Micropayments: Unlikely, but possible

Isaacson

In Walter Isaacson’s piece How to Save Your Newspaper, he analyzed the declining state of newspapers. Isaacson states that, contrary to common belief, the problem doesn’t lie in the readership, because more people are reading news than ever. With an easier access to news on the Internet, more and more audiences, especially younger people, are reading up now. Isaacson said the problem lies in the fact that less and less people are paying for their news. Years before the Internet, people had to pay to read news. They would either pay at newsstands, in their subscriptions, or at the boxes on street sidewalks. That doesn’t even include where newspapers get the majority of their money: advertising.

However, with the rise of the Internet, news has become free to access and much of the print advertising has gone online. Although people still do subscribe and pick up newspapers from the streets, a huge chunk of the readership has moved entirely online. After all, why pay for yesterday’s news when one can get brand new news for free? Isaacson doesn’t believe newspapers can survive without generating revenue from some other source. He acknowledged the attempts of some newspapers to charge for online news editions, and how none have been very successful. While he admits that charging for news online is the only way to save a periodical, he believes the way it is done is what matters.

Isaacson’s solution to the problem is online micropayments. Micropayments are a way of receiving and gathering very small amounts of money or charge for a service that is used and accessed often and by a lot of people, hence adding up funds to equal a large amount. Isaacson believes setting up micropayments on online periodicals can keep them alive and earning revenue. He said they need to “…come up with an iTunes-easy method of micropayment…a one-click system with a really simple interface that will permit impulse purchases.”

iTunes was really the first to successfully initiate micropayments online. It was especially impressive because, as Isaacson said, it was to the music audience of all audiences, who have more than easy access to free music on peer to peer file-sharing applications. Apple paired iTunes with their iPod products, making it the primary stop for music management. With a slick, easy-to-use interface to shop for music and video, both computer nerds and newbies were drawn to it. At a price of 99 cents a song, a click or two was not nearly as painful as driving out to the store and handing a cashier one’s money away. Although those users could easily download songs for free, the ease of obtaining the exact song one wants in a matter of seconds at a very reasonable price is enough to keep people paying.

Kinsley

In his piece You Can’t Sell News by the Slice, Michael Kinsley says that Isaacson’s plan of micropayments will not work. Kinsley said that even if it does some how happen, it will falter as a method. He figures that the average online reader would ideally spend around $2 a month with each issue costing only about 10 cents. He states that $2 a month per reader, as many readers as there may be, is still not enough to save a periodical.

Kinsley also notes the flaw that incentive brings up. Kinsley argues that most people nowadays don’t pay for newspapers so much for the content as much as they do for the paper itself. Having it in print is still considered more sentimentally valuable and special than online. People pay for print because they like the feel of it and/or the look of it on paper, not because they simply feel they should have to pay for news. Kinsley rather believes that people generally think that news is something that all citizens have the right to know for free.

My Take

Kinsley holds a more realistic view than Isaacson. He believes that most newspapers will die out soon, but some few bigger ones like The New York Times and The Washington Post will survive past the current economic recession. Then advertisers will return and the remaining newspapers will be running again. Kinsley said that some periodicals will manage to successfully transfer business to online, and some may emerge as examples of how to make it in future journalism. He said that at this point, there will be a small number of periodicals, increasing competition greatly, which itself will force newspapers to improve themselves.

Micropayments seem to be the best solution to failing newspapers at the moment. Of course, it would require clever programming and design, as well as universal usage amongst all newspapers. If half of the newspapers used it and half did not, the half that does not charge for news would greatly dominate the other half. If a good application were designed to feature paid, very easy and organized access to all newspapers, then perhaps micropayments would work… for a while.

Like Kinsley said, failing newspapers cannot realistically hope to save themselves off of online revenue, especially if priced so low. However, if newspaper trends continue downward, a large number of periodicals will disappear, and a few strong ones will survive, as Kinsley said. If the case does indeed become that newspapers become scarce and an efficient micropayment system—perhaps one like Rex Sorgatz suggests—is developed and used world-wide, then news will be in a much higher demand. At this point, newspapers can significantly raise their price for news online, while packaging in some attractive extras, perhaps. If all of this is the case, then it is possible for newspapers to run successfully on online micropayments, but it's unlikely.