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

[Ernie]

The birth of "paid news online" is the REBIRTH OF PRINTED NEWS.

It will revive PRINTED MATERIALS.

We don't need printed news anyway. It's redundant but we can do away with NEWS ONLINE because most news are garbage anyway.

Let's start charging people online for reading the news and say "Welcome Back L.A. Times printed edition".

[Peter]

The New York Times attempted to charge on-line readers a couple of years ago and it failed. Their mode was to allow one to read "selected" articles for free, but access to their Op-ed pieces and other content was restricted. I just stopped reading it.
The problem with charging for on-line access, as was with the NYT, is that it will not be priced fairly. Some executive is going to see $$$ and decide to charge as much for on-line access as they do for newspaper delivery. I can already see the miriad of pop-ups we'll need to endure as well.

[James Caffery]

Again, "new media business solutions" like micropayments overlook the real issue: it's not whether you pay for content (either directly or via ad sales), but the quantity & freedom of content you select, peruse, TRAFFIC. if the idea, as in traditional ad sales, is the highest number of eyeballs/traffic, then I - as a consumer - will be much more selective as to the content i CHOOSE to read. My browsing through articles would be cut down as I'd be forever focused on my "reader meter" - yes, an absolute, every 5 min annoyance. If I am to make a PURCHASE DECISION several times within a 5 min period, everyday, I will sooner go back to buying a traditional print newspaper. Simple answer overlooked: TIME, IS MONEY. add up all those small, article buying decisions ("Is an article on Paris Hilton really worth $.08 today.."), and that micro mentality adds up. Find more creative ad revenue, anything, but find a better solution. I'd like my information consumption to keep EVOLVING. thx for the article.

[M. Kuester]

I would be one of those under 30 people that read this and several other online news websites everyday (and no, not just the headlines). One should not limit oneself to a single source for information, which is what makes the internet so great - accessability to an endless amount of resources, for free.

If we examine programs like iTunes, they work b/c Apple's devices only work by downloading programs, music, movies, etc.. through iTunes. If Apple was not as successful in selling Apple products, it is likely that in turn iTunes would also not be a success. There are those that have not jumped on the Apple bandwagon and still download music "illegally", for free - heck there are those that have Apple devices, download "free" music and import it all into iTunes without ever using iTunes to buy a single song. The point is that even if you were to charge to read the news, be it a subscription or via micropayment - people will find a way to get it for free.

[Dan]

Micropayments is a great way to alienate your user base. I don't read printed newspapers or watch the TV news. TV news is boring and there is no point getting newsprint on my fingers if I don't have to. Plus, the online sites update so frequently. But to charge micropayments would push me away. I like to peruse, maybe only read the first paragraph of an article, but I focus on the headlines so I know whats going on.

I think the answer is in advertising. ESPN.com is littered with it, yet they have it in a way that isn't bothersome. It's not an issue of the charges bothering me, but more the manor of charging. It limits one's curiosity towards articles, making me not care to read them since I know I have to pay.

I could see paying for a full article, but getting the first paragraph for free. Something like that is much easier to swallow.

[LAT reader]

I wonder, does the Times make micropayments to the flickr users whose pictures they're using? I've been approached on flickr by old media publishers and usually they offer nothing more than "lucky you, we're giving you exposure!". Sometimes they offer money, but it's not enough to make it worthwhile for what used to be a profession. To see those same old media types come begging for a few micropayments of their own is not surprising. Print news does appear to be dying a slow death and internet news isn't going to make enough money as long as free or cheaper alternatives are out there. The established publishers have to re-prove themselves to younger readers that probably have lower standards and aren't the least bit impressed by a pulitzer; they're perfectly happy with JoeFreeBlog. Entering the workplace as a journalist or photographer these days isn't the best plan, it's like being an umbrella repair man. I'm part of the first large wave of video game playing kids (Gen-X) and I'll tell you what everybody my age or younger is reading; texts on their iPhone, BlackBerry, Blogs etc... anything more than a headline (newspapers) in print or online is for grandpa. I won't be making any micropayments myself, but I would be willing to endure more advertising a la Salon, for quality writing. If Americans want to increase news readership and engagement in society, they need to emphasize quality nationwide education and stop using videogames/TV as a nannies. I've watched the bulk of kids grow up around me for a few decades and all they care about is short term self-gratification and shopping for re-branded Chinese made junk. The baby-boomers dropped the ball and now somebody has to pick it up.

