The funding debate continues. And the word du week, this time around, is an oldie-but-goodie: “micropayments.” In the current issue of Time magazine, Walter Isaacson, echoing David Carr’s request that someone “invent an iTunes for news,” makes his case for “a one-click system with a really simple interface that will permit impulse purchases of a newspaper, magazine, article, blog or video for a penny, nickel, dime or whatever the creator chooses to charge.”
Isaacson’s proposal, like Carr’s before it, has been roundly criticized. Clay Shirky—who takes exception to the term “micropayments” itself—pointed out that “that users don’t like being nickel-and-dimed.” Andrew Sullivan argued that asking people to pay even incrementally for journalism won’t work for the simple reason that “there is too much good content out there for free.” Kay Stieger, writing for Think Progress, took issue with Isaacson’s “disdain for the advertising dollar,” writing that “it’s unreasonable to expect media consumers to take on the entire burden of the cost of information production.” At Rough Type, Nicholas Carr called micropayments “a heck of a longshot and not worth pinning one’s hopes on.” Today’s New York Times features an op-ed by Slate’s Michael Kinsley declaring that “You Can’t Sell News by the Slice.”
Yet even those funding proposals that we don’t end up adopting as A New Financial Model for Journalism can still be instructive, if only because discussing them helps clarify one’s thinking about online business models. With that in mind, we want to hear from you: What are the problems with the micropayment model for funding news? In what context could that model work? Why do we keep coming back to business models that have failed in the past? And what, when it comes to online journalism, would you be willing to pay for?
I think micropayments work, they work in a huge range of media, and have worked before itunes, and will work after itunes disappears. You can look at micropayment economies all around the world, trading small things, exchanging small payments. They work, but the media they work in tend to have systems that limit competition. Thus minimum value is sustained, whether that sustaining limiting competition model is our assumptions around musical talent, painting talents, cartoons, bowl carving, whatever. There is usually a limited number of people that produce what is culturally seen as valuable.
I think the issue with micropayments for news, I'm thinking, is that there is no system to limit competition. Some writers and photographers will be able to sustain micropayments based on their talents, etc. But I don't think micropayments will work for 99% of news professionals, because in the end, news is free, we can get it for free on the internet from friends and colleagues. What we pay for, when we pay for the NYT, is not the news, but the tradition, and while the tradition was based, in part, on being a newspaper of record and having the news, first. The NYT is still a newspaper of record, but it isn't first, nor is it always considered trustworthy in its representation of the news. Why go online and read it? when someone can go to googlenews or reddit and find more valid material?
I don't think anyone will pay for most news, I think on the other hand, news organizations have to compete to be viewed, as do most individuals in news. That indicates that my thesis of limited production due to talent or other aura, doesn't function in the news. news organizations exist to limit and direct news products that exist in competition with unlimited production.... That is bad news for generalized micropayments. However, as I said, some particularly talented individuals, much like some bloggers, will be able to make a living that way.
but that's just my immediate perception from a political economy standpoint.
Posted by jeremy hunsinger on Thu 12 Feb 2009 at 10:56 AM
This new post of mine is in part inspired by your questions. Give it a look!
http://networkednews.wordpress.com/2009/02/11/no-micropayments-maybe-charity-yes-freemium-news/
Posted by Josh Young on Thu 12 Feb 2009 at 11:19 AM
The problem with micropayments for news is that it commodifies news as an item, a widget, without regard for how that item exists out in the larger universe of ideas, dialogue, and discussion. Ideas, say what you like about them, can't really be owned or metered like your electricity in your house.
This idea of putting a "meter" on an item to monetize it is simply one social construction of capitalism, and a not very successful one at that. I am reminded of the exigence of the mid-90s, when people on the web just wracked their brains trying to find choke points where they could insert meters (read "toll bridges") into the seemingly frictionless ecosystem.
It was an artificial insert then, and it is now. The driving "need" for meters does not exist in the world of ideas. It is a transplant into the world of ideas from the world of selling widgets (physical widgets, mass market, mass produced items for sale, not their online incarnation).
What you lose when you restrict access to content, even for pennies a view, as the NYTimes discovered with TimesSelect, is the viability of your ideas even being part of the larger discussion in the Commons.
So if you are Kiplinger and you have no interest in your ideas and stories being part of the larger discussion of civic life, by all means, restrict access, use meters, monetize to your anachronistic heart's content!
But if ideas are only valuable when they circulate in discussions, in debates, in water cooler conversations, virtual and otherwise, you have basically removed yourself from interaction and a role in a civic society, which, for journalists, is what the entire endeavor is all about.
