Micropayments datapoint of the day

By Felix Salmon
November 12, 2009
Joe Brancatelli reports on airline fliers' stubborn refusal to pay even a nominal sum for wifi:

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Joe Brancatelli reports on airline fliers’ stubborn refusal to pay even a nominal sum for wifi:

Passengers “want to be connected, [but] they want it to be free,” Doug Murri, Southwest Airlines senior manager of technologies, told a group of airline and entertainment executives this past summer. Alaska Airlines, testing the same satellite-based WiFi system as Southwest, reports that passenger usage plummets when it charges a fee. The higher the fee, the faster the decline. “Even when we charge $1—and we did try $1—we see a drop-off in people willing to pay,” Alaska Airlines executive Craig Chase recently told the Wall Street Journal.

There’s a lesson here for anybody wanting to put a paywall around their website. Fliers are perfectly happy to pay $7 for a copy of the Economist to read on the plane, or even $4 for a copy of People magazine. And I’m sure if they spent their flight on the internet they would claim to value that experience at least as much as the experience of reading a single magazine. But getting them over the hump of paying anything at all for web content is still turning out to be all but impossible.

6 comments

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Well, I think it might also be who is selling it in this context. With the exception of Southwest, you have already been nickel and dimed for everything on the flight. Deciding not to give the airline another buck for something that will possibly be as crappy as the ham sandwich they wanted you to pay $10 for is probably easy for most passengers.

Consider someone who pays $20 a month for 4 weeks of 40 hours of internet usage. That works out to 12 cents an hour, surely something more in the bundled goods category than an independent profit center. Not that many will buy a magazine, but those that do will have it or redistribute it over a longer period.

Posted by Lord | Report as abusive

OK, so I am not the techiest person on the planet. And OK, so I am attached to the old-fashioned idea that on the plane, I CAN’T HEAR YOU, WORK-RELATED STUFF, LA LA LA, so I would not have a burning, indispensable need for connectivity in the air. So if I heard that someone else on the plane was going to pay even $0.10 for wi-fi, I’d probably just take a flyer and see if I could piggyback for free.

Posted by SelenesMom | Report as abusive

It’s a similar situation with hotels: the more expensive the hotel, the less stuff comes free. Most hotels I’ve stayed at that cost $500+ a night wanted $20+ per day for internet, or didn’t offer internet at all (London – you had to try and grab some BT openzone from a phone box in the street below).

And then there’s the problem of buying a pig in a poke. Last time I bought internet access in a hotel, it was in Amsterdam when I was coming back from speaking at a software industry conference, and naturally there were a bunch of other speakers also staying in the hotel, all getting various flights the next day. So, I signed up for 24 hours of Swisscom’s highest tier product, I think it was advertised as having a 512MB upload limit, notionally unlimited download, at up to 4Mbit/sec. In practice, I was lucky to get better than 20KB/sec (~160Kbit/sec) that evening, though. Technologists do like their internet. Tethering using my phone would have been faster, and cheaper if I had had the right SIM with me.

So there’s the combo: bean-counters who charge for something that really ought to be taken for granted in the civilized world, like electric lights, power sockets and indoor plumbing, combined with third-world level infrastructure investment based on outdated usage model assumptions.

Charlie Munger has called the loss of newspapers “a national tragedy” — media is vitally important in many aspects of our lives and media must be monetized or the world will be worse.

When it comes to monetizing content, the ones who must be involved, as I see it, are the Internet Service Providers.

They ought to be forced to split their revenue something like 50/50 with content providers since content providers are mainly what drives demand for their product. Or else an ISP surcharge of like $30 or $50/customer per month. ISPs are a utility, rendered indispensible by the content providers. All other utilities are regulated. We are presently charged peanuts considering that in the Internet we have continuous access to a resource hundreds of times greater than the Library of Congress.

On the other hand, does that mean that big new revenue streams would go to smut peddlers?

Better just divide the bounty among *media* sites according their popularity or some version of traffic ratings.

Who else is gonna pay the big bucks for reporters on the ground all over the place? First-hand reporting…

Posted by Dan Hess | Report as abusive

Dan, how in the world would you split that money from ISPs up? Would every webmaster get .000000001 of a dollar? There’s a lot of webcontent that isn’t journalism, and a big number of people never look at news online.