By Harro Ten Wolde
FRANKFURT (Reuters) - Publishers Axel Springer and The New York Times have together invested 3 million euros ($3.8 million) in Dutch start-up Blendle, betting it has answers to the problem of how to charge readers who eschew costly online subscriptions.
Publishers have been experimenting with how to charge for content since the early days of the Internet, but many have failed to crack the code.
With Blendle, readers can browse online newspaper and magazines and pay an average of 20 euro cents per story without being locked in to a subscription. Blendle keeps 30 percent of the fee, the publisher receives the rest.
The business also offers the attention-grabbing feature of potential refunds if a user does not like a story after reading it, though these have an upper limit depending on how many stories a reader has paid for.
The service is available only in the Netherlands as a web app, though Blendle is working on a smartphone and tablet app for Apple devices.
"The main reason we decided to go along with The New York Times and Axel Springer is that we think along the same lines about digital journalism," Blendle co-founder Alexander Kloepping said.
"We hope to use the knowledge and experience Springer and the New York Times can offer to build out the company. It may well be that our company looks completely different in a year."
Many newspaper and magazine publishers have been under pressure to replace an evaporating pool of print advertising income - once the lifeblood of newspapers - with digital advertisements and money from subscriptions.
Axel Springer now generates more than half of its revenue from digital activities, while circulation revenue at the New York Times has been boosted by digital subscriptions that now account for more than 50 percent of total revenue.
German publisher Axel Springer has attracted more than 300,000 subscribers for its so-called "freemium" model for its best-selling daily newspaper Bild since launching the service more than a year ago.
Europe's largest daily offers some online content free but some items such as exclusive interviews, stories and photos are subject to a charge.
The New York Times had about 831,000 digital-only subscribers at the end of the second quarter, almost a fifth more than a year earlier, despite conceding that new digital products have failed to live up to expectations.
Blendle describes itself as "the iTunes of journalism", referring to Apple's music-selling service, and receives about half of its traffic via mobile devices such as smartphones and tablets. The other half is from desktop computers and about a fifth of revenue comes from social media referrals by other readers, Kloepping said.
"It is always good to try different models, but it will be difficult," said Ian Whittaker, an analyst at Liberum. "Especially in the Anglo-Saxon countries. There will always be a lot of free news and articles available."
In the six months since it went live, Blendle has attracted more than 130,000 users in the Netherlands, 60 percent of whom are aged between 20 and 35.
That group is important for publishers because they increasingly consume information via tablets and smartphones instead of printed newspapers and magazines.
"We as a publisher want to convince people that in the digital age good journalism is worth the money," Axel Springer Chief Executive Mathias Doepfner said in a statement.
"Blendle has the potential to appeal to young, internet-savvy readers."
(Editing by David Goodman)