Nieman Foundation at Harvard
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March 9, 2009, 10:36 a.m.

If they won’t pay for Facebook, they won’t pay for your city hall reporter

I gave a talk to a high school in Toledo on Friday, which gave me a chance to do some ad hoc focus-grouping of how teenagers engage with media. (To put the demographics in perspective, this is a private school that, beyond some scholarship kids, is mostly upper-middle class and up.) We covered a lot of interesting ground: They don’t care much about blogs or Twitter, for instance, and they get more news from The Daily Show and Colbert than anywhere else.

But the most surprising topic we covered was Facebook. Well, it wasn’t a surprise to learn they live on Facebook; the consensus was that they spent about 60-90 minutes each night on the site, not counting the midday checks at computers in the school library or on their phones. These kids (there were about 80 or so) are smack in the middle of the Facebook demo. But here’s what surprised me:

I asked them what they would do if Facebook announced tomorrow that it now cost $10 a month. Not one teen was willing to pay.

This, after we’d spent 20 minutes talking about their well-nigh addiction to Facebook, about the way their entire social lives revolved around it. Despite all that, despite its centrality to their lives, they were willing to toss it aside because they wouldn’t pay $10 a month. (And remember, these are well-off kids — they could afford it.)

So if they all had Facebook taken away, what would they do?

— “We’d go to MySpace or something.”
— “Something new would come along to take its place.”
— “We’d just IM or text more.”
— “Maybe we’d all be on Twitter.”

In other words, these kids have complete faith in the availability of a substitute good — that is, something else that would come along, serve as a decent Facebook surrogate, and be free.

Why would they have such faith? Because the Internet has proven that faith right so far. There’s always something newer and better coming along, and it’s been free.

So, I ask you: If these kids aren’t willing to pay for Facebook — something they engage with every single day, something they love, something they have already invested countless hours into to build up a network of friends and apps and what have you — what’s the chance they’re ever going to pay half a penny to read a news story?

To me, what those kids are telling us is that the barrier to charging even small sums is extremely high online — and it’s higher the younger you are. If you’ve grown up in a free online environment, paying for digital content isn’t just a pain — it’s unthinkable.

Which is why I think the debate over micropayments really should be a debate over macropayments. If only a small fraction of people are willing to pay for news, then why bother charging them a fraction of a penny? I suspect the future of news will involve a lot more $200-a-year payments from the small fraction of the audience that is willing to pay than tiny payments from the masses.

The masses aren’t going to pay for anything.

[Addendum: Since iTunes always comes up whenever payment models for news are discussed, I asked them about that too. About 80-90 percent of the kids said they had illegally downloaded music. But some had also used iTunes to download music legally. Why?

— “My iTunes account is connected to my dad’s credit card.”
— “I got an iTunes gift card and I had to spend it.”
— “It’s easier to find stuff on iTunes, and you get the album art.”
— “There was an EP from a band I liked that was only on iTunes.”

Those last two comments were the only ones I heard that involved kids actually paying for something via iTunes. So ease of use, searchability, and exclusivity are all good things when trying to sell content online. But they still only appeal to a small minority.]

POSTED     March 9, 2009, 10:36 a.m.
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