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 @ 10:16am

    Re:

    Personally, I want a "gated" community for my news.

    If you make people pay to view/comment, then most likely you'll only get people who agree with the author to pay, and thus to comment. That's not a discussion, it's masturbation. I *like* to see a rational, opposing viewpoint-- it either helps me find a better way to state my views, or changes my views on whatever topic is being discussed.

    The belief that everything on the internet must be free has to end or news sites will never survive.

    ..a business that can not compete in the market due to its own inefficiencies deserves to go out of business.

    Good information is worth paying for and news-for-pay is the model that will succeed.

    Good information isn't paid for now, it's given away for free, supported by ads. How much better are they going to make the good information to make it worth paying for, since only a fool would pay for something that was given away for free without having value added first.

    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.

    Quality news sites are already here, for free. I don't use any of the major news outlets for news, and I'm often better informed than those that do. Making it harder for people to read your content will only serve to make you go out of business faster.

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