Universal Music Group Slapped Down (Again) In Case Against Veoh

Micropayments For News Represent A Huge Opportunity... For The Smart News Org That Avoids Them

from the that's-how-you-fail dept

Fri, Feb 6th 2009 2:58am — Mike Masnick

We just went through how dumb it was for newspaper folks to keep on insisting that they need to start charging, so I almost skipped this one, but a bunch of people have been submitting Walter Isaacson's laughable plan to save newspapers: micropayments! I thought we'd done away with that last month, but Isaacson gets attention, so let's end this once and for all, and explain why micropayments for news won't work. I can go through all the basic arguments about mental transaction costs and the cost side of managing micropayments: but there's an even simpler answer.

If most newspapers switch to micropayments, someone much smarter when it comes to business than Isaacson will create a new news site that doesn't charge. And they'll make it high quality, and they'll be able to make money through other means. Hell, it will be easier because all the fools who follow Isaacson and others in demanding payment will take all the competition out of the market.

These old journalists may know something about the inverted pyramid and how to put a news story together, but they might benefit from an economics class on how competition works when it comes to pricing. In the meantime, you just know there's a smart business guy out there, just drooling over the prospect of these old line media companies destroying their own businesses.

Oh, and one final point: just as in the article we saw yesterday, note that nowhere does Isaacson talk about giving people a reason to pay for the content. He just assumes they will. I'm sure the buggy whip makers expected people to keep spending money on buggy whips as well.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: micropayments, news, newspapers, walter isaacson

23 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Anonymous Coward, 6 Feb 2009 @ 3:18am

why on earth would anyone pay for news when it is free in so many places. DUH!
[ link to this | view in thread ]
yogi, 6 Feb 2009 @ 4:28am

Just sayin'
"why on earth would anyone pay for news when it is free in so many places..."

not to mention: biased, slanted, not true or only half-true, never tells you the whole story, is based on false assumptions and a world view that does not include ideas like truth, objectivity, integrity, professionalism.

Yeah, why would anyone pay for such a product??
[ link to this | view in thread ]
MadJo (profile), 6 Feb 2009 @ 5:43am

Re: Just sayin'
Given that most newspapers nowadays aren't exactly the bastions of truth and investigative reporting they once were (purported to be), what's the difference between the 'free' news and the news you pay for?
[ link to this | view in thread ]
Phillip, 6 Feb 2009 @ 6:43am

Re: Re: Just sayin'
There isn't a difference. Oh, and just so you know: The newspapers were never bastions of truth and investigative reporting. A quick look at your history book will show you that.
[ link to this | view in thread ]
Griff (profile), 6 Feb 2009 @ 7:22am

Maybe not now, but...
Once the last non free news source is gone, people may realise there are hardly any paid reporters any more. It is one thing for the Huffington Post to offer to pay a few dollars for some high profile blogs and fund it with ads. It is quite another thing to cover an overseas reporting staff.

Much as people sometimes imagine otherwise, we could not get our daily news fix from amateur bloggers alone.

I used to use avantgo on a cheap PDA to carry content round with me. If I could have my only personalised mix of daily news and weekly analysis articles aggregated onto my Palm in one morning online burst, I would actually be quite happy to pay for the convenience of that. And they could make a free version with ads to stop the "smart guy" in the this article wiping them out, but on my small screen those ads would piss me off bigtime. Note that my PDA did not need to be online or even have a true browser.

Yes, I can read news for free on my laptop, (and a lot of mags I subscribe to as well, buyt I still subscribe). Why ? The times when I want to read news are not always the same times that I am in front of a laptop. That is what magazines and newspapers offer over websites. Portability.

I may not have to pay for content any more, but I will pay for the convenience of having it delivered to me in a useful fashion.
[ link to this | view in thread ]
TravisO, 6 Feb 2009 @ 8:14am

Micropayments would be for old news, now current
It seems most commentors assumed this applied to current news. And in that case they are correct, nobody would pay for news that way because somebody else was giving it for free. The smartest place to use micro payments is for old news. Many sites already charge for old news on a subscription based system, but instead they should move to a micro payment system where you pay a trivial fee for old news archival.

It's a niche use scenario, but I've come across a couple times where I wanted an old article, but the $3+ cost wasn't worth the effort.
[ link to this | view in thread ]
Mia, 6 Feb 2009 @ 8:16am

Couch writing
Most of these bloggers are Monday Morning Quarterbacks. Meaning they aren't doing their own investigations. They are searching the web looking through credible sources, like newspaper websites, to formulate their opinions.

