Micropayments-For-Content Startup CoinTent Raises $1.1M

San Francisco startup CoinTent, which wants to get Internet readers to pay for news stories and other written content on the Web, has come out of beta and raised $1.1 million, according to a press release issued on Monday (April 20).

The $1,075,000 seed round included investments from Foundry Group, QueensBridge Venture Partners, Donna Dubinsky, Leonard Shustek, Andrew Tisch and Zynga CEO Mark Pincus — a notable investor not just because the three CoinTent founders are all former employees of Pincus’ games company, but also because game-style in-app purchases are the model that CoinTent is following.

“Just as we’ve seen with music, movies, and game content, people are willing to pay for quality articles that they’re interested in reading if the price is right and the purchase experience is simple,” CoinTent CEO Bradley Ross said in the press release. “We’re increasingly accessing premium articles and videos on phones and through social feeds and need a way to purchase individual pieces of content at low prices and with 1-click.”

The idea of getting readers to ante up on a pay-as-you-go basis has resurfaced regularly, usually coming from newspaper and magazine writers such as Walter Isaacson (in 2009) and tech columnist John Dvorak (in 2002). But Ross and his co-founders believe mobile games, with their small and instant purchases, have softened up consumers so they’ll pay 50 cents to read an article. (Meanwhile, third-world payments systems like M-Pesa have laid the groundwork for micropayments in the U.S.)

Actual prices for content is determined by publishers; CoinTent’s role is to set up app-store-like accounts for readers and facilitate payments. When a reader hits a paywalled article on the Web, CoinTent offers the choice of a full subscription or buying the individual article. In the second case, the reader is forwarded to CoinTent’s site to set up an account, fund it using a payment card or PayPal, then spend some of that money to pay for the article.

How much of the article’s price CoinTent keeps varies, but for an article under $2 CoinTent gets 20 percent of the price, including 5 percent earmarked for interchange costs, according to the Financial Times. Readers fund their accounts with larger transfers in order to avoid big interchange bites from tiny transactions.

CoinTent said that it has already gone live on more than 25 smaller publisher sites during its beta period, and that publishers are seeing between two and five times as many paying viewers as with subscriptions alone. The company is now talking with a number of top U.S. newspapers and magazines.