The newspaper industry is in a tough spot, with circulation and advertising falling and no clear sign of how to crack digital.
In the US, New York Daily News is struggling to sell itself for $1 at the moment and while that’s one of the worst horror stories from the industry, it’s a sign that things are not looking good.
But one Swedish online payment company thinks it has built a tool that can help ease papers’ transition to digital — and could ultimately save the industry.
Klarna, valued at over $1 billion (£640 million) thinks its one-click payments could revolutionise the way we consumer media online.
Founded in 2005, Klarna built its business around the idea of shifting payment until after you’ve bought something online, rather than before. It basically let’s any retailer put the equivalent of Amazon’s “buy with one click” button on its site.
Click the Klarna button, then input your email and post code. That’s it. You’ve bought your item.
The buyer then gets an email from Klarna asking them to fill in payment and delivery details. This method radically improves so-called ‘conversion rates’ — the percentage of people who actually follow through with a purchase after looking or putting it in their basket.
The smart thing about the company’s technology is that it then remembers your computer, smartphone or tablet, meaning you only have to fill in payment details once. Next time you go to any Klarna enabled site you can literally buy with one click.
This has turned into a billion dollar idea for Klarna, with the company attracting money from Silicon Valley’s renowned venture capital fund Sequoia Capital, which backed PayPal back in the late 90s.
Klarna processes an incredible 30% of all online purchases in Sweden and even works with eBay in the country, despite the auction site’s links to rival PayPal. Last year it processed $9 billion (£5.74 billion) worth of transactions globally.
Making it simpler for people to buy online is great for online retailers.
But Klarna’s founders believe it could also provide a huge boost to the online media industry.
The company has started working with Bonnier AB, a $4 billion (£2.55 billion) Nordic media giant, to offer customers an easier and simpler way of accessing articles.
Co-founder Niklas Adalberth told Business Insider: “People are trying to force everyone into these complex subscriptions but people don’t want to do that.”
Browers visiting Bonnier AB sites can pay €1 for a day pass with one click and will soon be able to buy individual articles for small sums.
Klarna isn’t the first to try this. The New York Times, Wall Street Journal and The Washington Post have all partnered with a Dutch start-up called Blendle to offer micropayments for articles.
But Adelberth, predictably, thinks Klarna’s solution is better. He says: “Lots of people have tried to do micropayments but they all require you to download an app or sign up first. People don’t want to do that.”
Klarna is currently only soft launched with Bonnier but plans a full roll-out in June. But Adalberth says the impact on conversion rates is already “massive.”
“If people see this complex subscription sign up people will just go somewhere else, but if you can provide them with an instant ‘buy this article for 10p’ they’d do it.”
Klarna is focusing on the roll-out with Bonnier but the plan is to pitch its tech to other media organisations around the world.
Adalberth said: “We think it’s an excellent solution and everyone we present it is is like,’Wow you guys are going to help save the media industry.'”
We could soon see the tech being used by US and UK publishers. Klarna is set to launch in the US imminently and launched in the UK just before Christmas. It has signed up around 100 retailers here so far.