Posted by Chris Boese on Thu 12 Feb 2009 at 11:23 AM
I'm not convinced that a new business model is needed when the old business model is not being adequately served (in my opinion), and with some creative reworking might become viable again.
Speaking purely selfishly, I want news that:
(a) covers an event from several angles
(b) maintains a focus on an event as it unfolds, possibly spanning weeks, months, years...
(c) is not obviously slanted, partisan, paid for by special interests, controled by government, acting as an echo chamber ... at least as much as that's humanly possible.
(d) is well-executed (meaning, for instance, cites solid references and sources)
Basically, I'll pay for news if I can get something I can't get from talking to people on the street or watching network TV.
My opinion of the New York Times has steadily declined over the last decade because, basically, their product has suffered. They aren't delivering the goods. I pay for Harper's because they do.
I realize NYT and Harper's serve different niches and purposes. However, I cite those two because, at least from this consumer's perspective, moving towards blogs and twitter is going exactly the wrong direction. Blogs, twitter, really anything on the internet is transient, disposable, free...almost, but not quite, valueless (not by content, but by perceptually). Those are the energy bars you eat on the run to hold you over for awhile. The newspaper should be the meal.
A little less selfishly, it seems to me people like to talk about the news. I see no shortage of newspapers lying around cafes and on buses and trains, and no shortage of people reading them and talking about the news. Would it make sense to target cafes, transit authorities, any entity that has a captive audience of people, and sell them newspapers? That is, instead of targeting homes and individual consumers, target organizations? In any case, there must be some way to serve that desire to communicate about the news and profit a little bit from it in the process. The internet ain't the way to do that.
Posted by Anthony on Thu 12 Feb 2009 at 11:29 AM
I agree with Chris Boese who previously described the limits of reducing views and ideas to monetary items pushed onto the public. The fact is that the public is inundated with information, is somewhat a victim of poor education (in this country especially) and as a result can be presented with a set of views that require a pay-as-you-go business model. Obviously this model is serving the business community, because it serves the capitalistic tendencies, and codified with telecommunication bill of 1996, where entertainment and journalism was blended to an art. This furthered confusion about matters that help with democracy, as vibrant and vital set of noble ideas.
Full and free internet access is one answer. A sustainable living, without shareholder pressures, can and should be the model for journalists. Bill Moyers, NOW and some PBS news programs are the best example - they really inform, and aren't bringing in millions for shareholders.
Posted by David C. on Thu 12 Feb 2009 at 11:52 AM
A sure-fire way to think up a great idea for the future of the news is think about the fundamentals. “What’s news?” That’s a good place to start. Dave Winer gets at the fundamentals really well.
Let’s ignore most of the fundamental components of the news and focus on a couple: users and creators. Very roughly, those map to readers and writers. But “users” and “creators” emphasize that readers are active and don’t simply passively consume the news. Users want to re-purpose the news, get more out of it. We also don’t want to forget that creators aren’t just writers; they’re also photographers and editors.
One pretty important fact is that users and creators are all people. And people can trust one another. Obvious? One would think so, but there’s been a big corporate wall between them for decades now. The publication has overshadowed the writer. We viewed newspapers as the creators. Writers and photographers were faceless bylines most people ignored.
For example, we once trusted the New York Times to give us all the news that’s fit to print. It’s an awesome slogan, containing a slant rhyme and some serious alliteration, sure, but it now works much less well as a promise. I doubt its author ever intended it to be strictly accurate, but now it’s no where near artfully true anymore. Only the internet can make that promise now. It is the great disintermediator.
And so creators of news are re-emerging as real people to their users, who are also real people. That relationship, however attenuated, is a better place to locate trust. Let me put it another way: there’s greater potential trust in user-creator relationships than in reader-newspaper relationships. Humans are built to trust other humans, personally.
Now, we certainly also have relationships with groups. I’m no anthropologist, but it would certainly seem that, as humans, the concept of group identity runs deep. We can trust a person because he’s part of a club or a tribe. It’s a good thing, then, that appreciating user-creator bonds doesn’t demand that we deny the existence of reader-newspaper bonds. The internet may erode—but it doesn’t destroy—the concept of a traditional brand, anchored in a group of people who share a common purpose. The internet supplements, or unlocks, the concept of a personal brand.
Why all the fuss about brands and user-creator relationships and, ultimately, trust? Simply put, trust is an economic good. It’s worth something. It makes markets work more efficiently. As a trader might say, trust is positively accretive to value. This is not just about peace, love, and harmony. Trust creates value. Value gets monetized. Money pays journalists. Journalists save the world.
