed today.

Somewhat surprisingly, this was accurately predicted as far back as 1996 by Nick Szabo, and restated by others (Clay Shirky, Walter Isaacson, Jane Singer) at regular intervals since. They rationally and logically explained that trying to make micro-payments work in the same way as macro-payments is doomed to failure.

Once the monetary value drops below a threshold, the barrier is a ‘mental transaction cost’ — users find it easier to do nothing than to consider whether a transaction is worth it, or fair, or necessary. In short, asking too many questions, asking the consumer to complete too many steps, places a massive amount of ‘cognitive load’ onto the decision and this outweighs the actual amount being paid, donated or rewarded.

Once the monetary value drops below a threshold, the barrier is a ‘mental transaction cost’ — users find it easier to do nothing.

Over two decades, a succession of companies has obligingly proven the case, at the expense of over $1 billion of investors’ funds. The importance of a solution, and the potential profit to be had, is so great that it has been repeatedly referred to as a “Holy Grail” by journalists and commentators alike. Coupled with the existential problem facing news publishers and other content creators and it becomes clear that this represents a tremendous and, currently unfulfilled, commercial opportunity.

To solve this problem, it needed to be turned on its head, and looked at completely differently. Tibit has developed a mechanism which removes the barrier — making spending a ‘tib’ analogous to ‘liking’ on Facebook — a frictionless, binary decision.

Q: How do you compare micro-payments versus subscription paywalls? Are they mutually exclusive?

CB: Without an effective micropayment solution dovetailing into the commercial mix, publishers are forced to make up revenue in other ways, but these are often ineffective or unwelcomed by their audience. Sponsored content (click-bait by any other definition) pollutes otherwise high quality sites with brand-damaging, often misleading headlines.

Ever increasing amounts of advertising (to offset the decline in value of online advertisement placements) and the rise of ad-blockers, reduces site performance and leads directly to more users of ad-blocking technologies. Traditional forced-subscription paywalls have extremely low take-up rates, and can lead to a decimated and frustrated audience base.

These revenue sources are not inherently wrong or bad and they all appear in traditional offline models. But in the absence of a casual purchase option for consumers, they take a form that frequently damages the relationship between the publisher and the consumer, especially when the consumer would be prepared to make a small, spontaneous payment, in exchange for quality content, if there was a viable means to do so.

Tibit can be used as a form of paywall in that the consumer can ‘tib for access’ (granular, bundled, timed or metered) in a traditional ‘pre-payment’ manner, as well as post-consumption ‘reward and support’, but the key element is that the reader/viewer sets the value of the actual payment beforehand. The tib value is entirely personal and unique to them, and it’s set and confirmed before the transaction is even contemplated. The transaction is reduced to the binary yes/no and that’s it, no cognitive load — tibs are spent without a second’s thought. They’re also spent anonymously which highlights the sophisticated, more mature relationship the publisher is seeking to engage their audience in.

By turning the equation on its head we are asking creators and publishers to consider a slightly different question with regards to their content. What are they willing to provide for the cost of a tib? Different content has different values to different people and the question publishers need to ask is what access are they willing to provide for the average/mean value of a tib, (currently 35c/25p). All content was created equally, just some content was created more equal than others!

The tech is easy. The psychology a little more tricky.

The ‘leap of faith’ is accepting the consumer has the right to set the value for content access, but without this, micro-payments will continue to fail.

Q: What feedback have you received so far from publishers when you pitched this? What would lead some of them to say no to micro-payments as a solution?

They are certainly intrigued and we’ve not had too much difficulty getting in front of a number of the major players. However, they remain largely (and understandably, at this point in time) skeptical as to the level of revenue that will actually be generated by micro-payments.

The ‘leap of faith’ is accepting the consumer has the right to set the value for content access, but without this, micro-payments will continue to fail. They need to trust their audience will pay/reward in the right manner and that it makes a genuine difference to their bottom-line. Tibs are designed to be spent freely but their value is large enough to make a difference.

Our pitch is that we co-exist with their other forms of revenue generation and these are not, and never will be, mutually exclusive. We both complement and provide access to an audience they are probably not engaging with in a meaningful, monetary manner. Cannibalization of existing revenues should not be a concern.

With the micro-payment debate having been around for over twenty years there is definitely ‘micro-payment fatigue’ out there but publishers should bear in mind this fatigue does not exist within their readership or user base. And this is where the success of Tibit will be decided, in the adoption and use by the consumers of content. Potential barriers to adoption could include:

a. No real problem. No one really wants to make a payment or reward, as no-one really cares about content or quality. 
b. Fear of the unknown. This is greater than you’d initially imagine and people will avoid its adoption and use if they don’t understand it. 
c. Unwillingness to change. “I’ve always done it this particular way and I’m not changing anytime soon.”

In short, apathy and procrastination are our enemies!

Q: What do you wish you learned earlier about pitching this?

All of the above and there’s no denying that it’s certainly been a learning process for me personally and the business specifically. It’s widely accepted that the press has always faced challenges from innovation and changing social trends — radio and TV in their day and now the internet — and they’ve been particularly adept at proving to be rivers of gold in brave new worlds. So, having said that, I’m more than a little surprised they’re not yet quite as open-minded with regards to the evaluation and implementation of Tibit’s novel and, potentially lucrative, micro-payments mechanism.

Q: If you and I were to catch up over celebratory drinks a year from now, what would we be celebrating?

Acceptance. Adoption. Traction. Survival.

Q: And what advice would you give someone starting up in the media-tech space?

Simple. Know your marketplace, know your product and position it well and in a compelling manner.

This interview is part of a series of stories around the journey of entrepreneurial journalism and the different ideas that could help build sustainable models.

We want to showcase both the ideas and the courage that goes behind breaking new ground on the business of media. If you know of someone who should be interviewed here (or yourself), please drop me an email: