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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
    Joshua Jones, 11 May 2009 @ 3:50pm

    Re: Re: Re: Need a mechanism

    Oh, and on the "news is free" kick. News, once gathered, edited, etc. might be very cheap to re-distribute electronically, it's not free to produce in the first place. Somehow, somebody has to get out of bed and gather and edit it. Maybe somehow magically a corps of volunteers will do it for free, but somehow I doubt it. Shills for special interests will easily outgun anybody who has to find some other way to pay the rent. Whoever pays the fiddler calls the tune, and I'd at least like a shot at calling the tune. It seems to me like you are now getting back to the same argument provided by the music industry. Nobody is saying that nobody can or should make money off of the news. What we are saying, and the people at TechDirt have been saying, is that the newspapers are confusing where the true value is. The content iself does hold some value, yes, but that content can be obtained many places on the internet for free - this is how things are and will likely continue to be, so it only makes sense to make plans with that in mind. What adds value that cannot be copied recreated elsewhere is your community. The people commenting on, sharing, and ultimately giving direction for your articles. In part, this has always been the real value of news sites, it is only growing every day. In the past, the goal has been to monetize that community through selling ad space. News sites can continue to do this, but if they say that it is not enough, then they need to find another way to monetize what is truly of value - their community. If you put up your content behind a paywall, then your community growth halts, stabilizes, and stagnates. An audience that is not growing is of no real interest to advertisers. If you leave your content open and viewable to all, and work on finding ways to further connect with that community, then you will see that audience grow, diversify, and ultimately add very valuable commentary to your articles. An active, participating community is more valuable than your own writers' opinions on the events that are occurring around the world. As a friendly reminder: you don't MAKE the news, you just write about it.

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