[Lisa Marie]

To Wasif:

I enjoyed reading your viewpoint. Although it's one that I feel is putting journalists out of business, it's one newspaper owners need to hear if they are going to save themselves in the new age.

However, it you bothered to actually read a newspaper once in a while, you might know that it is spelled as one word. Oh, and sentences forming questions end with question marks.

[Marina]

I think that the idea of micropayments would work, as well as paying for online subscriptions of the news-- even the LA Times. However, let me speak on behalf of the educated young adults and say that I personally still prefer to read a tangible newspaper. I love the internet and rely on it for my entertainment and social networking purposes. However, I have noticed that I do not absorb as much of what I'm reading online as when I am reading from tangible books, magazines, and newspapers. I am not sure why.

In response to Greg M., I am 22 and an LA Times Reader! Surprised? Guess what? I am also female... (Shocked?) Cynicism towards the next generation and their interest in the world at large is in no one's best interest.

[Colby]

I have been thinking about this for a while actually. I would buy a subscription to this paper because I check the headlines every morning, but I can't stand physical newspaper. It is smelly and gets ink all over one's hands and is a waste of paper. I would pay a subscription to get the online content.

[David Reynolds]

One big problem I see with this is that the headlines will be even more misleading than they can be now.

[John C Leddy]

Please remit to me the sum of 50 cents for taking my time to read your post.

[Midi Cox]

I read your column today with interest. Although I am not in the younger generation (I have 3 sons who are under 30 and they all get their news online), I have been pushed to an alternative approach to reading both print newspapers and magazines. It is the "last mile problem." I frequently have day trips away from my home and I leave before the paper is delivered. I don't like to leave it sitting in the driveway all day, so I cancel for the day. It is not easy to read a newspaper on a crowded Southwest flight; somewhat easier on Amtrak, but my paper doesn't arrive until after 7 am. I have a similar problem with some magazines that I subscribe to, with the magazine not arriving at all and I read it online.

I now have what I think will be a reasonable solution: Kindle. (I was given one for Christmas and it will arrive in March.) While I will lose the pleasure of holding the newspaper in my hands daily, I will gain the pleasure of being able to read it even if I am not at home at 7 am.
Reading the pdf version on my computer is not an alternative because I don't always want to carry my computer or take it out on the plane. I am hoping that I can get Kindle versions of the magazines so I won't have to worry about what has happened to them.

I am glad to pay the $9.99 for the Kindle version of the Los Angeles Times and would gladly pay for the Kindle versions of the magazines.

[Katie]

I am 21 years old and I read the news. I'm sick and tired of my parents generation and older (there are exceptions) claiming that us kids aren't up to date on current events. The fact is educated people (I am in this category too, you know) read the news. Why doesn't anyone rag on the umeducated apathetic boomers? I access my news through my phone ( and I'm writing this comment via iPhone for the record) and it is more up to date than your piece of paper that destroys the enviornment. I would pay for a paper if it was better than a site. I support free markets and think that papers should not be given a hand out. If a business is failing, then it should do what the consumer wants. Obviously a pay per use isn't going to fly with my fellow ex- napster demographic. I attend a large university and cant name a single person paid for music. Why would we pay for boring sensational biased news? We are taught in school to distrust all news information and read with skepticism. Why should I pay for that? Personally I would seek my news elsewhere (as I have done with WSJ). Generate more ads. Hook up with facebook. Offer me something I would want if I have to pay. Play the game of capitialism and don't ask me for a hand out.

[Liz]

People are going to have to seriously consider payng for news online if they want the same journalistic standard from the past hundred years applied to the next hundred. With the crazy times we live in, news is important to our daily lives and for that industry to continue they have to be able to make money. This sounds like a way for news outlets to make money and people to pay as little as possible.