So if there’s trust to be created, there’s money to be earned. Trust is the foundation for a value proposition. All else equal, it stands to reason that users will pay more for the news in which they have more trust. If so, then it follows that users will pay more for the news they use based on a relationship with creators, in whom they can place more trust than they can in newspapers as brands.
Whew, so all that was wildly theoretical, blurry stuff. Before moving on to something more concrete, let’s sum it up. Shifting the news relationship from reader-newspaper to user-creator increases potential trust, an economic good, and unlocks value, which people may pay for. But even the strongest value proposition does not a business model equal.
So let’s move to the concrete: the business model. How do we monetize this theoretical value tucked away in user-creator relationships?
You do it with an idea I’ve been flogging the past couple weeks. You do it with Mitch Ratcliffe’s idea, in which users pay creators for “added convenience or increased interaction.”
http://blogs.zdnet.com/Ratcliffe/?p=381
Note the elegant fit: increased interaction between one person and another is what fosters relationships and trust. Giving paying users otherwise exclusive twitter access to the creator could work. SMS updates could work, as could a permission only room on friendfeed. Even something as simple as a gold star on paying users’ comments—a symbol that they support the creator financially—would provide incentive for the creator to reply. Tiers of stars—bronze, silver, gold—are possible too.
There’s a social network lurking not too far below the surface. Because we’re in the business of fostering trust, transparency is paramount. So this social network would do best to require real identities. Users would have to be clear about whom they support, and creators would have to be clear about who supports them. Both users and creators would have personal pages of their own, identifying whom they support and who supports them and what dollar levels are being exchanged for what levels of interaction. This way, creators would have the ability to avoid potentially conflicted supporters. (Of course, a person could be both a user of some news and a creator of other news, paying for some and receiving too.)
Paying users of different authors would eventually form their own communities, if creators nurtured them well in the context of a supportive information architecture within the social network. Done right, membership in a community, which could suggest and debate tips for the creator, would represent its own value proposition for which users would be willing to pay up. Creators could have multiple communities, populated by groups of users characterized by different interests, areas or expertise, or even locations.
Creators would set their own prices, reaching their own equilibria between cost and numbers of paying users. Users would tend to pay less to a creator who offered less-value-added interaction by ignoring more questions and comments. But there would tend to be more users willing to pay a smaller amount than a larger amount. Users and creators would have to think about their elasticities of supply and demand. Over time, individual users and creators will find a balance that strikes her fancy. On the one hand, some creators might prefer a smaller set of users who pay more money and enjoy more interaction. Other creators, possibly about possible undue influence, might prefer a larger set of users who pay less money for a thinner relationship. And on the other hand, some users might prefer to be among a small community with better access or thicker relationships to the creator, while other users might prefer spreading themselves around and having thinner relationships with more creators. I don’t see any obvious reasons why a basically unfettered market wouldn’t work in this case.
Note that this represents an end-run around the problem that news is an experience good—you don’t know the value of an article till you read it. (New is not like buying a pair of pants.) This solves the problem that news itself is often nearly worthless the day after its published—yesterday’s news is today’s fishwrap. (It’s not like buying a song from iTunes. Also, ed. note: please, please, please follow that link to Doc Searls. The VRM parallels are clear and profound.) Finally, this also solves the problem that any given news article has myriad relevant substitutes—articles about the very same topic, event, or person and articles about equally interesting topics, events, or persons. (News is not like the Inverted Jenny. Yay philately!)
As with Kachingle, recently blogged by Steve Outing, this kind of freemium news doesn’t have to be the entire solution. It’s certainly compatible with advertising, though another feature might be a lack of it, just as it’s compatible with charity.
The point is that this idea and the business model on top of it are inspired by deeply human phenomona. Personal interaction and trust are constitutive of what it means to human. They’re a large part of what makes the world go around generally, and we should look to them to save the news too. The right tools and insights can help right this airship called journalism.
