I wanted to use this forum to thank those who commented on the “Modified News Micropayment Model” that me and Jameson Hayes presented today at ISOJ. I wanted to respond to some questions and issues raised about the model.
Alf Hermida, on reportr.net, ponders “whether this is an approach that is too radical for the news industry.” Maybe, but time and time again speakers at the session spoke of the need for news organizations to shake up the status quo, to innovate, to invoke sweeping change. In short, to try radical new approaches.
Hermida also points out that whether consumers are willing to pay for news is a hotly debated topic, to say the least. I’ve conducted survey research asking whether people are willing to (micro)pay for news, and under what conditions. I’m not alone. Nielsen and WAN have conducted extensive surveys, as have other leading research organizations. While I advocate solid research studies such as these, I think you have to take these with a grain of salt given they are asked in an environment where free is the norm. If you ask me whether I would prefer to pay for news or get it for free, I’m going to say free every time. But if the news industry forces the issue by putting its content behind a paywall and pay becomes the industry standard, the issue becomes null and void. The question is no longer whether I would pay for news, but under what conditions and whose news I choose to pay for.
Our research also looks at the existing academic literature on how to influence consumer willingness to pay (WTP), which suggests that consumers are more likely to pay once the pricing point has shifted into a “foreign currency.”
Another issue that was raised was the viability of advertising as a sustainable business model. A student pointed out that Google has been quite successful with its search advertising model. First, newspapers have historically relied on an impressions-based advertising model, not a search one. As the publisher of the Dallas Morning News noted, this revenue model is waning. Secondly, the future of advertising is a social one (advertising on and through social sites), not through search. Search advertising is flawed in that it does not take into consideration the context of words. If I write “I hate Florida Gators” in my email, Google’s AdSense software will provide me ads for Florida Gators. Social advertising provides the necessary context. Advertisers can send me targeted information about their products that I voluntarily follow on social media sites.
Furthermore, Google makes some of its money off the content it aggregates that newspapers create. Rupert Murdoch, for one, is quite angry about this. This is one of the reasons news outlets want their content behind pay walls in the first place. And finally, most newspapers cannot generate enough eyeballs to make search aggregation advertising a fully sustainable business model.
And finally, some Twitter users took exception with my example of paying for ringtones on a phone as an example of why we would be more willing to pay for news on the phone, than online, because we are more naturally conditioned to pay for mobile content. Some news consumers also pay for mobile news apps now. Once that new distribution platform is in place and we become accustomed to receiving news content on our smartphones, will we miss it once news companies flip the pay switch?
Time will tell. Our model is an abstract theoretical model that relies on many existing technologies and factors that already exist on the Social Web.
We hope that a news partner, or partners, will seek to implement our model. Will it work? We don’t know. The current system, however, is broken. We need action. We need radical change.
Inaction guarantees failure.