what ever happened to micro-payments?

with all this talk of the demise of newspapers (and potentially, print journalism), i find myself thinking back to the model of micro-payments (or microcommerce) that has previously been proposed as an effective method for earning revenue from online content (and apparently, more recently in the Times). in theory, micropayment involves charging very small amounts at a time for an online transaction, such as downloading a song or purchasing items in a game. the key, though, is reducing barriers to completing the transaction — such as having an payment account set up in advance, linked to a credit card or bank account. the iPhone, for instance, takes advantage of this model with its App store, and even though iPhone apps aren’t as inexpensive as the payments initially envisioned by the micropayments method, they are often only a few dollars, charged immediately to one’s credit card through a user account which Apple practically requires all iPhone owners create.

app-store.jpg

the benefit of micropayments lies in the ease of accessing content, at low cost to users, while potentially generating significant revenue for content-providers when all those little payments add up (especially given the low cost of delivering content digitally, rather than through offline distribution channels). in addition, micropayments make it possible to earn revenue without relying entirely on advertising, which means content isn’t as dependent on appealing to preferred audiences — or on a secondary market of consumer goods (and such advertising has notably been slumping of late).

for newspapers, however, charging small amounts per article might still not represent a viable solution — unlike a song or an app, an article is more like a television show, something you might want to consume once but don’t need to own. moreover, reading an article online isn’t the same as reading the paper — a paper you can peruse, strew all over the coffee table, easily share with members of your household. so the challenge should be how to charge a modest amount for access to premium online content that is commensurate with its value to the consumer. perhaps very inexpensive subscriptions, on weekly, monthly, and yearly bases would fit this niche — i can see myself paying a few dollars a month to read a website like the NYTimes.com, as long as i know up front what it will cost.

online sources also have to consider how readers access their content — users are unlikely to pay in advance for something they aren’t sure they’ll use. perhaps trial services and subscriptions could address that issue. but it does seem to me that at low enough prices, with instant, easy-to-use payment services, some kind of micropayment system might be a viable way to keep supporting journalism and other kinds of professional-produced content.

writing for TechCrunch, Brian Solis has argued for a Darwinian-like survival-of-the-fittest model for journalism, mobilizing online social networks to cultivate successful individual journalists. this approach might work well for music, television, and other media whose value lies in their consumption, and where there can be niches for different tastes (independent music, for example, can benefit from the low cost of distributing songs directly to fans). but journalism it seems to me is more like research — sometimes you have to support investigation that leads to dead ends in order to uncover important findings. while i don’t want to over-romanticize the role of journalism in a consumer society, i do think there’s a place for investigative reporting that requires new revenue models in a world of digitized media.

 
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