Will micropayments save newspapers–Or, should they be saved?

The collapse of the newspaper business and the efforts to find ways to save newspapers are starting to feel alot like the efforts to bail out the banks; yes, we truly need both credible news-gathering organizations and financial systems, but is there truly a way to stave off the changes leading to the current collapse?

I love news, and I love local newspapers and I love…I could go on and on–but it starts to feel like an intervention with someone who is all too painfully aware that despite their good intentions, they’re continuing to drink–ie, the legacy systems, the ad margins, the physical plants, the leveraged debt–newspaper companies have tons of baggage, that, combined with  shifts over the past 5 years in consumer behavior, are that mill stone around their necks, the 300-lb albatross dragging the shop down.

So, are micropayments the solution?

Walter Issacson, a brilliant writer and magazine editor who went off to the Aspen Institute about 10 years ago after a long tenure at the top of Time Inc, has a story live today called How to save your newspaper that lays out the following argument: Why pay for the cow, if you can get the milk for free, or in other words, giving away free news online is “economically self-defeating.”  He also points out, most wisely, that relying on only one revenue stream, like advertising, is madness (Time Inc’s masterly database and direct mail marketing lists cannot help but leap to mind as I write this.)

So the short version of what Issacson is proposing is that media companies charge for access to content like Apple charges for downloads of music from the iTunes story.  Why not require users, says Issacson to pay, oh, 10 cents or less for each item a reader wants. The catch here, of course, is not putting the payments system in place–ecommerce systems already exist that could be rejiggered or repurposed.

No, there are two issues that stand in the way:
1) Could the famously contentious media industry agree to all install metered gates on their web sites, forsaking bits of their ad revenue as they try to switch consumers to micro-paid content?
2) Would users/readers actually want the established companies content enough to pay?

While we know #1 is unlikely, #2 is actually impossible,  You see, the problem with the current big company media system isn’t only that it’s got debt and an infrastructure that don’t support its costs, it’s the customers don’t care about these brands the way they used to. On one hand, you have news as a commodity, crowd-sourced on Google News, YouTube and Digg, it’s origin buried in a mess of aggregated links.

On the other hand you have mico-niche busineses, all new and web-based, springing up to take the audience and the revenue away. Some of these authors may have started out valuing fame more than fortune, but they’ve now built strong niche businesses that audiences flock to.

  • The Daily Kos? Fella says he made $1MM in ad revenue last year. Plus more $$ from consulting, events, and so on.
  • Talking Points Memo? Just hired a pundit away from the Portfolio and is expanding
  • Liz Smith, Lesley Stahl, Erma Bombeck? Aced by dooce, who’s making money as the leading mommyblogger/essayist, and one of the top 100 most trafficked blogs.
  • BlogHer? Divine Caroline, Glam, Sugar–giving all those in paper women’s sections and soft features a run for their money–and winning.

Huh, Walter, maybe that horse of paid content done left the barn.

Latest Comments

  1. David Cohn says:

    Good thoughts Susan.
    For me it comes down to a third point as well.
    I love newspapers. But when people say “we went wrong when we gave away the content for free” – I almost get angry.
    Think about all the information, the learning, the engagement, discussion, etc that was made possible because this content was freely available.
    Perhaps it was “bad” for newspapers – but was it good for the country? Yes. I’d even go further: It was good for the human race. End of story.
    And of course my personal bias: If people should pay for the news – they should pay for EXACTLY the news they are passionate about and their money should be accountable for that specific story/reporter that they support. Hence spot.us.
    Keep on rocking.

  2. John V says:

    I agree with you, despite Alan Mutter (Newsosaur) suggesting the same thing as Walter just this morning:
    But his commenters seem to agree more with us.

  3. chadrem.myvidoop.com says:

    Thanks Susan
    One thing I’d love to see more newspapers do more frequently is make better use of the assets they could sell, like photos.
    I built http://gamedaymagazine.com and one of its best revenue generators is the hookup with Smugmug.com for selling images from games. While one or two images are often included into an article, there are DOZENS of images taken and they now load these up as galleries for parents and fans to purchase through Smugmug. Smugmug takes a modest and reasonable 15% cut and the rest of the revenue goes to the provider.
    The big papers seem to get this and have purchase options, but I’m amazed at how many smaller papers completely ignore areas like this where they could be generating revenue.

  4. Dean Landsman says:

    Last October a wonderful article about this topic appeared in AJR, written by Philip Meyer: http://www.ajr.org/Article.asp?id=4605
    The forward thinking as well as his look back at insights from quite some time ago are incredible. He also makes corrections on some of his older predictions. For anyone is interested in newspapers and their future, this is a must-read article.

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