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June 2, 2009, 3:12 p.m.

Micropayments? Steve Brill is not optimistic on per-article fees

Even as he leads newspaper publishers toward charging for their websites, Steve Brill remains skeptical of one oft-mentioned model for making money online: micropayments. In our conversation yesterday, he told me that his startup, Journalism Online, isn’t expecting newspapers to reap much revenue from per-article fees, though readers will have that option.

“I think that people really want…the convenience of just having a subscription as opposed to stopping and buying something,” Brill said, later adding, “My gut is that subscriptions will win the day, but I don’t want to bet on it because I could be completely wrong.”

In the slides we presented earlier today, Brill’s calculations assume very little business from micropayments: just 5 percent of paying readers purchasing six articles a month at a quarter a pop. For a site like The New York Times, given some of Brill’s other assumptions, that would generate $900,000 to $1.8 million a year in revenue — before Journalism Online and perhaps a third-party vendor like PayPal take their cuts. “We don’t think micropayments are going to be a huge part of this deal,” Brill told me, “but who knows? That’s the whole point of trying everything.”

A common platform like the one under development at Journalism Online could help micropayments catch on since readers would need just one account to buy news across many sites. “They’ll just have to do it with one click because they’ll have a password,” Brill said. “They won’t have to set up an account every time they want to spend for an article.” On the other hand, there’s little overlap between the markets for paying readers of, say, The Philadelphia Inquirer and The San Francisco Chronicle. And while the 25-cent-per-article price point in Brill’s slides is just hypothetical, it’s worth noting that you can usually pick up the entire Boston Herald for a quarter at most commuter hubs around here.

For a comprehensive background on micropayments, see the arguments in favor by Scott McCloud and, more recently, David Carr as well as the ultimate micropayment takedown by Clay Shirky. Steve Outing also generated a lot of buzz in February with his piece on a micropayment system called Kachingle. He provided a quick update on that and a few similar platforms in a comment at my earlier post. (Thanks, Steve!)

Photo of newspaper box by Steve Rhodes, used under a Creative Commons license.

POSTED     June 2, 2009, 3:12 p.m.
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