Micropayments the answer? I think not...

When considering the issue of micropayments for online news, there are really only two opinions that one can choose from: either you are in support of it or you are not, there is really no middle ground. Those in support of it have mostly likely read How to Save Your Newspaper, an article by the former managing editor of TIME Magazine, Walter Isaacson. If you haven’t checked this piece out, and this issue is important to you, then you are doing yourself a disservice by not doing so. Even if you are against the idea, one should check out this article, which was featured in the Business and Tech section of TIME on February 5th, 2009. Then, those against must also check out the New York Times’ rebuttal written by Michael Kinsley, the founding editor of Slate magazine, in the paper’s Opinion section just four days later.

The Idea – Micropayments

In How to Save Your Newspaper, Isaacson essentially does just that: offers his opinion on how to keep newspapers from going under during these rough economic times. As we have already hinted, his grand idea is the inclusion of micropayments for online newspaper articles, sort of like the payment for a song on iTunes. A great sounding idea on the service, Isaacson presents micropayment as “a one-click system with a really simple interface that will permit impulse purchases of a newspaper, magazine, article, blog or video for a penny, nickel, dime or whatever the creator chooses to charge.” However, even Isaacson had to mention past failures with the micropayment system in order to save his own credibility (such as with “Flooz, Beenz, CyberCash, Bitpass, Peppercoin and DigiCash”). Still, Isaacson maintains that considering the way the online newspaper climate has changed just over the last year, the micropayment system shows room for success now in this field – just as Steve Jobs’ iTunes creation and Jeff Bezos’ Kindle creation have flourished. In essence, Isaacson concludes that if such micropayment systems have already proven effective, and if newspapers are able to keep the prices cheap enough and the process easy enough, then consumers will be willing to pay. And if consumers are willing to pay, then the quality of journalism, along with the incentive to be a good journalist, will exponentially rise.

The counterargument – Why people won’t pay

In You Can’t Sell News by the Slice, Michael Kinsley offers a direct response to Isaacson’s idea, starting off with the simple phrase, “well, maybe.” Kinsley’s main rebuttal revolves around the price of newspaper itself – that is, the actual paper the news is printed on. He argues that, if nothing else, the development of Internet news has removed the costs that newspaper organizations face with paper printing. Furthermore, with those savings, big newspapers – which are now facing more competition than ever from other, smaller sources – should be able to weather this economic storm. To be specific, Kinsley says, “the Times, The Post and a few others probably will survive.” And when that happens? Well the newspaper industry will be as competitive as ever, as advertiser’s options will then be diminished, and the micropayment system will definitely not make sense.

What do I think?

Now while I do not completely agree with Michael Kinsley’s counterargument against micropayments, I do agree that they are not the answer to online journalism’s current economic problem. Instead, I agree with an article by a third voice, Steve Outing, called Forget Micropayments – Here's a Far Better Idea for Monetizing Content. Steve, an opinion writer for the online journal website Editor & Publisher, is a huge supporter of a start-up company called Kachingle. Now, Kachingle’s plan can get a little confusing, so if I lose you during my summary, I suggest that you check out Outing’s article for yourself. Here it goes:

In essence, users will be faced with a choice when signing up for web services (just as when they sign up for internet service itself) whether to “donate” money to favorite blogs, newspapers, magazines, etc. or not to. Either way, all of the websites content will remain available to everyone. Thus, it will be up to publishers (like latimes.com, huffingtonpost.com, even tmz.com) to inform its audiences about the importance of donating to their cause (in order to promote strong journalism). According to Outing, National Public Radio has been successfully operating under a similar plan. And if you do decide to “donate” money to the journalism sites you view? Well then the total amount you decide to put up will be split amongst the sites you have flagged as your favorites depending on how many times you visit them that particular month.

Make sense? It didn’t really to me either the first time I gave it a thought. How could a news organization possibly make money simply by asking for audiences to donate? Well, like Outing, I think you might be surprised by Kachingle’s success in the near future.