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Feb. 19, 2009, 9:40 a.m.

The micropayment debate continues

Is it possible to be fascinated by an issue and yet tired of it at the same time? If so, then micropayments for online news pretty much fits that bill for me. I know that it’s a crucial time for the newspaper business (which pays my salary), and I know that many thoughtful and intelligent people believe that micropayments are the answer to the industry’s woes — including former news executive Alan Mutter, who blogs at Reflections of a Newsosaur, and whose recent argument about paying for things I took on in this post. But there has been an awful lot of talk about the issue over the past few weeks and months, including some excellent pieces by Clay Shirky and others (I’ve collected a list of the major ones at my personal blog if you’re interested).

And still the debate continues. The Freakonomics blog at the New York Times is the latest to throw its rhetorical hat into this particular ring, which seems fitting given the authors’ focus on the conjunction of economics and society. Both Alan Mutter and Clay Shirky show up in this forum as well, making similar arguments — the former in favour of micropayments, which he says will overcome the “Original Sin” of giving content away for free online, adding that readers wouldn’t mind being nickel-and-dimed “if the content were sufficiently unique and compelling.”

Shirky, meanwhile, argues that:

Online, small payments only work when the collector of those payments has end-to-end control of delivery, generally by controlling the hardware or software the user has access to. (This is true of all metered billing, in fact.)

and adds:

The fantasy that small payments will save publishers as they move online is really a fantasy that monopoly pricing power can be re-established over we users. Invoking the magic word “micropayments” is thus grabbing the wrong end of the stick; if online publishers had that kind of pricing power, micropayments wouldn’t be necessary. And since they don’t have that pricing power, micropayments won’t provide it.

Sharing of content is the key to much of what users (or readers) do online, Shirky argues, and blocking content off destroys that relationship, and arguably makes the content less valuable rather than more. And without monopoly control or a giant cartel, there is simply no way to wall off all of the content — someone will inevitably provide something similar (i.e. close enough) for free and make it sharable. MIT information technology professor Marshall Van Alstyne concurs, saying that micropayments would be like “putting tollbooths on an open ocean.” He says that journalism can be supported by charging based on the platform (i.e., the Kindle), and charging for enhanced value of some kind (different versions, or more processed information, such as that offered by Bloomberg).

William Baker, an executive-in-residence at Columbia University who is looking at new business models, says that he sees journalism being supported by a mix of almost all the possible sources that people have mentioned: micropayments, donations or charitable foundations, advertising and subscriptions. Meanwhile in the comments, readers suggest some additional ideas: One recommends a process by which interested readers buy “shares” in a newspaper, which then funds the journalism and collects donations for it — with any surplus returned to the shareholders. Another suggests that advertisers could support the news directly by offering free subscriptions to readers in return for having them click on an ad (as Salon does).

Will any of these solutions make the difference in an industry whose old business model is being disrupted by a new medium, and may never be the same? Will someone try to put tollbooths on the ocean and actually make it work? Or will we still be having these arguments 10 years from now? I wish I knew.

POSTED     Feb. 19, 2009, 9:40 a.m.
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