PS. I'm super sorry for cross-posting this, but wordpress tells me there have been only a couple dozen click-throughs to the post on my blog. That's too bad because all the fun links are there:
http://networkednews.wordpress.com/2009/02/11/no-micropayments-maybe-charity-yes-freemium-news/
Posted by Josh Young on Thu 12 Feb 2009 at 12:15 PM
I'll take a slice of the questions above: "Why do we keep coming back to business models that have failed in the past?" I'd guess that, in micropayment's case, it's because not everyone has given up on the basic idea that news consumers should be the ones to pay for news--and "micropayment model" not only sounds (and, in some ways, is) cutting-edge and savvy, but it also offers a kind of positional compromise between the general assumptions of traditional media (online news should be supported as print news has been, through a combination of reader participation and advertising) and the general information should be free in every sense ethos of the Internet. Many of the recent essays/posts/columns/memos advocating micropayments--Carr's, Isaacson's, Brill's, etc.--are rhetorically rooted not just in the merits of micropayments themselves...but in the more general notion that users should (somehow) pay for the online content they consume.
Which is not to say that the micropayment model is a cop-out, or that it would be across-the-board ineffective. I actually think the model has some merit--not as a catch-all Funding Solution (for reasons that have been well articulated by others), but as one part of a constellation of individual funding solutions that will likely include: endowments, sponsorships, user contributions, traditional fundraising, syndication, advertising, and some combination thereof. That might sound like a cop-out itself...but, truly, the more we talk about funding models, the more convinced I am that there's no financing-journalism silver bullet. More like silver shrapnel.
Posted by Megan Garber on Thu 12 Feb 2009 at 01:08 PM
The problem is that much of the added value of news on the web is specifically related to the freedom of availability. An interesting article will be linked to by others discussing it, insightful comments are in many places accompanied to a link back to that writer's own writings and Google News offers access to compiled accounts and articles from papers you've never heard of. If all the journalism on the web was just newspapers on screen, or even with embedded links, newspapers wouldn't be threatened. It's that putting these articles onlines adds value that paper publications can't replicate.
Ads are actually surprisingly good as micropayments. They reward based on the number of people looking at an article, invisibly to the reader with no security protocols or chance for fraud.
Probably a better bet than trying to shift the direct cost onto the customer, and so adding more barriers to both the news and the paradigms that are coming out of this new format, would be finding ways to add even more value to the news. One form that seems to have stood up so far has been delivering it to portable devices (Kindles, or perhaps an iPhone application?) or consolidating good writing from elsewhere (Google, Huffington Post, etc.)
However, things that were previously subsidized but few people read are unlikely to survive in a popularity-driven environment, no matter what the cause, whereas those who many people disagree with may get a boost (as people read them in order to complain about them and disagree). Only time will tell, but I don't think all the innovative strategies in the world can turn back the clock to the glory days of print.
Posted by Beth on Thu 12 Feb 2009 at 01:59 PM
I'm probably going to get my head shot off for sticking it out of a fox hole here, but I completely disagree with the idea that micro- (or as Shirky prefers) small-payments won't work. I believe they absolutely would work.
First I believe that people understand that there is a difference between the inconsistent social media being created today and serious "enterprise" reporting. I am involved many social networks and consume a great deal blog and other free content, but does it replace my need for informed, well-researched and deeply thought enterprise reporting?
No way. Not even close. If it did, I wouldn't have bought that copy of The Economist last night for $7.99(!). Yes, even though the content is available for free on the Internet.
I understand, and I think a lot of people are with me on this, that serious investigative journalism ("enterprise reporting") requires an investment of capital. Hiring informed people who can write and will spend time researching and finding the untold story costs money. We all get that. While my feed reader is chock full of posts from experienced, intelligent people who are writing for free (or limited ad revenue), it doesn't deliver consistent quality and has huge gaps in coverage. Yes, it's nice from "staying in the flow" and "catching early signs" perspective, but it is not comprehensive and doesn't come close to matching the valuably insightful product that we get from NYT, Economist, FrontLine, etc... From my perspective, enterprise reporting and UGC are not comparable in terms of quality and value. They serve different purposes.
Now, I agree that MSM has experienced "credibility issues" lately because they lost their alignment and ability to deliver the "real" story in some instances. I believe this is because the targets have figured out how to pervert the incentive system such that the media was not rewarded for serious work, it was rewarded for work just interesting enough to hold attention. But the public is getting wise to this and it can be fixed through new media constructs that rely on subscription or small-payment models. That's one of the beauties -- it aligns the interests of the reporter and reader -- but this has been discussed before at length.
i think one of the real causes of the decline in media consumption is the strategic mistake early on by all printed media to make their content available by Internet for free. It's that simple. Granted at the time you had a very fast growing and self-confident technology industry basically shouting everyone down and telling you that it would be certain destruction if they didn't make the content available for free. They're a very vociferous crowd. They hate to pay for anything. But they will, if forced and they find it valuable enough.
