Mathew Ingram has a post over at The Nieman Journalism Lab asking if micropayments are the holy grail or a dangerous delusion? I think the answer is obvious.
Micropayments will not work for news. Why not?
- I don’t believe there is a market — News is one of those things that I think macropayments make a lot more sense for. There are certain news outlets that I value a lot more than others. I suspect I’m not alone. The issue isn’t that people aren’t willing to pay for news-related products, but rather the issue is that it will be tough to get people to pay for a product that has been free for years. How about we try creating new products that have never been free? My guess is that we’ll have much better luck selling people on these. Instead of trying to sell micropayments of throw-away stories, why don’t we try to create macropayment products that add value to our ad-supported content?
- Transaction costs — Yes, Apple makes money off of micro transactions on the iTunes store and does sell songs for $0.69-1.29. First, there is a huge difference between selling a song for 99 cents and selling an article for 3 cents. And that’s assuming that an individual article is worth 3 cents (many articles I’d say have zero value, while others are worth a bit more than 3 cents). But beyond that there is something journalists have to realize; Apple wasn’t making money off of 99 cent transactions. Credit card fees can easily be 25 cents a transaction. Add in giving labels more than half, bandwidth, etc and that doesn’t leave profit. That’s why Apple begun bundling transactions and billing people less often. If I bill you weekly, I’m much more likely to make a profit than if I bill you daily. Also, Apple’s iTunes store sells more lucrative content than individual songs: movies, applications and even complete albums (in fact, Apple and music labels would much rather you buy full albums). Beyond that, Apple makes monster margins off of the iPod and iPhone. Apple doesn’t need to make money off of the iTunes Store, but if it does, well that’s just gravy. Without a physical device like an iPod to carry profits, how exactly are micropayments going to work for news organizations?
- It can’t be piecemeal — Let’s assume that micropayements are A) going to happen and that B) people would be receptive to them. Even if I were down with micropayments, I wouldn’t be down with a different micropayment system for each news site. If I can’t have one account that follows me around the Web, it’s no dice. There is no way in hell that I am going to register and put my credit card info in at every single news site that I visit. I’d only agree to this if a trusted third party (perhaps Google) created a system that kept me logged in while I was surfing the Web. When I came to a piece of content that I wanted to purchase, I could easily do so. No fuss, one bill.
- It would have to be effortless — The beauty of the iPhone is how effortless it makes it to buy applications and songs. If the buying process were a big ordeal that required me to type in my address, credit card info, etc, I’d almost never use my iPhone to purchase content. But I do. Why? Because it’s effortless. The same thing with Amazon.com’s 1-click buying. It’s just a great shopping experience. Which begs the question: When have news organizations ever had great consumer experiences? Have you seen there online classifieds lately? It’s embarrassing.
- In sum — I think micropayments are a bad idea because A) consumers don’t want them, B) they present serious technological hurdles and C) I don’t trust news organizations to roll out effortless systems.