Feb 11, 2009, 06:21AM

The Macro Argument Over Micropayment

An "iTunes for newspapers," as many journalists are begging for, doesn't make any sense. But at least someone's trying to figure out a new revenue stream for this godforsaken industry.

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Photo by myuibe

There’s been a lot of pundit fervor recently on the topic of newspapers and their uncertain future. There are many hands, here, but the general crux of recent commentary pits an “Information lives free or we all die!” philosophy versus a “Look at iTunes’ $0.99 single tracks!” side.

The fact that micropayment platforms are being debated is in and of itself a good sign. At least people are thinking about monetizing newspapers in ways other than ads, ads and more ads. Everyone knows that newspapers are hemorrhaging/bleeding/evaporating/drying up/falling apart. The question remains: What are we going to do about it?

Steve Brill, a man of, in and from the media industry, lays out the most comprehensive micropayment platform to date. His idea is buffeted by the belief that online ad revenue will simply not be able to sustain high-level journalism. He wants readers to pay small, flat fees of a dollar or two a month; with The New York Times boasting some 20 million unique hits a month, the math is simple and optimistic. But what trips up Brill—and the other iTunes-for-newspapers crowd, such as the TimesDavid Carr—is that the iTunes analogy is a terrible one. iTunes flourishes in large part because you can hear the music for free via MySpace, Pandora, LastFM and dozens of other streaming sites. You know what you’re paying for, already.

Mark Hamilton points out the obvious point that the Internet public looks at dozens, if not hundreds, of sites in a given month or week (or day!). Many of those 20 million unique hits on the NYT’s website are one-offs, skimmers—basically a chunk of the macrocosmic ebb and flow of Internet traffic. These aren’t the people who would pay some $100 dollars a year (a la The Wall Street Journal) for access to a website.

Walter Isaacson, over at Time, recently weighed in on the side of micropayments:

In an advertising-only revenue model, the incentive is perverse. It is also self-defeating, because eventually you will weaken your bond with your readers if you do not feel directly dependent on them for your revenue

There are some excellent anti-micropayment opinions out there, too.

First, Frédéric Filloux, writing over at Monday Note, had this complicating perspective:

In a regular newspaper, popular sections tend to subsidy the less attractive ones—such as politics, business or science. All of these news items are supported, without distinction, by the same revenue system: advertising and copy sales. Once you slice up the content and assign a counter to each component, it becomes a different story: an important article on the state of the national debt will be outranked by a factor of 100 by the latest Brad Pitt gossip. That’s how the world really works, like it or not. The risk is that, at some point, an obscure bean counter will raise the flag on the costs of the financial columnist vs. the celebrity desk, the latter scoring a much higher audience. Slicing up content reveals inconvenient truths that raises obstacles to the pay-per-article model.

Second, Slate founding editor Michael Kinsley had this to say in yesterday’s New York Times:

The Times, the Post and a few others probably will survive. When the recession ends, advertising will come back, with fewer places to go. There will be a couple of surprises—local papers that execute their transfer to the Web so brilliantly that they will earn a national readership (like the old Manchester Guardian in England). Or some Web site might mutate into a real Web newspaper.

Kinsley’s math, which is probably based on Brill’s numbers, isn’t as wide-angled as Brill’s plan. But his larger point is clear: Let the cards fall where they may. I would counter: At what cost? Yes, the Times and the Post and a few other national papers will survive, but Kinsley’s timeline starts with when the economy “recovers,” as vague a starting point as any.

We’re talking about a product. Information. Should it be free? Does the public have the right to information? The Obama Administration is slowly, but surely, upgrading open Government 1.0 as a means to bring actual, legit public information to the public. And yet, it would be hard to argue the fundamental role—however skewed it gets—the media plays in democratic discourse. It is argued you don’t pay for the news; you pay for the paper and ink and the delivery service. You don’t pay to talk to someone; you pay a phone company to connect you. You don’t pay to read The New York Times online; you pay an Internet service provider for the opportunity.

And so it follows that the news itself should remain free.

But the appeal of micropayments lies in its—at the moment—novelty and various supporters. But one paper, even one as big as the Times, isn’t going to do it. The silly phrase “online E-Z Pass” has been bandied about, and what it lacks in clever rhetoric it makes up for in addressing Hamilton’s point. Too many people visit too many sites. If there was a way to drop an Internet toll on subscription-only news outlets, then perhaps the ball would get rolling and a new generation of readers wouldn’t expect a free product from thousands upon thousands of hours of work.

T.J. Sullivan is trying to gain support for his “One Week Without Virtual Newspapers.” Starting July 4, for one week, every newspaper will cease to update its website.  Sullivan sums it up:

A move like this puts the crisis where it ought to be, front and center at the top of every newscast. It makes it impossible for anyone to deny where the majority of news content comes from, and why it matters. For without virtual newspapers, what would Drudge report? What would Huffington post? What would Google News and Yahoo News and all those cut-and-paste blogs that get so much of their material from newspapers have to offer if newspapers went away?
Even if micropayments aren’t the way to go, I support this. The shock factor, the subsequent dialogue—it would be a necessary foundation shaker. As for what happens on Day 8: Business as usual.

  • The solution is not micro-payments, but rather better advertising. And the only way to significantly increase advertising's revenues is for the government to give up trying to ensure that we all have a baseline level of privacy online, and accept the fact that if we're not going to pay for our news or video (which, let's face it, we won't), then we're going to have to let advertisers spy on us more. Perhaps newspapers will put all their content behind a gate, but the gate will lift once you create a unique online identity and (implicitly or explicitly) allow advertisers to track your movements across websites, analyze your iTunes and Amazon shopping habits, and target ads more directly to consumers. And there's also another fallacy in the news-as-iTunes files argument: no matter how fast and easy downloading music is, live music will always be easy to monetize. I don't have any exact figures, but I remember reading that though online music buying is way up, it's not up enough to actually make up for the loss in CD sales.

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  • PS – you should really think about altering your comment system so that whitespace appears. Or at least have a preview and remind people that they need to insert <br>'s if they want line breaks.

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  • Whoa, that's a chilling prospect, and one I hope doesn't come to pass. Face it, the Internet still isn't fully developed for content, free or paid, and the financial panic isn't doing anything to settle it along. I think all we know is that print's dead and rules are being written and un-written for web use. Coming next, the uniform sales tax on all merchandise bought online.

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  • Newspapers also need to get young people interested in news...the ball is in their court in that regard. If the people are interested, they will flock to whatever system of payment or distribution the industry comes up with.

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