In fact, there are some great examples of subscription models that have done very well recently. I know of research firms that sell reports to hedge funds for hundreds of thousands of dollars per year and they're making a lot of money, and by money I mean profit. There isn't much difference between their content and news. They write stories, publish them in PDFs and send them off to clients everyday. The big difference is that their "news" is extremely valuable and their clients don't redistribute it (much). Another example is online subscription databases. I've seen many businesses do very well by simply aggregating valuable information and make it available over the Internet but only by subscription. Granted there are some direct economic correlations that allow the higher ASPs, but again, they're selling information, the same as print media just at a different end of the spectrum. Regular reporting is the same business model, just at the other end: high volume, low ASP. This entire debate is about the elasticity of the value of media.
In fact, the Internet actually makes the publishing model even more profitable. The problem is that high-quality media is afraid to lock the gates and make people pay. If enough news sources did it (e.g. FT, NYT, Economist, Time, Newsweek, USA Today, etc...) the public WILL DEFINITELY notice the drop in quality of information and will decide to pay for that news which matters to them. The problem they have is Prisoners Dilemma: Will some opt out (as Shirky asserts) and take a lower economic reward by ruining the party? How many quality content creators have to retreat to paywalls, small-payments before the public realizes they're left with low-quality free information?
The model of the future is going to be a blend of make certain parts of the content free, enough to draw interest and establish credibility/authority and require payment for the more valuable parts. I'd be happy to preview the first X sentences and decide if I want to pay 10 cents to read the rest of the story. This model is in full effect in lots of ways now: Feedreaders (some authors show first few sentences, but require you to click through to read full story), Magazine covers (summaries on covers drive you to buy whole magazine). And in fact, doing it on a story-by-story basis has A LOT more value to consumers. It's analogous to iTunes, the much maligned, but very successful model that tore apart the CD and is driving economics per song.
Using Web 2.0 technologies can improve the quality of the news (e.g. experienced outsider perspectives on the "standard view") or to increase community participation (e.g. forums, comments, crowd-sourcing, etc...). All of this can increase the value of content to a point where someone is willing to pay for it.
In fact, for great reporters, this could be a boon. Imagine a world where Gretchen Morgensen writes another one of her good financial investigations and 500,000 people decide they want to pay $.30 each to read it? Yes, $150,000! Now imagine she does this five times a year....yes, $750,000. Now imagine the rest of her content only averages $.05 cents but is seen by only 200,000, that's only adds $10K, but the total of $760K can pay her salary and contribute to overhead. If she does it consistently, then her readers can opt into a subscription format if they find their pay-by-the-meal costs are too much. I think this is possible and I think this can be a reality.
Granted, small-payments inserts friction into the consumption process. It will create a value hurdle that media will have jump over in order to drive consumption. But this is a good thing. The outdated media economics that are eroding are jolting a new conversation about how to build value through content again. Good! *Content should be so valuable as to compel payment from the direct consumer.* Many of responses that I read seem like they're afraid to ask the consumer to pay. The media sources that can create this level of value will have a distinct competitive advantage over those sources that continue to rely on 3-way compensation mechanisms (adverts, syndication, etc...). Cut out the middle man and go direct to the consumer -- it's a much more profitable business. Harder, yes, but more profitable.
I think what is happening is an overreaction to the initial appeal of the free end of the content spectrum. Yes, there is a ton of content out on the Internet. But recently we're seeing that free may not be the best model. I've seen a few "crowd-sourcing" or "UGC local-journalism" experiments (aka start-ups) go down in flames. They weren't even close to creating a ton of value for the average consumer. At some point, people will begin to respect and pay for enterprise reporting again. We're going through a cycle here and the question is how do we get back to it.
What I am not doing in this response is defending the "glory days of print". There are reasons why print is eroding and some of it is due to the relative advantages to electronic media. That cannot be reversed. However, it does not follow that just because media becomes electric that it can not be subscribed to.
Someone attacked the iTunes model as only being valid because of "RIAA et al." Well, "RIAA et al." = "laws". Granted, these are very unpopular, but they are we are still a nation that believes in rule of law (yes, even this can be argued). There is a huge alignment between the "information should be free" pirate community and the technology community. Partially because the technology community understands that free content makes their technology more valuable. The free content movement is vociferously attacking any IP laws in favor of a "make everything free" approach. The reality is that I think a lot of people respect that the creation of media often requires significant human investment and that investment should be compensated. Unfortunately this requires sane IP laws which protect the creators right to compensation. Free riders make this necessary. It follows that enforcement is also necessary. Now everyone loves to point to the recording industry as how this runs amuck, but this doesn't preclude a more sane approach with greater fairness. With a sane approach, it can create an environment where content creators are willing to invest more into creating better content -- to all of our benefit.
