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. identicon
    Walter Cronk, 11 May 2009 @ 6:21am

    Payments will not diminish the value. They can only serve to increase value for one simple reason - it keeps the morons and drive-by idiots at bay.

    Look at the "news sites" that are out there - DailyKos, Huffington Post, this site, TechDirt and even some local newspapers. The comments on these sites do little to enhance the news value and are often hate-filled diatribes and rants.

    Personally, I want a "gated" community for my news. I want to know who it is that's posting a rant, or at least can be identified if they slander someone. The belief that everything on the internet must be free has to end or news sites will never survive. With the impending death of the printed newspaper, moving to an electronic platform, with ads as their primary source of revenue is ludicrous. Ads, often blocked by blocking software, will never support a quality news site. Good information is worth paying for and news-for-pay is the model that will succeed.

    Sharing an article with non-paying customers can easily be accomplished and could actually serve as a news site's "circulation" booster. The recipient of such an invitation will be allowed to view the article sent by a friend, but will not be able to read the entire site. Easily done with a cookie or special one-time use URL. Then the recipient is offered an opportunity to subscribe. It would be just like the "blow-in" cards we all hate in a magazine, but are one of the best ways to increase readership.

    It won't happen overnight, but with the disappearance of newspapers, quality news sites will begin to appear, and they won't be free. It may take a few years, but it will happen.

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