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

(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]

Comments

[tom]

I would pay 2.3 cents for this article. Bill me later.

[Lois Richard]

Read David Sarno's article "Free" news. I am not sure that I would want to be charged those "micropayments". I have been subscribing to the LA Times for more then thirty years. So yes, I do pay for my news. But I feel with micropayments I would probably wind up paying more for news then what I currently pay for my subscription. I am basically a news junky. What if I don't have a hand held device to carry with me to get the news? That is the problem I have with getting my news from the Internet. Can't take it with me. I do love the Internet. But I like getting my news from a newspaper (first) TV (second) and then the Internet (more and more). This old dog can learn new tricks. But it might take getting rid of the newspaper all together. I hope that day never comes.

Lois Richard (current LA Times subsciber)

[neil millikin]

if advertising won't support the cost of journalists and web programmers, then newspapers will further recede into the mist. when people pay for information, they are paying for entertainment. there are too many free forms to get nickled and dimed to read somebody else's take on the daily news.

[Jeff]

PayPal donation button.

[Craig Murray]

This morning as I was retrieving my LA Times,
I happened to realize that I now actually enjoy
surfing the web each morning as much—or even
more--than I enjoy reading the paper.

And then I came across your column.
You’ve hit the nail on the head—somehow, someone
has to entice those 5,000 (or more) news, sports
and blog sites to band together and charge something,
anything, for their content.

So put me in the category of those who would, yes,
absolutely pay for this service.

Please keep this idea alive...it’s the best I’ve heard yet
for solving this problem.

[John S. Nelson]

This morning's article really hit home, since I was reading it at the kitchen table, coffee cup in hand. I was born before television, and have been an avid reader all my life. I am also an early riser, and am impressed each morning as the complete paper arrives on my front door step, usually by 4:45 a.m. I do use the Internet for banking, e-mail, driving directions, etc., but can't imagine reading an entire newspaper on the screen. I am very much aware of the diminution in readership, and hope fervently that the newspaper does not disappear before I do. I consider the daily paper a bargain, and would be willing to pay more if that would increase the likelihood of its surviving in its present form. If it were no longer available, I would probably utilize a metered system for reading on line as you suggest, but I would not be happy with the change. I am concerned for the country, because I believe that the younger generations are not following the news at all, in print or otherwise.

[Greg M]

Google must be laughing at your article...

I get the Times every day. I punish myself by religiously reading the articles you print ... out of habit only I promise you (carrying on a family tradition of over 50 years).... I pay $50+/month for the priviledge, but if that's the price to catch TJ Simmers words while I have my coffe and my smoke in the mornings, while I enjoy the sun coming up on the back porch........ Fine...

If you can find a person under 30 even reading this newspaper (or any other)... Online or in print.... Please, let me know.. And if those readers actually read more than headlines... Please let me know.

I'll offer 3.5 cents for this article, and that is my final offer, and it is only out of sympathy...

(there might be some useful information here for you to mine,,, but I doubt it)

Wats of Wuck....

[John Tedesco]

Newspaper subscribers often ask why they are being forced to pay for the printed product when they can read stories online for free.

Maybe micropayments are a way to deal with that complaint.

If you're not a newspaper subscriber, you have to make micropayments. If you do subscribe, you get free access to the newspaper's web site and all its extra, searchable content.

It seems daunting to persuade all newspapers in the United States to agree to this practice, but maybe it's enough to simply have every major paper in a state form a micropayment network. If you subscribed to just one of those papers in the network, you get free access to the Web sites of the other papers.

That would increase the value of a newspaper subscription, and it might entice more people to subscribe.

[Eric Baines]

I disagree with what you say that general circulation newspapers cannot get away with charging subscription supposedly because much of what they write is already available elsewhere. Hometown newspapers are usually the only sources of information for "local" news. Also, readers are becoming aware that the failed online business model being followed by most newspapers is putting their beloved hometown paper at risk (e.g. Seattle Post-Intelligencer) and are now BEGGING to pay subscription to try to save them. The myth that readers expect everything on the Internet for free is just that -- a myth!

[Wasif Sindhi]

Why would I pay for something when I can get the news for free through a million different resources online. I am 28 years old, and avid news junkie. I think I can count on one hand how many times I have picked up a news paper in the last 10 years.

[Greg Gearn]

Of course micropayments are not going to work; the reasons are clear in your article. The simple reason that newspapers are failing is that the business is based on the 'Detroit Model,' the focus is on short-term profit regardless of the customer needs. It's the same model that is failing the record companies and beginning to destroy the cable providers. When a core tenet of a business model insists that the customer is wrong and blames its failure on the customer and the competition, it will fail. It is only a matter of time before I cancel my Times subscription of more than 30 years. Everyday the paper offers less of what I want while delivery becomes more and more unreliable. Last week's headline about 'the biggest job lose since 1945' is a prime example. It was pure drama, just like Fox News. It certainly got my attention and then my annoyance that, yes umemployment was way up, the highest in 17 years, but it was not news in the sense that it was useful information. 1945 and 2009 are not comparable in terms of population, economics and employment. The New York Times on the same day presented the news in a useful, more honest and more concise way. So I will soon cancel my Los Angeles Times subscription but I will keep my New York TImes subscription. There will always be a market for real news and cogent analysis but tabloid journalism is free on TV and available everywhere on the web. There is a huge market out there for real news but if newspapers continue their 'death spiral' of delivering less and less for more and more money simply because they are unwilling to serve their customers, good ridance.

