The more interesting I found it, the more “valuable” in any sense the item was in my eyes, the more I want to pass it along — and the angrier I will be when the link doesn’t work, or when it doesn’t go to the item proper (Evan Rudowski’s notion that a link back to the originating site alone will do is hopeful malarky), or when sends my correspondents to a bare abstract with a “pay here” link to see more.

This remains the case when the micropayment is zero — remember the NYT registration system? How many times did you see in slashdot or digg a link to a NYT story with an embarrassed “(registration required)” after it? The NYT registration barrier was in fact a micropayment system, one in which the payment was extracted in the form of the reader’s time and keystrokes to log in whenever they got a link to a useful story.

I cannot imagine a micropayment system that would place a LOWER barrier to casual linking than the old NYT registration system did. But it was widely detested and widely flouted. People who wanted to share a NYT story on digg or facebook knew their correspondents hated having to sign in to read something, so they — almost without conscious thought — just dragged over the text, hit copy and then hit paste. Violating copyright, not to mention often expunging the byline, losing the formatting, omitting to mention the source, and not infrequently introducing undocumented errors, omissions or intentional changes.

By dropping their registration system the NYT regained some measure of control over their content. Now most sharing would be via simple links back to the original, at least preserving the author’s byline, the format, the complete text, and the accompanying illustrations. And giving the NYT some slight chance of selling marginal ads.

No content-control system that impedes people from easily sharing content in their tweets, blogs, emails and other networking media, will work. If the content is really compelling, people will share it by copy/paste. If it isn’t, they just won’t bother, and readership will wither.

This is Clay Shirky’s text about iTunes:

“Fans of the iTunes model are right to point out that people use it because they find it more convenient, but they overlook the legal and regulatory hurdles put in place precisely to make other models less convenient (especially for law-abiding citizens.) (…) Newspapers, even if every single one of them acted in collusion, cannot establish a monopoly on news.”

I think it is indeed important to analyze why iTunes is more convenient than downloading music through file-sharing software, but it’s not at all for the reason Shirky points out. Basically Shirky is saying that users are buying from iTunes because they are forced to, they have no other option. This is simply not true. Monopoly by one definition is the market condition that exists when there is only one seller. I can hardly see how a company can be called a monopolist if you can get the same or almost the same product for free from your home computer. In addition, I have talked to dozens of friends who regularly buy from iTunes and not a single one told me they use the service because they think they would not be law-abiding citizens if they downloaded it for free.

If the overwhelming majority of Internet users don’t think it is wrong downloading music for free how is iTunes selling content hand over fist? The answer is that users already have iPods and iPhones. iPods connect directly with iTunes music player. iTunes music player is also itself the browser for iTunes Music Store, and for the App Store that sells iPhone applications. iPhone only lets users upload applications from App Store, and so on. The result is that once you are inside Apple’s virtual perimeter, it’s not at all the same to get music from some other music store.

Shirky is right when he says that people find iTunes more convenient because there are hurdles put in place precisely to make other models less convenient, but the hurdle is not legal or regulatory. The hurdle is that Apple has created a significant mental transaction cost (a psychological factor) for you to acquire music *outside* of Apple’s music store, once you have an iPod.

@Steve Outing:
I have an original thought for you: how content providers (including news websites) can replicate what Apple has done with iTunes: http://www.icents.net/en/website/TheNewCaseForMicropayments2009.html

@Phillip Hallam-Baker:
About the risk that the payment system itself becomes a monopoly: users should be able to pay with the payment systems they already use. In other words, a micropayment platform should simply aggregate regular payment systems, like PayPal, Google Checkout, Zong, Amazon Payments etc, and “change them” so they work for micropayments. This is what iCents.net does.

@Mathew: sorry for the long comment!

I think another deficiency in the current debate is that all everyone is talking about is how to get people to pay for an old format — a news article — in a new medium, online.

In reality the new medium offers new formats, and that is what people will pay for. I may not pay for a news article on herbs, for example, but I may pay to be part of a knowledgeable community of herbalists who share information, ideas and encouragement (one of our very successful SubHub sites, herbmentor.com).

Most of the noisy current debate is by old media companies trying to figure out how to get people to pay for old content formats. Why should they? The old media companies are not spending nearly as much time thinking of how to create something new as they are thinking of how to charge people for the old stuff.

The people who are using the capabilities of the new medium to create something new are the ones who will find they are successful, at charging for content and at attracting advertisers.

Kind regards,
Evan

Now if we have a small well defined context one can provide useful new information by organizing data for a reader. Specially if I need that information “now” to do something.

If we have a large shared context build upon the environment/culture we live in. Providing something “new” is rather difficult. I can scan for example a headline and know what the article will be about without reading it, since I already have a context with many overlapping areas. And will make up what’s missing with a good enough ratio.