I don't think the "endowment model" is all that great because at the high-end of the scale, it means rich people will have their hands on the tiller. And at the low-end, what really is the difference between NPR's pledge drives and subscriptions anyways? An appeal to people motivated by emotions to subsidize others' access for free. I don't have a problem with this (I even contribute.) But that doesn't mean it's the only way forward.
I haven't really even touched on the idea that "because it's been tried and it doesn't work". I've heard that a few times before, one was back in 2003-04 when investors hated the Internet advertising companies. Some of them were trading at a value that represented 50% of the cash on hand. Things change in small ways that can have a big impact on the viability of a business model. For Internet advertising it was saturation of broadband and continual improvement in tools that provided concrete metrics to advertisers.
Micropayments are a similar concept. They may not have been viable in the past. They may not be viable today, but I believe they will be viable in the very near future. As the tools develop, the audience grows weary of low-quality information and the enterprise reporting organizations start to defend their value (and create new value), there will be a model for this soon.
IMHO
Posted by Jake Kaldenbaugh on Thu 12 Feb 2009 at 07:04 PM
I think we have to get past thinking that one system of payment or one source will pay for some generic idea of news. Looking at funding models that are based on a specific product of value to a consumer make more sense. Of course no one will pay for generic news when it is free elsewhere. But a specific activity -- like watchdog investigations of how city tax money is spent -- might attract support via contributions, subscription or micro-payments. I'm not suggesting any particular funding method will work, just hoping the discussion will recognize the diversity contained within the term "news" or "journalism" that may bring funding answers for specific types in specific communities. More thoughts at http://tinyurl.com/c6z3en
Posted by Michele McLellan on Thu 12 Feb 2009 at 10:51 PM
I'm no expert on this but I'll weigh in as a lifelong, avid news consumer.
You have two different issues here, the fate of newspapers and the support of journalism. Now, as a lifelong-until-recently subscriber to a daily newspaper, what I paid for a subscription didn't begin to cover the costs of producing the news I read every morning. At best, it paid the transportation costs, plus ink. What newspapers did was print news, via journalism, to attract eyeballs to the advertising. It's been advertising that has paid for journalism all these years, and for television that is still the case.
Nobody ever wept about people getting their TV news "for free" by broadcast. Advertising still pays for TV journalism. I think what web-based news venues need may be to strike a better bargain with their advertisers. That's one option.
Blaming and berating your audience is not a good option. I'd pay for good journalism, sure. But I don't want to pay for a "package" of mostly hackery and fluff put together by someone else, either. That's why I dropped my newspaper, and I am better off for it. I'm more informed, not less. I get more information, not less. I get more context, more background, more analysis, not less. I get wider geographic and ideological perspective on any given issue compared to my reading of a single newspaper.
Let me know when you guys figure it out.
Posted by James on Fri 13 Feb 2009 at 04:07 AM
@Michele McLellan: Thanks very much for your thoughts on this--and for the link to your post (which, everyone, is well worth a read). I posted a response on your site, Michele, but just to keep CJR's readers in the loop...:
"I see micropayment (and its cousin, microfunding—the Spot.us model) as a workable strategy…but only for some for news organizations. For other outlets—for various reasons that others (Clay Shirky et al) have noted—a micropayment model simply won’t work. But the fact that a micropayment model isn’t an across-the-board solution doesn’t mean that it’s not any kind of solution.
That’s one of things I find so valuable about your post, Michele: its recognition that we need to rethink some of the fundamental assumptions we’ve brought to the whole financial models debate. I couldn’t agree more. And those assumptions aren’t merely about the basic framing of the debate, the journalist’s perspective versus the news consumer’s, etc.; they’re also about, I think, the conclusion(s) we expect to emerge from it. Our panic about journalism’s future, it seems to me, is leading us to hope for a kind of financial-model panacea—one magical model that will extend its umbrella over all of us, funding journalism in a way that serves both content user and content provider.
Such a catch-all solution, I hate to say, doesn’t exist. Rather, I think the answer to the funding question will lie in a mixture of several innovative funding models...that news organizations will cobble together in a way that works for them, individually. Which is less sexy, I know, than searching and hoping for a Holy Grail for Funding. But it’s also, as far as I’m concerned, much more realistic, and therefore much more productive in the context of our current conversation."