[Paris M]

To all major online papers: 1. Save money, stop printing on paper. 2. Stop sharing your news with other online news sites and news agencies (hire personel to enforce your copyright, sue when necessary ) 3. Focus on advertising for the web only. 4. Make your content easily available on cells phones and PDA's. I currently read several major online newpapers from different countries. If one of them forced me to pay to read, I would switch to another free paper.

I would be glad to pay $1/week for each newspaper I read online.

[JBN]

I have been writing to LA Times for years asking them to make a subscription based online service without ads, or hell, without animating ads. I love the LA Times, and fully support its staff of talented reporters and photographers. No other newspaper put as much thought into this election when it comes to local and state issues. I very much like the idea of micro-payments. It means I'm not being charged if I am working too much to browse, but then the days I am just aimlessly surfing the web, I'm actually paying for the service you provide. For the record, I'm a 24 y/o male. I've got dozens of friends who all seem to know the same news stories when we meet up for lunch or dinner; we all read the LA Times online for our first line of news. Please do something, because I'd hate to see the LA Times go the way of the dinosaurs. A Free Press is to me one of the most important parts of this country. Society requires your work.

[Kern Barrow]

I would pay for a news website that would link to any newsource the web. Something like the Drudge Report that links to other major news websites. I think that would be cost effective paying for every news source would be the end of the internet as a news source.

[Gary]

I wouldn't pay a penny or any fraction thereof to read any news online. There is just too much free information already available.

[Karin]

I'm 22, Greg M, and I read the LA Times and NY Times online religiously, more than just the headlines. I'd pay for it, even though I'm pretty much broke, but I don't want to subscribe to the print edition because I don't read the classifieds or the stocks and I don't want to waste the paper or the ink. But, after hearing my journalism professors (who are or were LA Times writers and editors) lament the future of their profession, I know newspapers are in dire straits. I would pay, but I don't know how many others would. Keep publishing stories and columns like this one, and people may start to sympathize more.

[steph]

I'm with Jeff about the PayPal button. I think the LAT should try it. You might be surprised...

[T Pham]

No, I would not pay

[Wu Ming]

I'm reading this online, of course-- I read most of my news online. I feel guilty about it sometimes because I rarely buy the newspaper, even the excellent L.A. Times which is my local one. I keep meaning to get a subscription to it, and then we move again. If I have to drive into town to get a copy, I don't buy it. I love newspapers too.

The problem with free news online is, how can our newspapers afford to survive, to pay reporters? They are going through a wrenching change in the paradigm, comparable to the change from trains and ships to air and car travel. And if all reporting is paid for by advertising-- who is going to do investigative and international journalism, when most readers just want to read about Angelina and Brad and their local news?

I would probably NOT be willing to pay per page/article/ or even per newspaper. It doesn't suit the browsing-quickly mode. Too much trouble, too much expense, and too much free competition. I wouldn't mind a flat fee for a year for everything.... but, when so much on the web is free, it would have to be comprehensive in scope. I am addicted to Google News and read news from many countries every day. How would you make micropayments work across international boundaries? This is one big problem I see with it.

I would love for someone to come up with a solution that saves newspapers while also saving the openness of the web that is its magic.

[Rick Friedman]

Good luck with this idea. It'll never happen. The Times should spend less money on content I don't care about. Like this hairbrained idea about micropayments.

I'll read 5-15 articles each every day on WashingtonPost.com and NYTimes.com. I read about 2 or 3 on the LAT web site. Better use of editorial resources could change the equation of both the print version and the web version. When the web version becomes more valuable, there can be more web ads, and the idea of micropayments becomes moot.

[Fran]

I live in a rather small town in the middle of the country. I read some things in 17 papers from all over the country. I have lived in several places and want to keep up on news and columns in different places. I can't get that delivered to my home. If I had to pay to keep up on things in places other than where I live, I would stop keeping up.

[Ben]

Charge 2 cents per online story. If you have a paper subscription then online content will be packaged along for free. 2 cents per article is practically as good as free while still providing essential revenue from online patrons. Basic economics underlie the fundamental reason that some or most are unwilling to pay. You need to charge what consumers are willing to pay, and that needs to be carried out in a functional manner. It may not seem like much, but add that up and and it's good for the consumer and the paper. This may not be the answer, but I think it's a good starting point.

[Paul]

It's too late, Times. You messed up by giving us free news for a decade. No matter what you do - Micropayments, online subscriptions, two-paragraph previews that push people to buy the full paper - people will just go elsewhere. And if every news source starts charging, then people will just allow themselves to be less informed.

[Gerald C]

Why not make this even simpler? Create a cell-phone like offering, allowing readers to choose between pay-as-you-go (prepaid) or all-you-can-read (unlimited) monthly plans. Even better, if such a payment system is shared across the online newspaper industry, readers can signup once and forget about it.