Newspapers have traditionally enjoyed huge advertising dollars in the print business. It is no secret that this business model is going away slowly albeit surely. When the Seattle Post Intelligencer went up for sale, reality felt a little closer to home. The 10% issue seems to explain the woes in very clear terms. Even though online penetration of newspapers is usually 10 times that of print, their online revenue is 1/10 that of print. Online advertising is an inherently more efficient marketplace than print advertising -- resulting in advertising rates being closer to their true value. This results in online revenue being unable to offset costs of traditional content creation and distribution. This is in spite of online distribution being significantly less expensive than print distribution. But then, this is usually what happens when there is a fundamental change in business models. There is inertia to change. Employees and employers heavily skilled in the earlier business model resist change. Spending time and resources on a revenue stream that is 10% of the main revenue stream is looked down upon. Besides that, print newspapers were able to charge for the newspaper as well as ads. But online, they can charge only for advertising.This appears to be subject to change.
Of late, some folks have been questioning whether content online should be free. There was even a Daily Show episode on this topic. Read Jon Austin’s column on micropayments for news. It’s long, but you can read a synopsis here. The idea is rather simple. Charge people a few cents (yes 3 or 4 cents) to read any given article. The notion is that people will be OK to pay that little to get to read an article they won’t get elsewhere. The often given argument is – If it worked for iTunes and music, it must work for the news. In the rest of this article I discuss, why this will or will not work.
News content doesn’t get re-read
Music can be listened to again and again. News/articles, not so much. You read once, you understand, you move on. Will you really pay for it? An alternative way of thinking -- this is like taking a sip of milk. If you buy a carton of milk for $3. And if you take a sip a day to finish it in 30 days, that costs about 10 cents a day. If you think of micro paying for an article as consumption as opposed to owning, it could work! But then I’m not sure most people think about it that way.Especially given the iTunes model is owning. You own the music you buy. Would you want to own the news articles you buy? What does it mean?
News gets stale fast
If you wanted to read an article about the US Airways plane landing on the Hudson within 10 minutes of the accident, you get information known at that time. Within a half hour, the news will be that ferries are headed toward the plane and passengers are getting out. Within an hour, the news will be that all passengers got out alive. Now if it were up to me will I pay for each of these stories? Maybe a model where you pay for a stream (where a stream is defined as news stories covering a certain incident) and you get news updates for one single payment may work.Maybe even have updates pushed to me once I register for a stream?
News articles are often forwarded
If I like an article I paid 4 cents for -- and want to forward to someone else. Will they or will they not pay to read? Or will I need to pay to forward it? Viral spread of stories will come to a standstill. Does the news provider really want that? One of the reasons for online news being able to reach farther is viral spread.
Free news and articles
Will free news and articles ever disappear even if some news sources start micro charging for their content. How will micro paid news ever compete with a plethora of free news? How does one reverse commoditization? News has become commoditized. People have come to expect it for free or really cheap. How does one go about reversing that? One idea is to make micro payments really easy to carry out. Now imagine this. A news article that after a paragraph contains a button “Read more for 3 cents”. You click the button and if you are already logged into the micropayment service, you are automatically accounted and you get to read the article. Fairly low friction and 3 cents poorer isn’t a bad state especially if the article is good.
Variety and Opinion
When I read some news article, I follow links and read more about the specific issue. I also read more opinions etc. Even with micropayments being micro, will people ever feel like reading onto other news sources? Or will the need to read other points of view drop off?
The world knows the cheapest news
It's safe to assume that a majority of the population will gravitate toward the cheapest news. The knowledge base of the world will now be news, opinions from the cheaper news sources. This can't be good.
Antitrust
Imagine two news corporations X and Y, both using micropayments for their news. Now X could drop their price a little bit below Y through donations from a certain organization Z in return for favorable articles about Z. This can't be good either.
Policing copyright infringement
What prevents someone who micro paid for an article from copying it onto their blog? Once word gets out, will anyone else micro pay for the original? iTunes had DRM. DRM for news?
Overall, here's my belief on micropayments for news. You cannot charge people to read news that is common knowledge. They just get it from another source that is free instead. However you can charge for news based on information that isn't supposed to be public, or is difficult to obtain, or requires special skills/research to produce, or are so niche that no one is writing about it yet. Also, you can charge for news on upcoming media where free content isn't taken for granted yet. Examples,
1) Investigative reporting
2) Finance news based on models/research not commonly available
3) High risk photography and documentaries
4) Opinion that goes beyond normal talking points
New ways to get the news on the iPhone, Kindle, cell phone could be paid for as well.
Thoughts?
Photo credit, PreciousRoy