Posted by Megan Garber on Fri 13 Feb 2009 at 12:50 PM
If there's so much "good content out there for free", as Sullivan says, then why do we think any new payment model is needed? The people who are producing all that good free content must be supporting themselves somehow.
Covering the cost of producing news is not the problem. News is being produced in excess nowadays. The problem is that producers of GOOD content are having trouble figuring out how to make their product outcompete BAD content, when both are equally abundant and equally free. The consumer's ability to distinguish between the two seems dubious.
What news businesses need to do now is educate the consumer. They need to start explaining, clearly and specifically in ad campaigns, why their product is superior. This effort must go beyond slogans and involve concrete examples:
"Our newspaper makes fewer errors than the competition."
"Remember when Network X said such-and-such, and it turned out to be false? We got it right."
"Our competitor devotes X percent of its coverage to celebrity gossip. For the real news, turn to us."
Posted by DB on Fri 13 Feb 2009 at 04:35 PM
Late last January I had been thinking about these issues and submitted some thoughts to CJR. I've copied these verbatim below.
Hi Mike,
I actually hadn’t planned on my ideas being published in CJR. Rather, I was thinking that your group makes the most sense to hear from others on some possible ways to look at the newspaper crisis. CJR has the contacts necessary to see if these ideas are feasible. I believe that the people involved in the newsrooms and in the administration departments of the newspapers are the best to judge. Yet, I have not seen any of these ideas out there, and they might work at salvaging the industry as a whole.
Which is my first part. I do not believe that the actions of any one newspaper (organization) can suffice to lead to a more prosperous future. There has been a sea change in the relationship between readers and newspapers. This relationship is where the solutions can come from inasmuch as I do not foresee my online reading habits changing (I have no print subscriptions).
After reading James Warren’s piece in The Atlantic, it occurred to me that the problem does not lie in the print editions, but in the manner the companies are serving content online. Free online content is key since many people do not want a quick bit of news, but various contrary accounts of the news as presented. Therefore, going from one free news site to the next has become the norm, as I judge from people’s comments on articles. This is a great bonus for the reader, and a possible device to generate revenue for all the newspapers, the big, the middle, and the very local. However, I would also advocate Warren’s idea of raising the print subscription price by adding a “delivery charge” to newspaper subscriptions.
To start with, it is unrealistic to demand pay for content today. Yet, I believe asking for some small amounts of cash is possible. Having an industry-wide system (more on this later) to ask for pennies whenever the reader feels like giving something back for having read something of interest is certainly possible. There are articles, especially breaking news, which make people angry, blissful, cry, and shout out loud. These are the times to ask for a dollar, or even two cents. When breaking news hits, there are thousands, if not millions, of page views. If each person had the chance to feel thankful for receiving this news, many would easily give a dime or a quarter to the paper at that moment.
Yet, this cannot seem to be panhandling. The process must be easy, safe, and fast. As an industry, create a system online where at a touch of a button the reader can debit that small amount of cash immediately. I am proposing a system where each yearly quarter, the newspapers hold a non-aggressive NewsAThon where they request readers to submit a small sum, say ten dollars, in possible donations sometime in the future. These upfront dollars would be usable across the industry so that while I’m reading the NY Times and jump over to the LA Times for more information (e.g. local) I can donate if I wish at both, or neither, with a click of a button. Likewise for smaller, local papers online. However, these NewsAThons should be away from the main page, though with advertising on the main page. My inspiration for this is what was commonplace in museums which asked to please give $10 to enter, or any amount that you wish to give. At least for a time, this system worked rather well (I for one would give the ten bucks).
Will people give money upfront? I believe the newspapers need to educate the public about the situation. When the news goes, people will listen. As Warren accurately stated, without the news organizations’ investigative reporting, people’s insight on events will be greatly diminished. Many people know this now, but most probably have not thought about the implications of reading copy for free. I further like Warren’s idea of having celebs make pitches about the role of newspapers in our lives: many would make videos for free on topics they have read in the news which matter to them. A newspaper or the industry could use TV airtime or simply streaming video to get the message out, most probably during the NewAThons.