Good journalism costs money. It's not free to send reporters to cover our troops spread throughout the world.
[ link to this | view in thread ]
Peter, 6 Feb 2009 @ 8:36am

Convince me and make it easy
Rule 1: I will pay for something that is of value that can't be obtained from elsewhere for cheaper.
Rule 2: Don't forget that time=money.

I pay for Kindle books because I value the convenience of carrying 10 books around with me, since I like to read. Wireless delivery of those books is the killer feature. Can I get some of those books for free? Sure, but I don't want to spend time(hence, money) looking for them. But I do occasionally download free ones available from places like Project Gutenberg etc.

Can news organizations provide enough value for me to consider paying for it, given the possibility of aforementioned smart businessman making stuff available for free? That's the crux of the matter. Run-of-the-mill news stories won't cut it. Maybe editorials or opinion pieces? Not sure.
[ link to this | view in thread ]
Anonymous Coward, 6 Feb 2009 @ 9:15am

the day is coming
Seriously!! News from Bloggers??? Are you kidding? To get actual news stories you have to get out of your chair, interact with the public, and then write an intelligent paragraph that people actually want to read. I don't see bloggers doing any of that. All they do is go find the actual news stories and reconstitute it.

You may not like it but you need real reporters, even if you don't think they are telling you the truth, the whole truth and nothing but the truth, to go out there and get the stories, and that cost money.

Seriously, you want to rely on bloggers and the public to generate the news? Come on, no one is that stupid.
[ link to this | view in thread ]
ehrichweiss, 6 Feb 2009 @ 9:18am

Re: Maybe not now, but...
Have you been out of the loop for the past 20 years or so? Name a single newspaper in that time that actually pays a reporter overseas. There's TONS of television reporters overseas but there's just no real need for each newspaper to have a reporter there, they typically just borrow from the other media and report on that. Isn't that obvious?

Then there's the free newspapers and their umbrella organizations that do happen to cover the stories you're referring to. AWN and ANN come to mind here.
[ link to this | view in thread ]
ehrichweiss, 6 Feb 2009 @ 9:24am

no it isn't
There are already organizations setup to find news stories and they're NOT the AP or bloggers. You need to be an insider to know the newspaper business and how the flow of information really works but suffice to say that if the AP and all paid newspapers were to die off tomorrow, you'd still be getting your news from paid reporters who go out and actually investigate. Free newspapers do get real news, you just don't know about it cause their markets are often saturated with the for-pay papers that they run the alternative stories.
[ link to this | view in thread ]
MediaSlackers, 6 Feb 2009 @ 9:32am

Why would I pay for crap?
Why would I pay for crap when I could get free crap? Why is it that these large industries, bloated with years of consolidation, conglomeration and cutting out and pushing down the little guy, have found themselves too large to adapt and now blame their customers? Much like the music industry and Hollywood, the newspaper industry failed to adapt and now wants to change the rules of the game, without knowing how to score!
[ link to this | view in thread ]
Peet McKimmie (profile), 6 Feb 2009 @ 9:40am

Re:
To get the added value content, of course!
[ link to this | view in thread ]
Mike (profile), 6 Feb 2009 @ 11:38am

Re: Micropayments would be for old news, now current
The smartest place to use micro payments is for old news. Many sites already charge for old news on a subscription based system, but instead they should move to a micro payment system where you pay a trivial fee for old news archival.

Actually, I disagree. Techdirt, for example, gets significant traffic to our archives. If I blocked that off with micropayments, there's no way I could envision making up the cost of lost advertising through micropayments.

You'd kill off about 25% of your traffic off the bat.
[ link to this | view in thread ]
Francis, 6 Feb 2009 @ 1:36pm

Lost me as a customer
When the NY Times started charging for access, I switched to the Washington Post. When they stopped charging, I didn't go back.
[ link to this | view in thread ]
Mel Baker, 6 Feb 2009 @ 3:42pm

Micropayments YES!
How exactly are micropayments different from paying for a newspaper, magazine or other printed content?

Readers who say they won't pay for content are - from this working journalist point of view - little more than thieves.

Would you feel equally comfortable with lifting a magazine from the newsrack while the clerk wasn't looking?

