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
    JohnForDummies (profile), 11 May 2009 @ 5:39am

    I'm all for paying people when they provide something of value... but quite honestly, when I go to a linked news story, and it requires me to register for even a FREE account before I can read it, I generally hit the back button and either a) find the story somewhere else, or b) do without.

    What happens if you've read an article, which they've automatically charged you for, and you feel that you were short changed because it sucked or didn't deliver what it promised? Do you get a refund? Do you get to peruse the article's contents before you agree to make the payment? That's how it works when I purchase a magazine or newspaper at a newstand. And at least then I get a physical object that I may keep, pass on to someone else, or discard--that's my perceived value. An online story that I just "bought" (rented) is useless to me.

    @Yeebok, yes, Murdoch owns the WSJ: http://crooksandliars.com/2007/07/06/rupert-murdoch-buys-wall-street-journal

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