[Sylvia Sukop]

Isn't it obvious that - yes - newspapers must and will switch over to mostly online publishing (maintaining perhaps a once-a-week paper version with news summary and analysis)? And that the revenue to support those newspapers (or maybe we should simply start calling them "news organizations") and keep them in business can and will come from their online advertisers? It's nothing new, in fact it's just like traditional TV - we watch the shows and the ads come with them. Now with online newspapers - we read the stories and the ads come with them. It seems to be working for the New York Times. What's the big mystery? Micropayments would be a particular nuisance if we also had to be subjected to online advertising at the same time. Micropayments would only work for me - if at all - in a pristine ad-free space.

[Graham McCann]

Dominate online classifieds and win back the market share lost to Craigsilist.
Craigslist dwarfs the newspapers pageviews with just classifieds.
The newspaper used to own classifieds, what happened?

[Melanie M. Cogdill]

Yes, I read your article online. However, I would be happy to pay for it, if they had home delivery in the East Coast like the NY Times does in the West Coast. Sadly the L.A. Times does not offer that service.

Alas, I could only read as much as I could see on the print edition front page PDF, but I agree with the thoughts I could read.

As the managing editor (now for 17 years) of a very small, non-profit, evangelical Christian magazine, I am concerned about how the internet has changed print media. We are hanging on in print, but I wonder for how much more. We just got rid of our news section. In the internet age, how current is bi-monthly news even in our area of focus (religion)?

Thanks for the op-ed--at least what I could read of it. I miss So Cal having moved two years ago. And I do miss a real life, print-edition-in-my-home of the L.A. Times a lot--changes and all.

Best,

Melanie M. Cogdill
Managing Editor
Christian Research Journal
Charlotte, NC

[Putt Petrulli]

How ironic that more readers probably read your entire article on newsprint rather than a LCD. Readers read newspapers. PEW probably measures "people under 30" that scan website headlines & blurbs and believe they are "getting their news".
Sure, a few have shifted from the paper to the web, but the LA Times is wasting away for reasons only tangentally related to our news sources. With the exception of newbies outside of the traditional delivery areas, longtime readers have watched their paper shrink, dumbdown and increasingly focus on the left side of the political fence (an embarrassment to many liberals) and south of the border fence. Micropayments wont change this.
Twenty years ago most on my block had a morning newspaer in their driveway. Now, two or three get that morning plop. The rest don't have the time, don't read English, or see above.
Unfortunately there is no way to reverse, adjust or correct in favor of newspapers - RIP. As far as web based news, few want it bad enough to pay even micropayments for it. Those under 30 (future news consumers) will continue to click on sensationalistic headlines, read 2, 10 maybe even 40 lines and then click.... Ask them to read 2 or 3 pages of text on a screen, AND pay for it? ....Those are iPod earbuds being inserted as they pick up their phone - "Hey, what'a ya doin?"
If you read this far, gosh, you may be one of the few that read entire articles on LATimes.com

[Figgins]

One of my personal gripes about subscribing to the daily newspaper is that 90% is left unread, and just ends up in the recycle bin. I don't have the time to read the entire paper, so I pick and choose which articles to read. The online version suits my lifestyle best.

I would pay for an online subscription, IF AND ONLY IF, I did not have to put up with pop-up or animated ads (or preferably no ads at all). And the subscription better not cost more than I pay for my present Sunday-only subscription. Afterall, think of all the money the LAT would save by not buying ink, or the transportation cost of the rail cars delivering newsprint!

[Wayne]

The L.A. Times is destroying itself, a little at a time, over and over again.

Several months ago the paper reduced content by 15%. After I saw what was left of the Sunday editon I stopped buying it. They had removed much of the content that made it worth paying $1.50 for it.

Now, they have damaged their PAID circulation again by raising the price of the daily paper by 50% (except in the Valley where I understand it is still 50 cents).

What the Times fails to realize is that their PAID cirulation is going down, not because of the web, but because it keeps making it more and more expensive while reducing the content.

IF the Times REALLY wants to increase circulation (and therefore advertising rates) they need to restore the content they removed OR reduce the price of the paper, not keep raising it for less and less. They need to REDUCE the single copy to 25 cents daily and a dollar on Sunday (I will buy the Sunday paper for a dollar, but not $1.50.