The question becomes what it is worth to me, in the first place something. If somebody organizes data for me to make it easier to grasp the relations that’s worth something. IFF it fits my model of context.
In the later case, well not so much since the information value is really,really small.
But most articles fall in the second category for most people. Then again we work from our context, if “you” provide some real information in a small context, people might be willing to pay for it.

If somebody would provide a better craigslist for example. Organize data from local providers, maps, prices, reviews (local, I don’t care for flatland car reviews, I live in the Colorado mountains and need a car which can handle snow, right now) to a given search. My guess is, that would be worth something at least to the local advertisers and most likely to customers too.
Intent on those searches is really high, see above.

Or in other words shallow articles without much information since they are based on a wide shared context just won’t cut it. Or one can twitter about shallow stuff, most people will get it, but hardly about scientific research, most people will go huh?
Btw, to make things worse. We are working on a system to automate all of this.

In these conversations, certain points are frequently misunderstood or misrepresented, as evidenced in some of the comments above.

The main one is that subscription websites do not benefit from the link economy, as their content is locked behind a “pay wall.”

Any good subscription website will publish a blend of free and paid content, with the free content being more than enough to cause the site to be well indexed by the search engines and linked to by those interested in the subject.

Additionally, even the paid content behind the so-called “wall” can be published in a way that leaves headlines and article summaries exposed to the search engines, causing the individual paid articles to be indexed just fine.

If we are going to have a legitimate conversation about the relative benefits of different revenue models, it’s important that people truly understand the functionality of these models.

There’s a lot of genuine and honest misunderstanding, and some of this is unfortunately exacerbated by pundits who know better but perpetuate the negative myths because it reinforces the strident positions they’ve taken for or against one method or another.

Your blog, Matthew, has always been well balanced and thoughtful, so thanks for that!

Kind regards,
Evan Rudowski

http://roberthheath.blogspot.com/2009/07/clueless-in-chicago-unraveling.html

I can add nothing to Shirky’s arguments why micro-payments are likely to fail. He’s done a masterly job of showing why the micro-payment approach is less efficient than the alternatives: aggregation, subscription and subsidy.

Even if he’s wrong (and I seriously doubt it) a successful micro-payments based business model will only expose how much of traditional newspaper economics are based on bundling other people’s content. The web does a pretty good job of that at a pretty reasonable price, which will make it impossible for newspapers to reclaim that revenue on or off the web.

For more on this topic, see my post at http://roberthheath.blogspot.com/2009/07/clueless-in-chicago-unraveling.html.

Micropayments are a way to eliminate one hurdle: resistance to an all or nothing choice (i.e., subscribe or you get nothing).

Micropayments enable paid trial: if marketed effectively is much more effective than trying to convince people attracted to a free offer to upgrade because the people to whom free appeals are the least likely to be interested in paying anything at all.

But micropayments should be part of a more comprehensive marketing strategy involving product, pricing, promotion, and placement.

Mainly inpsired by a back and forth with Paul Graham about his post “Post-Media Publishing”- http://bit.ly/MenLY – I just posted that a turning point may come when publishers recognize they are in the B2C (business to consumer) not the B2B (business to business, namely advertisers). http://bit.ly/h7eEi

I will pay micro-amounts (for example, 5 mils per article), but I won’t pay stupid amounts such as 25 cents per article. I will go elsewhere.

If 100% of the content providers charge for access and the price is more than I “want to pay”, I will stop reading the news and will read other things on the web. I personally find it difficult to imagine that 100% of the providers will charge. The NY Times and the Times of London may charge, but I bet that http://timesofindia.indiatimes.com/ will not.

The old way of:
Business Value = Subscribers * Demographics

Made us valuable to the publishers, little money from the subscribers, which were targeted with for example writing style and layout, to build Demographics which was sold to Advertisers.
We got a little “information” and entertainment since we most likely belonged to targeted Demographics. We feel good since this enforced our believe system. This model is still carried forward by the WSJ for example.
It’s basically a statistical model, no hard facts.

Then came:
Business Value = Eyeballs * intent

And intent was proof-able, aka Google click through. But most people just looked at one part of the equation, eyeballs. But 250M * 0 still equals 0.

As long as newspapers chase the eyeballs without understanding intent, they will loose.
If one writes a program to value the news value, like.

Information = Data in context
News = new information in that context

Most so called articles provide very little news, spread that out over online distribution and the value goes to 0. Means it would only make sense to pay a fraction of a cent to one article in that context, there go the eyeballs for the rest.
Since they still haven’t figured out intent, they end up with 0 * 0.

I think they haven’t thought it through. Their delusion seems to be that they will be the first to brake any “news” therefor they will get the fraction of that cent. But since they can’t control the “spreading” any more. It’s just that,
delusion.