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Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

Micropayments for news

I know.  You don’t want to hear about it.  Readers will not pay for news online, period.  We tried that and it didn’t work.  Information wants to be free.  Attention, not content, is the new scarcity.  Free is a business model.  I’ve explained this, myself.

But the “make the reader pay” crowd just keeps sending new combatants with new fodder into the fray.  The latest is Jon Austin, one of the perpetrators of  The Same Rowdy Crowd, in a very long and well-informed post entitled “Fixing the Newspaper Business or ‘Do I have to Do Everything Around Here?‘”  You can read it for its considerable entertainment value (and very thoughtful chain of comments), or save yourself half an hour with Paul Gillin’s summation, or Austin’s own:

Let me wrap up by reviewing the preceding 4,543 words: 1) journalism is not dead, dying or irrelevant; 2) micropayments are the answer to the economic discontinuity afflicting newspapers, and; 3) advances in distribution and display technologies will make digital paper a reality and a viable alternative to paper.

Basically, Austin suggests (a) that news sites adopt a micropayment system in which content is priced in pennies, or perhaps even fractions of pennies, or perhaps even variably priced for different content and for different readers; and (b) that what he calls versions 2.0 and 3.0 of e-paper gizmos will enable newspapers to get to a realistic pay-for-content model.  (Version 1.0 being the Amazon Kindle or Sony Reader, version 2.0 the promised Plastic Logic reader and maybe Kindle 2.0, and version 3.0 a fully flexible, very thin, paperlike, color reader: basically a reusable newspaper).

One problem with this vision is that the Kindle and other e-readers are, for now, one-way content downloading devices that don’t send back data that could be used in a pay-per-click micropayment system.  So newspaper content delivered to e-readers is paid for on a subscription basis, and the results so far seem to point to viability for this model: The New York Times has reportedly signed up 10,000 Kindle readers, or about 1 percent of its 1,000,000 paid circulation base.  It shares the lead among the best-selling Kindle newspapers with the Wall Street Journal, and its not hard to envision the Times and Journal building their e-reader base to 100,000 each on e-readers 2.o, and to 1,000,000 — equalling or beginning to replace print — once 3.0 arrives in a few years.  At $10-$15 a month, that would be real money, even for the Times and Journal.  I mention all this because Austin mentions e-readers as “Thing 2,” but e-readers don’t entail micropayments for microcontent, except maybe as a way to pay for digital “single copies.”

So back to “Thing 1,” micropayments.  This has been a long, drawn-out argument already.  Clay Shirky detailed the case against micropayments as long ago as 2000, as did Andrew Odlyzko in 2003.  To their arguments you might add, “if consumers would accept micropayments, somebody would have figured out how to do it by now.”  The biggest issue is really that any payment at all is an enormous deterrent to usage.  In a web world that has been operational for nearly 16 years now (yes, really!), free has indeed turned out to be a business model that works.

But.  Think about this: micropayments can flow in any direction.  If attention, rather than content, is what has value, because it is scarce in the web world, then why can’t a portion of the micropayments that flow from an advertiser to a content publisher for delivering a page view (or a clickthrough) be diverted to the reader of that page?

If a web users views 500 web pages in a day, which is entirely possible and probably not an unusual level among intense online readers (my history showed 400 yesterday), even at just a quarter-cent per click, that becomes an expensive reading habit (around $450 a year) relative to typical costs for news on paper.

But in a web environment, not far down the road, in which the delivery of commercial content delivery to me is greatly enhanced by whatever I’ve been willing to share about myself in personal profiles on social networks, and by whatever has been gleaned about my preferences from my willingly shared social connections, my searches, my feeds, my content referrals to others, my purchases and my reading —  a world in which the whole web, for practical purposes, has become one big social network —  in that environment, don’t talk to me about paying micropayments.  I — the deliverer of the scarce resource called attention — I don’t want to pay. I want to get paid.

You can pay me, perhaps, in reward points of some kind.  You can charge me for some of the content I view. (I’d willingly pay a few cents, but not the standard $2.95 or more, for the occasional archived news story or Wall Street Journal piece I want to read.)  But on the whole, if my personal CPM is reasonably high, and I continue to read widely, I’ll come out ahead.  And actually, the right model would pay off or break even even for less-intensive web users willing to share some profile data.

But, you may object, clickthrough rates are miserable and online CPMs keep falling — how can there be enough money in the equation to pay readers?  The answer, I think, is in the web’s evolution through 2.0 and toward 3.0.  In a fully social, partially semantic web, vastly better commercial content, vastly more targeted — in  fact, to a large extent invited — will be possible.  The web today attracts only $11 billion in advertising, less than 5 percent of the U. S. total.  With a smarter web and an economic recovery, that will grow exponentially and faster than the associated content creation cost, which opens up the opportunity not only  to finance online news enterprises, but for consumers to get their slice of the pie.

                                   
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Ken Doctor    Aug. 13, 2014
If newspapers are going to have to survive on their own, the first numbers aren’t encouraging. In southern California, we could see big movement fast.
  • http://timwindsor.com Tim Windsor

    You write:

    “One problem with this vision is that the Kindle and other e-readers are, for now, one-way content downloading devices that don’t send back data that could be used in a pay-per-click micropayment system.”

    While it’s hardly sophisticated enough at this point, one of the genius bits of The Kindle is its always-on EVDO network, Whispernet. Although Kindle itself is not even close to being optimized for a two-way experience, there’s already some structure in place, along with intelligent pricing (seemingly free — baked into the device up-front cost) of the wireless access.

    Some of the groundwork for what you’re describing has been laid.

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Thanks Tim — agreed, that problem is just “for now,” and should not hold back e-readers from pay-per-click (or get-paid-per-click) down the road.

  • http://sellingprint.blogspot.com MichaelJ

    Martin,
    It’s very interesting approach. I needs some mulling time to see what I think.

    I the meanwhile, I wonder what anyone might think of the following:

    Itunes breaks even for Apple. The real money is selling hardware. They just did a deal to charge for different levels of service.

    So, it seems to me it would make sense for levels of service for newspapers. Read the paper for free, pay a subscription to get it automatically delivered to my kindle, pay a one time charge or a subscription to get access to columnists. Access in this case means, you have a reasonable expectation that they will respond to at least some of the blog posts.

    Then while that is rolling nicely along, the paper harvests the data from the web interactions to identify stuff that viewers might want to purchase.

    Consider that wal-mart is building it’s own TV channel in the stores to reach their customers. Given the intellectual power at the good newspapers why not really focus on what is probably now a peripheral business.

    The NYTimes does a book on Obama. Released on Presdent’s day through the publishing channels. My bet is that if they used their own website, it would already be on their own best sellers list. Plus they get to keep all the excess value they were giving to the distributor.

    I keep turning this over and over, and can’t figure out why it wouldn’t work.

    Any thoughts?

  • http://www.metaprinter.com robert ivan

    You may be interested in my podcast regarding newspaper micropayments a la videogames and videogame console manufacturers.

    Podcast – Video Game Revenue Models To Save The New York Times?

    http://www.metaprinter.com/?p=1622

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