IF the Times continues to reduce content and/or raise prices I can guarantee you that circulation will continue to decline and extinction will be a reality. You have already lost my Sunday purchase and many others have done likewise.

Finally, I am still deciding whether or not I am willing to pay 75 cents for the daily paper. And NO, I will NOT read the Times on the web, never have and never will. I read the paper while taking a break from the computer. You must be naive to think that I am going to use the computer for anything while taking a break.

[Stephen Paliska]

Interesting article on print versus electronic data. It is lucky your piece started on the front page or I would not have noticed it (I only read the comics and the TV guide in Calendar Section). My problem with a monitor is the speed at which I read is significantly less on a monitor versus the printed page. I would guess my monitor speed is less than 1/3 of the hard print speed.

The present problem with the Times is Real Estate and Business sections have been gutted with most of the advertising directed towards residential real estate and vehicles, two categories which I very seldom require. Also we are Costco and Ross devotees, having no need for Macy's

We also subscribe to the Register, which in today's climate offers Orange County news and apparently has not suffered the down sizing of content prevalent in the Times. Both my Spouse and I are members of the technical community and have very little interest in the Arts, Calendar and Sports sections. Seriously, I have subscribed to the Orange County edition of the Los Angeles Times for some 49 years and if the Times continues in the present down slide, could very well switch to USA Today.

Stephen Paliska
North Tustin

[Jason]

How about making the printed versions of LA Times for free? Free to pick up at the newsstand and free delivery.
LA Times can make its money from ad revenue (by increasing the rates since you will have more subscribers).
People don't want to pay for the newspaper because they can see it free online. Micropayments is a pipe dream. Won't work.
Jason

[Jocelyn DeVault]

David,

I am a daily reader of the PRINTED version of the LA Times. Every morning for the past 20 years, my husband and I read the paper and drink coffee before work. If the paper does not show up, we stare at each other and fidget. We do not go to the computer for our news, and I only read news on the internet when checking emails.

I find the news on the internet lacking in length and substance. The shrinking papers are indicative of the shrinking intelligence of this country. I am very worried about the future of newspapers, and if paying to read news on the internet helps saves papers, then I'm all for it. I will not get my news from a computer if papers go away. I just won't be informed anymore. The newspaper industry has to find a way to save itself.

[jar]

I love reading newspapers, magazines, the printed word. However, I also enjoy reading everything I can on the internet. If 5,000 newspapers and magazines were to be one standard portal of information, the cost will be very expensive and the stories repetitious for the consumer, and we'll find another way of getting the information. No, unfortunately it looks like the newspapers will have to find another way to generate revenue, the best being their archives. Old information will be priceless for the users of the internet and for researchers, wrtiers, teachers, students, etc.. This is all very generational, because it's all what you are used to. In 25 years, a person born now will be used to not having a newspaper, and will most likely carry a portable reader where they subscribe to their newspaper through their reader, where you'll read the newspaper for free with commercials and with a subscription fee without commercials. Scary, huh?

(I'm an LA Times subscriber, but my paper doesn't arrive until 5:45am which is really late.)

[Cici]

I recently began subscribing to the print version in the past week and realized that I have barely read any of them because I'm simply not in the habit of reading a daily paper or news not sourced online (and I tend NOT to read the LA Times online). However, today I read nearly all of the print version and came across this article.

I definitely would not pay micropayments for any news source online. It would turn me off completely. That being said, I would have no problem paying for a print subscription and having access to the Web site as a subscriber perk, similar to how I believe the Wall Street Journal handles their Web access.

The only other model I would pay for is if the Times bundled with other papers in sort of a "cable-TV" model and I could pay a monthly flat fee for access to all of my favorite newspapers/sources and magazines. BUT all articles should be download-able in case I want to read them later but don't want to connect to the Net to do it, or if I want to print them and read them "offline."

Personally speaking, though, I find that while the Net offers fast-breaking headlines, most online "content" is crap or re-spun stuff to boost SEO, including news. I will, however, pay more for quality content and commentary that can be delivered to me in multiple ways.