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Micropayments: A rainbow for journalism...or a Hail Mary?

January 13, 2009 |  4:44 pm
Micropayments
(Photo credit: flickr user [177])

Here’s a funny question: Did you pay to read this?

It’s funny because it has two obvious and opposite answers. If you’re at your kitchen table holding The Times’ Calendar section, then of course you paid. Everyone knows a copy of the daily costs 75 cents.

On the other hand, if you’re reading this on your home computer or office workstation, then of course you didn’t pay. Everyone knows reading news online is free.

It’s so rigidly free, in fact, that most newspapers (including this one) that have tried to charge for their content have found such efforts to be a bit like pulling the sword from the stone. One pretender after another has slunk away, amid derisive shouts from the crowd.

But if there’s any lesson from the Silicon Valley mentality, it’s that failure breeds success. And now is certainly the time for some mad science. Newspapers’ print operations are becoming gaunt, shedding ever more staff in exchange for ever fewer readers — all while their online counterparts are breaking traffic and readership records with regularity.

Last month, the Pew Research Center signaled the tectonic shift we’d been expecting had finally arrived. For the first time, more Americans were getting their news from the Web than from newspapers. Another Pew finding rang a louder knell yet ...

...among people under 30, the Internet is now tied with TV as the leading source for national and international news. Printed newspapers ran a distant third, even though they produce a substantial amount of the Web’s news content.

The upward trend line of Web news and the downward slope of print suggest — strongly — that the right survival strategy for news organizations is to worry less about saving the papers and start getting creative about converting online success into real revenue.

Although specialized publications like the Wall Street Journal and Consumer Reports have successfully charged subscription fees, most analysts doubt that general circulation newspapers could get away with it — too much of what they write is available elsewhere.

So instead of paying in advance for all of a paper’s online content, what if you paid a teeny tiny fee every time you read an online article or a blog post? Say you want to read last night’s Lakers story — when you load the Web page, The Times might bill you half a penny. Then, if you wanted to jump to the latest Washington politics story, you’d pay half a penny more. And since news is so interconnected these days, the system would operate for any news site or blog you surfed to.

These kinds of small-scale revenues are called “micropayments.” Something sort of like it is the model behind iTunes, which just unveiled a sliding pay scale charging between 69 cents and $1.29 per song.

But the micropayment lore is also rife with ghost stories of tech companies that tried to mine the tiny money niche. Some couldn’t find enough interested consumers, others couldn’t find enough interested content providers.

Clay Shirky is a digital media consultant in New York who’s pointed to a number of faults with a pay-as-you-go system, including that it would terminally annoy readers. Moreover, he believes, the moment any group of outlets starts charging for news content, a new crop of sites will arrive to offer the same content for free — and scoop up all the advertisers abandoned by the pay sites.

But even though his anti-micropayment manifestos have been online for years, Shirky said, last week he received an unusual number of calls from reporters asking him about the theory, suggesting to Shirky that desperate newspaper types are “rummaging around” for revenue ideas. “I haven’t talked to anybody about this stuff since the last recession,” he said. “I don’t get any interest except when it’s a Hail Mary play.”

William Baker, a professor who is investigating new media business models at Columbia University, is more optimistic about micropayments and chose a metaphor to mirror Shirky’s Hail Mary. “There’s a potential rainbow here,” he said. “Normally no one would take this risk because it’s a scary jump. On the other hand, the economy is so terrible now that it may force some entities to try.”

It’s easy to imagine a kind of news network that would contain, say, 5,000 online magazines, newspapers and blogs. Every member of the network would be connected to the same pay system, so that the user could seamlessly navigate from one site to the next. Each time you loaded a page, you’d be charged a small amount, and a meter on your screen would allow you to keep track of your balance.

There are plenty of technical questions about how such a system would be implemented, but the question that trumps all the others is simply: Would you, the news reader, consider paying for the same journalism that has been free for more than a decade?

By all means write in (or post comments) to share your thoughts — at no charge.

— David Sarno

This post was in print as "‘Free’ news comes at a cost"

Related:

Let's invent an iTunes for news [David Carr / NYT]
Answering David Carr's excellent challenge [Jack Shafer / Slate]

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