Isaacson's Micropayment Article An Example, By Itself, Of How Screwed Up Mainstream Media Is

from the irony-without-the-micropayments dept

We've already beat up on Walter Isaacson and his ridiculous plan to save mainstream newspapers and magazines via online micropayments, but couldn't resist discussing one extreme bit of irony pointed out by Tim Lee and discussed at length at the Abstract Factory blog: the reasoning in Isaacson's article is so weak, it shows why it's not worth paying for. Specifically, the post notes that Time Magazine published Isaacson's writeup instead of those who actually understand the issue, because he's a part of their "club" (the former managing editor). Thus, Time chose a clueless friend, rather than an informed stranger -- and that sort of thinking is all too common in the business:

When you're a member of the club, your buddies will publish any old crap you write; better you than some stupid professor nobody knows....

I mentioned irony earlier. Isaacson has filigreed the irony with extraordinary precision. His article is inferior to material produced for free online by people who draw their paychecks from other sources (Shirky and Odlyzko are both professors who also work(ed) in the private technology sector). Furthermore, it is inferior as a direct consequence of structural weaknesses of traditional magazines. Despite its inferior quality, it presumes its own superior status by ignoring or dismissing contributions to the discussion which occurred outside of traditional "journalistic" media. Finally, taking that superiority as a given, it argues, poorly, that people ought to pay money for products like itself, because (quoting Bill Gates) nobody can "afford to do professional work for nothing".

In short, Isaacson's article not only fails to make its case, it actively undermines its own case while doing so.

Meanwhile, if you want yet another good argument against micropayments, be sure to check out Charles Arthur explaining how micropayments would turn the web into Zimbabwe.

Filed Under: micropayments, news, newspapers, walter isaacson

Economics Doesn't Work In A World Of 'If Only...'

from the back-here-in-the-real-world dept

We had already explained why Walter Isaacson's "we'll just use micropayments!" model for news wouldn't work, but it seems he's still out there pitching the idea. Clay Shirky did an even better job dismantling the concept, but last night Isaacson appeared on the Daily Show with Jon Stewart to pitch the same ridiculous idea: Stewart called him on a couple points -- noting that once something is free, you can't reasonably flip a switch and start charging for it, and also noting that news is fleeting, while music is a product people hold onto. Isaacson didn't have good answers to either points, other than a basic "if only..." Towards the end, Stewart pitched an equally bad idea (which Isaacson loved) which was that any aggregator would need to pay news publications for sending them traffic. It's the "how dare you help build our readership" business model.

But the really frustrating thing is that Isaacson doesn't seem to have a clue about basic economics (and, at times, news business models). For all his talk about the importance of getting good reporters "paid," he seems to have missed out on the reason we want good reporters to get paid: because they actually do good work. That means doing research to understand the topic they're talking about.

Isaacson didn't do that himself.

Instead, his whole idea is based on the wishful thinking of "if only..." If only the newspapers hadn't started by putting content online for free. Newsflash: they didn't. A lot tried to charge and it failed. Miserably. If only we had a system whereby people could pay just a small amount per article. Newsflash: it's been tried. People don't like it and don't use it. If you want to destroy your audience -- the most valuable resource you have as a publication -- it's a great way to do so. If only journalists could get paid. Newsflash: they do. Journalism has always been paid for via advertising rather than direct subscription fees (which mostly just handled the cost of printing/delivery, if that). It's particularly egregious early on in the interview, where Isaacson says:

"Who is going to send people to Baghdad if always, everything in journalism is free?"

Isaacson is certainly well-respected for his work in journalism for many, many years, but how can he make that claim with a straight face. Everything in journalism is not free. It's never been free. The fact that you might allow people to read it for free, does not mean that "everything" is free. Google gives away "everything" it does for free, and is quite able to make a ton of money. Why? Because it sells the "attention" of its users. That's what newspapers have always done. The difference now isn't that they're giving content away for free. It's that they're not used to competition and haven't done a good job keeping their audience around.

But, the most ridiculous thing is that nowhere in the interview does Isaacson ever give a single reason why people would want to pay for a newspaper. Instead, he just focuses on why newspapers need money. That's not how you run a business. That's not how you come up with a business model in the face of tremendous competition. You don't focus on "we need money." You focus on giving someone an actual reason to pay. Isaacson doesn't do that at all. He just focuses on the need for money, and falsely assumes that tollbooths solve that problem.

Filed Under: daily show, micropayments, newspapers, walter isaacson

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

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

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.

Filed Under: micropayments, news, newspapers, walter isaacson