WSJ To Try Micropayments: What A Bad Idea

from the watch-this-fail dept

There are all sorts of bad ideas around trying to get people to pay for news, but perhaps the worst is the idea of micropayments. Micropayments are trotted out every other year or so as the "savior" to paid content by people with little understanding of economics. The problem is that micropayments never work in a competitive market. First, the "cost" is much bigger than the nominal sum, because of the mental transaction costs ("is this worth buying?") that add friction to the process. Second, and more importantly, it's a self-defeating move. In adding micropayments, you automatically decrease the value of the content. This may sound paradoxical, but what matter is why and how people value content. These days, many people value content for the ability to engage with it, comment on it and share it with others. Micropayments take away that ability, and thus decrease the value of the content. In some sense, adding a micropayment option gives people fewer reasons to pay! Micropayments have been tried over the years, and every time someone announces them the press goes all nuts about how they're the business model of the future for content. And then the projects go nowhere for a few years, whither and die. And the press never seems to notice.

So, it should probably come as little surprise that it's the press itself that's going to try such a plan. The Wall Street Journals' managing editor, Robert Thomson says that the WSJ is going to start offering a micropayment offering for individual articles. Of course, it sounds like it's not always micropyaments either:
"It's a payments system -- once we have your details we will be able to charge you according to what you read, in particular, a high price for specialist material."
A "high price," by definition, isn't a micropayment of course. And it's just as likely to fail miserably. Putting a paywall in the way of people, and they'll find the content elsewhere. Put a paywall in front of good content, and it just opens up the opportunity for other, smarter, publications, to provide the news for free and run away with all the advertising money.

Filed Under: micropayments, robert thomson, wall street journal
Companies: news corp.

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  1. icon
    BobinBaltimore (profile), 11 May 2009 @ 5:30am

    Missing the Mark

    Mike, you're comment that "These days, many people value content for the ability to engage with it, comment on it and share it with others. Micropayments take away that ability, and thus decrease the value of the content." I get that you think micropayments are a bad idea. (Increasingly, TechDirt comes across as seeming to espouse that any payment is a bad idea and spends a lot of time justifying and attempting to justify how payment for content is not only untenable but unethical...) What does any payment system have to do with the presence or lack of presence of engagement functionality? Your thought seems to directly relate payment with a lack of engagement. How do micropayments take away the ability to engage with the content or, rather, other readers on content? Yes, sharing can get a bit dodgy, but there are plenty of ways to handle that, several of which WSJ has been using for years on paid content. It does mean that the community engaged on that content is likely to be more limited, but I think there might actually be some merit to that. Most communities are limited or self-limited in some way anyways. But the extension of the "right to free content" to some kind of "right to comment and engage on said free content" just takes an already tenuous argument and stretches it in a contorted way. I'm not saying that micropayments are a panacea, but this particular argument is rather thin.

    As for the restriction on engagement devaluing the content itself. Well, maybe. There are readers who value the content, and there are readers who value the reaction to the content. And some value both. But the bottom line is that without the content in the first place, there is little else to do. The problem at hand for these businesses is exactly that: the value of the content. They have seen 10 years of their content being given away and circulating all around the globe without generating revenue, making the content less valuable to them as a business. Oh, yes: the news is a business, in case anyone had forgotten. This isn't about serving the consumer it's about finding the balance between audience development/retention and a rational revenue stream.

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