Micropaments might not save all, but writers should be compensated for their work. Who do you think pays them?

The Situation

It is not a secret that many newspapers around the country are running into financial problems. Layoffs, decreased circulation and cutting back from daily versions are only a few of the consequences that many organizations are feeling not only because of the recession, but because of the way Americans have taken up as their method of receiving the news— free online newspapers.

Since the newspapers began updating their own news sites, people across the country have been logging on and reading. A faster and more easily navigated version, online editions have been slowly—but surely—pulling subscribers away from the hard copy.
By doing so, readers are causes news organizations to lose money in subscriptions and advertisements.

The biggest advantage is that it is free. Anyone with a computer and a web provider is able to log on and read the daily news without paying for a subscription. Though some publications, like The New Yorker and The Chronicle for Higher Education, charge a small fee to enable readers to see online content, this is definitely not the norm.

By putting news on the web for people to read for free, news organizations are losing money from a decrease in hard-copy subscriptions and in advertisements.

While some people say that they will always prefer the smell of newsprint and the authenticity of holding a hard copy, and ill continue subscribing for as long as they can still read, many are making a permanent transition to online newspapers. It may seem as though his might just mean the end of paper copies of the news, the reality is that the money lost may kill its presentation online as well. The age of the paper may be on its way out.

Micropayment to the rescue

For Walter Isaacson, a former managing editor for TIME magazine and current CEO for the Aspen Institute, the solution to this problem is simple: micropayments.

In “How to Save your Newspaper,” his Feb. 5 article in TIME, Isaacson explained that though readership is up, the newspaper crisis has reached “meltdown proportions” because revenue come from advertisement, subscriptions and newsstand sales. With more people getting their news for free online than are buying copies, according to a Pew Research Center study, these numbers are going down.

To make matters worse, he says, the recession is causing the amount of what money the online version does make to decrease. Online advertisements — the life-blood of Web news — seriously declined during the end of 2008.

Isaacson claims that many people “piggyback” on online journalism, making money off of it. Internet providers charge money to log on and read free content, and search engines, portals and aggregators make money off of advertisements, he explained.

Another problem with online papers receiving revenue from advertisements is that journalists put out stories for advertisers, not for the reader. By charging for online content, the writer is forced to shift back to writing for the reader — to keep the reader engaged.

Isaacson cited online subscriptions as a way of supplementing revenue, but says this is not the best answer. Instead, he says that micropayment is the way to go. Micropayment lets newspapers, magazines, blogs and other online services charge a small amount of money for users to access content. For instance, an online newspaper might charge a reader five cents for an article or 10 cents for the day’s full edition.

Micropayment makes it quick and easy for users to “click and buy,” Isaacson says. He says that most people will have no problem paying a few cents for the day’s news.


Online content might not be so bad

Michael Kinsley, the founding editor of Slate magazine, disagreed with Isaacson in his Op-Ed response “You Can’t Sell News by the Slice,” but not on the grounds that micropayment is inherently bad.

Instead, Kinsley says that online news is not killing the newspaper, but is, in fact, helping company’s that put out papers. He explains that readers have never paid for content, but have paid for what the words are printed on. He says that newspapers actually lose money on the printed edition because of the cost of paper, ink and delivery. He claims that the reader is doing the newspapers a favor by reading content online.

In theory, Kinsley says if newspapers went exclusively online, they would cut down on enough distribution and publishing costs to make a profit. He also says that with many news organizations around the world printing English-language stories online, there is more competition and, thus, better content.

And, he says, even if online newspapers started charging for content, the amount they brought in would not come close to matching the amount brought in by circulation.


“Mental transaction costs”

Clay Shirky, who has written for the Wall Street Journal and the New York Times, argues that micropayments cannot work. In his article “The Case About Micropayments,” Shirky cites a little thing called “mental transaction costs,” a process in the human psyche that has people evaluating “the energy required to decide whether something is worth buying or not regardless of price.”

He says that it doesn’t matter whether readers are being charged two cents or $200, they won’t be willing to pay any amount for some things.

Writers need to be compensated ... guess who pays them

Shirky does have a point when he says about some people having anxiety or down right stubbornness when it comes to paying for something you feel you should have to pay for. And Kinsely brings some interesting information to light about the real costs of the hard copy of a paper.

But ultimately, many people who support news organizations will be more than happy to pay a few cents in order to read a story. People can see the value in he journalist’s hard work behind each story. And while micropayments will go to the news organization and not directly to the writer, people must remember who pays the bills!