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
    The infamous Joe, 11 May 2009 @ 10:02am

    Re: Missing the Mark

    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..

    I read here at Techdirt quite often, and I can't remember any of the Techdirt bloggers ever saying that you were a bad person for charging for an infinite good-- just that you were a foolish person for doing so. However, feel free to correct me with links-- I forget plenty of things.

    How do micropayments take away the ability to engage with the content or, rather, other readers on content?

    If you charge to view the content, then less people will view the content. If less people are viewing the content, less people will comment on the content than if the content were given away for free. I'm not sure if that's what you were asking.

    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.

    Now, I've never worked for a newspaper, but don't they make their money selling ads? So, if you're in the ad selling business, it makes sense to get as many eyeballs on your ad space as humanly possible so you are more attractive to those looking to buy ad space. If you limit the eyes, you hurt your business.

    However, you are correct in that the content has been given away for free for a very long time, which makes it even more ridiculous to think that people are going to magically start paying for it even though the newspapers haven't added anything new worth paying for.

    No matter how many newspapers try this, there will *always* be another site that will give it away for free-- thus defeating the payment system.

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