It's time to grow up and realize that real people create the stuff you're reading and they need to pay the rent just like the rest of you!
[ link to this | view in thread ]
Mike (profile), 6 Feb 2009 @ 3:48pm

Re: Micropayments YES!
How exactly are micropayments different from paying for a newspaper, magazine or other printed content?

First of all, as has been detailed repeatedly, most publications are *not* paid for by the readers. Those cover the physical printing costs, but that's about it. The money has always come from advertisers.

Also, you could get away with charging for a *physical* product because there's real scarcity there. In a competitive market, where there's no scarcity, basic economics (i.e., reality) says you can't charge.

Readers who say they won't pay for content are - from this working journalist point of view - little more than thieves.

Really? Pray tell, what was stolen.

You read this article for free, and thus, by your own warped definition, you are a thief.

Would you feel equally comfortable with lifting a magazine from the newsrack while the clerk wasn't looking?

Don't be an idiot. That's a SCARCE product that would then be lost. That's not the case with content online.

It's time to grow up and realize that real people create the stuff you're reading and they need to pay the rent just like the rest of you!

Honestly. For a working journalist, you should try READING sometime. No one said that there aren't models to get paid. In fact we've been detailing them quite a bit. The point is that getting paid by micropayments DOESN'T WORK no matter how much you wish they would.

I *am* a grown up and I understand economics. I would suggest that rather than whining, you take an economics class or two before telling others to grow up.
[ link to this | view in thread ]
Balaji Viswanathan, 12 Feb 2009 @ 8:28am

What is the revenue source for the small news org?
I'm an engineer, not a media person, but I don't accept your argument. There are some stuff in main media that blogs and small media can replace, but what about those field reporting, interviews and unique stories? They are far and few, but still exist and I dont think small houses will get the scale to do them. And if the small media houses do get to the field in Baghdad or Congo, would it expect its quality journalists to report fair and "free"?
[ link to this | view in thread ]
Niall Hosking (profile), 16 Feb 2009 @ 9:28am

Re: Just sayin'
Well, let's see. The BBC for one? It is supported by the licence fee paid by British TV viewers, and is seen as one of the best-quality news services in the world. So given that this is 'free' for anyone not in Britain (and already paid for in my eyes by my 'right' to watch TV at home), how can someone charging $1 an article or some substantial fraction of this manage? Unless there is some substantial additional value added (Commentary, Guest Speakers?) then unless the payments are VERY micro it's just going to fall over compared to free+quality.

Look how a lot of software vendors go with Linux distributions. The software itself is free, but additionals like support aren't. Value is being 'added' by the vendor in order to compete with the essentially free and infinite quantity of the product. Similarly, some bands are giving away copies of their CD at a gig (the printing cost is negligible and easily covered in the ticket price) but making the money back in not just ticket sales but tangible products.

So maybe if the news companies looked into how they could create value with what they can add to the 'news', they might do better, rather than charging for 'distribution' (a model based on scarcity and cost of production). One option might be finding some creative use for their archives, and charging for access and some uses of those.
[ link to this | view in thread ]
Someone, 20 Feb 2009 @ 11:39pm

Isaacson? Are you serious?
Why would anyone take Isaacson seriously about ANYTHING having to do with 21st century media? This is the same guy who, when he was still at TIME, told Don Imus that TIME wasn't threatened by the internet... and would still be being printed, on paper, in one hundred years. So, yeah, let's listen to him, he's been so prescient.
[ link to this | view in thread ]
Bill, 22 Sep 2009 @ 7:31am

Micropayments
The point is that getting paid by micropayments DOESN'T WORK no matter how much you wish they would.
advertising is essentially a micropayment system and it works.
[ link to this | view in thread ]
Adrian Courage, 4 Oct 2010 @ 6:49am

I just Flattred this for the sake of pure irony
Long live Mmicropayments!
[ link to this | view in thread ]
Chester, 8 Mar 2011 @ 7:56am

Re:
Simple. Because it's f'ing easy and users would get quality. When I was 20 I could spend hours researching songs and getting free music. After age 30, I would rather just pay 99 cents for a handful of quality songs I wanted and can download quickly with no hassle. So, you are correct, certain profiles will have time to research and get it so many places for free, but they would miss the real deal of quality on WSJ and NYT as examples...

Just my 2 cents. Time = Money.
[ link to this | view in thread ]