Oct 15, 2012 · 5 minutes

Last week, a friend of mine from Wellington, New Zealand, walked into what Americans would call a social security office, strolled up to a self-service kiosk, opened Microsoft Office, and accessed an enormous trove of private government data. The files from New Zealand’s Ministry of Social Development included names and addresses of children living in protected care, investigators and clients in fraud investigations, invoices, and medical prescriptions -- and that’s just the start of it. It was, according to a national newspaper, the government’s largest ever security breach.

My friend, Keith Ng, is a freelance journalist, but rather than sell the story to a newspaper or magazine he blogged about it on a website called Public Address. The site didn’t pay; in fact, Ng maintains his blog there voluntarily. Instead, he put a link at the bottom of the story that led to a donation page on GiveALittle.co.nz. “This story took most of the week to do,” he wrote, “so if you like it, some money would be greatly appreciated.”

If he had published the story in a newspaper or magazine, he likely would have been paid about NZ$700 ($573) for his efforts, despite it being one of the top scoops of the year. The “leave a tip” approach proved a better option. In the course of 24 hours, donations had topped $4,000 ($3,727), all going straight into Ng’s bank account. The National Business Review, a newspaper, joked that Ng had become "the best paid journalist in New Zealand."

“I considered selling [the story] to the papers,” Ng said in an email, “but I decided against it for a few reasons.” Newspapers were never going to pay him a decent amount, and he didn’t want to write the story in a news format. “I knew that if I wrote it up for a newspaper, I would have to get a lot of response quotes.”

Ng knows that sounds sacrilegious, but here’s how he thought about it: “Of course the [government] department was going to say, ‘We are fixing everything, an inquiry is underway.’ Of course advocate groups were going to say, ‘We are very shocked, this is terrible for beneficiaries.’ Of course the opposition [party] was going to say, ‘This is all the government's fault.’ That's what would have been expected for a news story, but none of that would have been interesting.” Instead, he just wanted to write the facts.

But he also wanted to experiment with crowdfunding. He knew that to really test it, he had to do so with an A-grade story. “It turns out that the best stories are the ones most suited to crowdfunding,” he says. “These are the stories that people love and really engage with, and are most willing to pay for – well above standard rates.”

While Ng refers to this as crowdfunding, I would characterize it as “tip-based journalism." The latter implies that the reporting work wouldn’t have been possible were it not first financed by a pool of donations. Instead, Ng wrote the piece then asked, “How’d you like that?”

Tip-based reporting is not going to be enough to finance every story, but it could still have a place in the future of the news business. A couple of years ago award-winning journalist Paige Williams put out a virtual tip jar for a story she thought was great but couldn't get magazines to publish it. And it’s not unimaginable that journalists such as Seymour Hersh or David Grann could earn substantial sums for their longform reporting or major scoops on tips alone. Given their large existing readerships and the wide global distribution enabled by the Internet and, increasingly, smartphones and tablets, the pennies could add up quickly -- especially if payments were as easy as tapping a button. But such reporters are also big earners whose magazines -- The New Yorker, in this case -- cover reporting expenses and pay large fees. It's more likely that such "tips" would be most meaningful to freelancers such as Ng, who aren't necessarily loyal to one particular publication for their income.

Ng accrued his donations in a way that already seems old-school, by providing a link that sent readers to a website at which they then had to enter their credit card details. That’s a cumbersome multi-step process, but it won’t be the norm for much longer. Amazon has already normalized one-click payments, and -- with Square, Braintree, and Stripe lining up to improve payment systems across the board -- it’s only a matter of time until one-tap payments are popularized within mobile apps. That would lower the barriers to "tipping" substantially, at the very least making it easy for people who want to pay to pay. As Instapaper's Marco Arment wrote in an FAQ post about the launch of his new $1.99-a-month digital magazine: “Give people an easy way to support something they like, and they will.”

Update: The story of Ng's discovery of the security flaw has been widely covered by the international media, and New Zealand media have raised the question of whether or not Ng's disclosures broke the law. One lawyer suggested he could be prosecuted, but the Ministry of Social Development has said it will not lay charges against Ng. It has, however, not closed off the possibility of charging the man who tipped Ng off to the security flaw. Meanwhile, Prime Minister John Key has called for a government-wide review of online information.

This is the second time Ng has tried the tip-jar approach to reporting. In January, he did a story exposing Big Tobacco lobbyists disguised as an association of community retailers. For that, also using GiveALittle.co.nz, he pulled in about $1,500.

"I knew this was a bigger story, but I figured that there might be a bit of fatigue after last time, so I was aiming for a similar figure," he says.

Instead, within the first day he brought in almost three times as much. "There's no way I could've gotten this much selling the story," he adds.

[Illustration by Hallie Bateman]