Micropayments Won’t Save Newspapers

February 10th, 2009 by Nick Gonzalez

While well intentioned, much of the musing about how to turn around newspaper’s falling online revenues is misguided. Walter Isaacson’s Times article does little more than apply an old model on a new environment. Business models are subjects of their physical and regulatory environment, and online publishing has fundamentally altered the environment that made newspaper subscriptions possible.

I agree with Michael Kinsley, that micro-payments won’t save newspapers.

Newspaper subscriptions were feasible because of the local monopoly newspapers held over spreading the news. If you wanted to know what was going on, you had to buy a paper or borrow one from a friend. Newspapers thought they were selling good journalism, but what they were actually selling was access to good journalism.

The trouble is that online, that control has been lifted. Comcast, AT&T, and Time Warner Cable are the new newspaper subscriptions providing access to millions of online articles. And putting everything behind a pay wall only slows the leak of revenues from newspapers. Journalism becomes free once the newspaper publishes. There are armies of writers and news aggregators ready to re-syndicate any content that’s published (not to mention account sharing). Case in point, the Wall Street Journal’s stories are commonly reblogged. What WSJ has effectively done is price discriminate by charging those who need to be the first to know.

Micropayments won’t solve the fact that information’s natural state online is free. The larger the audience, the more easily the information spreads, the harder it is to charge for. This effectively undermines micropayments for mass media. Looking at Kinsley’s estimate of a $24 million in micropayments for the NYT each year, the revenue doesn’t seem to change the paper’s overall fortune as well.

Tags: newspapers, social media

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