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 @ 2:38am

    Re: What a great idea

    Andrew, I'm afraid that I must have missed your point. You say that the commenting and interaction doesnt add value to you, but you find your value in other peoples' comments. That is still a part of the interaction, even if it is not yours. Content behind a paywall will not receive as many comments as that which is open and free, because the number of paying readers will not equal the current number of non-paying readers. So the value will ultimately be diminished.

    You then state that you make comments in order to guide the authors toward content that you are interested in - possibly one of the finest uses of comments since, when looked at as a whole, they will ultimately work to keep the author on point and relevant in their future posts. If you have to pay per individual article, only to then need to make comments to get the authors to even write about anything you are interested in... I know it wouldnt take me too many purchases to get tired of that cycle.

    That is even assuming that the people setting up paywalls are also people that understand the value of comments and interaction, and keep that part of the system. Honestly, I wouldn't be surprised if after setting up a micropayment system, the comment systems were completely removed. But that is purely speculation on my part.

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