Nearly two years ago, our Rowdy colleague Jon Austin did his damnedest to fix the newspaper industry. (That remains, to date, the longest fucking thing anyone’s ever written on this site, which is quite an accomplishment, now that Lambert’s on staff.)
Part of Austin’s solution revolved around implementing a system for micropayment. Rather than rehash, I’ll simply republish his own words, ad nauseam, sans guilt:
To survive this inflection point (which is a far-from-certain-thing; how many buggy manufacturers made the jump to automobiles, after all?), news providers need some way to capture revenue from their on-line readers who ain’t buying the cow today because they’re getting their milk for free. The all-you-can-eat monthly or yearly subscription model doesn’t seem to work so the solution is…
A micropayment scheme is one in which tiny payments – for purposes of this discussion, let’s assume less than 25 cents, but a purist would say a micropayment is less than 1 cent or the smallest denomination of local currency – flow from a buyer to seller. These tiny payments are insignificant on an individual basis, but aggregated add up to real money.
Here’s how it might work for newspapers; consider this snapshot of Thursday’s Star Tribune homepage:
Today is a pretty typical news day here in the Twin Cities and there’s the usual mixture of breaking news – the Oscar nominations, the SUV kamikaze run on Planned Parenthood, new unemployment numbers and the AG’s lawsuit against Allina – and features like the skyway for sale and Sid’s column. In today’s world, all this content is free to users.
In a micropayment world, however, click on the link to any of these stories and a tiny, variable payment would flow from user to provider. The skyway story costs 1/10th of 1 cent. The unemployment story is 3/10th of a cent, Sid’s column is 1/2 a cent (and overpriced at that), reading about the Oscars will set you back a whole penny, the SUV story is 2 cents and the Allina story is 10 cents (more on why later). In the micropayment world, a user hitting all of these stories might send 13.9 cents to the Star Tribune‘s achingly bare coffers. No logins necessary, no extra steps, the transaction creates very little friction to the current point-and-click process (see below for a longer discussion on this point).
Less than fourteen cents probably wouldn’t have paid for Sid’s coffee back when he started in the news business (actually, I think it was the price of a steak dinner back then), but is it really relevant in today’s world? You betcha. Remember those stats way, way back at the beginning of our story: 14,000,000 unique visitors per month at the NYT, fast-growing MSM web sites, etc; even little numbers are meaningful when multiplied by big numbers.
A few months ago, the giant of the online payments business, eBay-owned PayPal, introduced a system for processing micropayments for “digital goods.” That’s a start, particularly for smaller-time publishers who don’t have and can’t develop their own custom systems for processing online payments. But when the pricing model is set at “5 percent plus 5 cents for purchases under $12,” that’s not really going to help in the rather plausible situation Austin lays out above. Those micropayments aren’t micro enough.
That’s not to say the PayPal system is without purpose. After all, iTunes has made a not-so-cottagey industry out of charging a buck a piece for most of the content it sells, and in a similar situation, this PayPal system would provide a rather frictionless transaction.
For journalists and their news outlets, there’s an intermediate step, though, between the current “full payment” system of buying books or newspapers or even subscriptions and this fraction-filled world of truly micro micropayments — and it’s not far from what Apple and iTunes have done for the music industry: Kindle Singles.
Literary works of fiction or well-reported acts of journalism, these standalone stories represent “compelling ideas expressed at their natural length,” according to Amazon. Priced between $1 and $5, and usually clocking in at about 5,000 to 30,000 words, Kindle Singles present a significant opportunity for forward-thinking publishers.
Subscribing to a magazine, for example, is quite a commitment (if you’re like me, you’re compelled to read each page of each issue that comes through that mailbox), and unless I’m stranded — almost literally, like in an airport — and have exhausted all other reading options, the times are rare in which I’d actually purchase a single issue for $3 or $5 or $7. But for $0.99, I can get exceptional, magazine-style news reporting — like this, from ProPublica — and that’s a much easier pill to swallow. And even though I’m “getting less” — just one story — I feel as though the money is better spent because I’m not paying for all the other stuff that would normally surround a magazine feature story and, more so, I know my money is being directly attributed to the quality of this particular story. My purchase rewards behavior I’d like to see more of.
Harvard’s Nieman Journalism Lab (one of the most fascinating inside-the-media-game sites you’ll ever see) has a great piece dissecting ProPublica’s approach to single-story sales. This is encouraging stuff, though it raises another question to be tackled another time: Why is this sort of innovation — iTunes for music, Kindle Singles for words — so often driven by previously disinterested hardware manufacturers?