Back to the cash donation system for a moment. The devil is in the details, not simply because we are dealing with possible privacy concerns (the newspapers know everything I read and liked!), but also because the possible accounting nightmare this could present. A PayPal type system I believe is too cumbersome and there are additional problems involved with ease of use. Yet, I was pondering a joint venture with Google, whose philanthropic ideas are somewhat to be counted upon. In return for Google’s aid in making this system work, the industry could have a separate though clearly linked page full of Google ads, rent free (at least for a time). With an opt-in system, it is possible to link the topics read in the news to those ads. This may sound very AOL-TimeWarner, but it might be something to float around. Perhaps there are already pre-existing programs for the type of system required – if I remember correctly, Microsoft had some similar ideas but I believe they died at the launch. Regardless, it is necessary for the reader to feel that any money given up front can be returned without undue hassles. I would also think that any money given up front should stay available for a long time, perhaps the length of each participant’s email account. Further, it’s important that there is a “donate now” button to give more cash immediately and an “expand account” button so that a person doesn’t have to wait until the next quarter to add money to the system.
Secondly, there is the matter of copyright. I’m not sure if this takes place today. Yet, this could be used to generate high quality reporting while bringing in revenue for the newspaper which originates a story. Today, news hits in one location and is taken up by everyone else. This is healthy. Yet, if the originator maintains the copyright of the ideas inside of a story (not the basic facts), others who profit from these ideas should pay a royalty. I propose a first day breaking news story royalty of a small sum, thus not stymieing its proliferation. The second 24 hours, however, should come with a slightly higher sum, to continue into the third 24 hours at a higher rate. If a breaking story has legs, the originator should be rewarded. This will encourage better reporting of real news. I would add that the royalty would ensue only if the story turns out to be accurate.
Lastly, I propose shaping content to differing audiences. There are those who want the basic news, those who want more depth of coverage, and those who want red meat. Each audience has a different need of the news, and therefore a different feeling toward paying for content. Low brow news should be free, middle brow should ask for small sums of cash, while high brow content should ask for at least a dollar (no offense intended with my titles here). Those who need to know and those who really desire to know (first) will more probably hand the money over than those who will wait till the other news organizations pick up the story second hand. Here I’m thinking of the many surprising or troubling articles which lead to significant change in our democracy – there are many people who would pay to read these immediately as they are truly important stories. Others will get the info later in secondary ways like their local paper or TV.
Obviously there are many details missing in this analysis. I have further ideas and I would like to flush out these given here. Yet, moving the focus of the newspaper away from the print editions to a clear focus on online content seems to be the best way forward. In general, the idea is to get more readers reading online, and from there generate extra revenue without seeming like the airline industry today. I further speculate that if these trends worked, general ad revenue would increase as the numbers of online readers of various sorts are perceived – those who are willing to pay for “premium” content are surely an attraction for specific companies’ ads. Likewise, those who are just taking a moment to see what’s happening in the world today are a niche for other companies. This, I feel, is the way forward for the industry.
All that said, please let me know if you’d like more info. I would be happy to supply more if you’d find it of interest.
Sincerely,
Patrick Spooner
1.28.09
Posted by Patrick Spooner on Fri 13 Feb 2009 at 11:55 PM
Isaacson's article misstates one of the fundamentals of the business - advertising indeed has historically provided the majority of funding for newspapers and magazines. This is not a "new business model" as he states.
Subscriptions exist to secure a reliable base of readership (eyeballs) in the interest of delivering advertising.
Trade publications have been giving away print content for many years. I'm comped several of them. Many do quite well. The reason? They can hook the right kind of audience for their advertisers.
The answer is not in charging for content. The answer is in creating content that is uniquely appealing to the kind of readership sought after by your advertisers.
Posted by Xavier on Sun 15 Feb 2009 at 08:44 PM
The problem with micropayments is that they (1) provide a disincentive for people to read the news (the more you read the more you pay) and (2) they lead to an uncertain cost that would be incurred in the future. I think most people would use such a system until their first bill arrives and then drop the concept to save money.
Like any tax on consumption, micropayments tend to reduce consumption, which is the opposite of your objective. News should be read, not avoided.
Perhaps a subscription model would be more workable. There the economic incentive is to read as much news as possible to get your money’s worth.
Posted by JLD on Mon 16 Feb 2009 at 01:46 PM
As long as the industry as a whole keeps undermining itself by flooding the market with "free" news, forcing it to seek ever cheaper ways of producing this news and lowering journalistic standards as a result, this downward spiral isn't going to end. The industry as a whole needs to work on dispelling the notion that reporting costs nothing and consumers can get all they need to know for free, or the odd click on a web banner. I'd like to see not just those loudmouth bloggers, but all the PR flunkies and message pushers in government and business spend a month without us so everybody can appreciate the difference between blogs and press releases on the one hand, and professional reporting on the other. Also, sack 3/4 vice-presidents in every news corp. That should cut costs...
Posted by jjf on Tue 17 Feb 2009 at 07:11 AM