Pay a small toll to read this news story
There is nothing like the threat of a hanging to concentrate the mind.
The newspaper industry is in a collective panic over its future. The debate centers on the thorny issue of how publishers might find some way, any way, to make online readers to pay for what they read.
The fear is that the newspaper business model has suffered a mortal wound from the collapse of advertising that once funded it, and which has only accelerated in the current economic environment. Or perhaps it’s the realization that younger generations reared on digital media will never settle down to buy print.
This crisis has forced leading publishers and pundits propose all manner of last-ditch business strategies or glitzy technical solutions to cut off the abundant supply of free Web news undercutting their business models.
Print newspapers are limited by space on the page and the boundaries of physical distribution. But the volume of online news seems almost infinite and most of it is free.
Online readers are like butterflies fluttering from place to place. Very few pay directly for anything they read.
The dilemma is that if one Web publisher charges, users click elsewhere. It would take a general agreement among publishers to stop giving away their news for free to make charging for news on the web work widely.
A U.S. Congressional committee has been considering suggestions that the government relax competition barriers to let publishers cooperate in charging for online news, or perhaps offer them an educational, non-profit status.
Rupert Murdoch raised industry hopes last week by declaring that News Corp was studying how to make readers pay for reading news online and that News Corp would experiment with ways of doing so over the next 12 months.
One solution Murdoch is considering is micropayments, a kind of technological “silver bullet” that would allow publishers to levy a small charge per story on readers.
He’s vague on details, and until we know more, it’s hard to say how likely readers of the Sun or the Times in Britain would be to pay by the item.
However, paying by the item might work if the increments were small, like the cost of a text message, say 10 pence a story. Making consumers fill out endless forms and remember all their passwords won’t work either. Far better to figure out how to charge on a monthly bill, say through one’s broadband or mobile phone supplier.
Like the cost of phone calls, the individual cost of the article wouldn’t cause a fuss. It’s the ability to manage the overall monthly bill that would stop consumers from becoming frustrated.
Another alternative might be a subscription television model where readers might pay a single fee for access to 500 channels.
Murdoch is echoing former Time magazine editor Walter Isaacson who sees micropayments as a way to enable an electronic marketplace that trades all forms of media production, from professional journalism to user-generated video or blog posts.
Isaacson sees lessons for the news business in Apple’s iTunes or its iPhone Internet phone that has millions of users paying for music, movies, TV shows, software or games for a few dollars or pounds at a time.
The problem of micropayments isn’t technical. It has to do with the fickleness of news consumers in a world of abundant free content. It’s difficult to make potential readers appreciate the value of any particular news story before they read it.
But the newspaper industry must find a way to make work one or several of these proposals to make consumers pay for online news. The alternative is to accept that newspapers have had their day.
— At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund —