Posts Tagged ‘micropayment’

Mixed models: How micropayment can work with freemium

April 1, 2011

Note: The International Symposium on Online Journalism (ISOJ) is taking place right now in Austin, Texas.   Last year we unveiled our “Modified News Micropayment Model” at that very conference.  Panelists discussing paywalls today stressed the need for multiple business models.  I couldn’t agree more.  Now seemed like an appropriate time to write this post that I’ve been wanting to do for quite some time. Here goes.

When my colleague and I developed our “Modified News Micropayment Model” (now in press, International Journal on Media Management) we wrote that it was but one new business model for online news.  Our micropayment model not only could be, but should be, used in tandem with other digital business models.  With the launch of the New York Times’ “paywall,” the news industry’s focus has been on its tiered, metered approach.  Other smaller news organizations, such as Morris Communications’ Augusta Chronicle are following suit with similar metered approaches.

Such a freemium model, while promising, leaves out a valuable audience segment and is not without  flaws.  A micropayment system can address the flaws and fill in the gaps created by a freemium metered approach.  The good news is that micropayment can work with freemium.  Let me tell you how.

What metered approach is not

The metered approach is predicated on the old notion that news consumers will seek out the news they want to consume.  It relies on the newspaper website as a destination. The reader can have 20 free views when they come to the site. Of course, in today’s news ecosystem news often finds the reader rather than the reader finding the news.  Metered fails to capitalize on, use and harness the power of referral and sharing that takes place on the Social Web.

The existing metered approaches are also designed to get new digital subscribers.  With online content, there are a number of users who come to the site who are not in your market, who only want to read a few articles from your site (since it found them and they are not seeking out your site, brand or content) and who will never become a subscriber to your publication.  Micropayments allow for news organizations to capture some revenue from “one off” users.

Another downside to the prevailing freemium model is that it does not place a premium on valued content.

Freemium + Micropayment = Success?

Micropayment can be implemented to serve a variety of needs and in a variety of ways in tandem with freemium metered approaches:

1)Metered micropayment:  You can set benchmarks that would activate a switch toward micropayment per article.  For example, once an article that is free on your website reaches X number of pageviews, you can start to charge for that piece of content.  If a story happens to go viral, you can (literally) capitalize on the buzz and additional traffic.  John Paton, CEO of the Journal Register Co. has talked about the importance of news organizations stacking “digital dimes” and such a “metered micropayment” approach allows news organizations to monetize their most popular stories.

2)Exclusive, premium content:  You can be selective with the types of content you offer for free and the types of content users must (micro) pay for.  If your news organization offers exclusive, high quality premium (presumably hyperlocal) content that readers cannot get anywhere else, why not charge for it?  Implement a micropayment component for your most prized content.  The Augusta Chronicle offers a perfect example.  In just a few short days, The Masters golf tournament will roll into town.  The Chronicle owns that story because it is in their backyard.  Golf lovers who do not live in Augusta but want to read stories they can’t get elsewhere will likely (micro) pay for individual stories.

3)Social readers: Micropayments can serve a unique audience– users who do not want to subscribe to your newspaper.  This may be because they live out of the market.  This may be because they want to read a specific piece of content that found them (perhaps by the recommendation of a friend), not that they actively sought.  Micropayments work better as a monetization strategy for active Social readers, rather than destination-seeking Web viewers.

4)The one-off news event.  This is not an everyday event, but from time to time a breaking news story happens in your community that may attract regional, national or even international attention.  You may suddenly find foreign readers clamoring for your coverage.  Why not have a mechanism in place to make money off the increased traffic and attention your paper will receive if and when these “one-off” events find their way to your town?  Micropayment serves that need.

These are just a few examples.

The bottom line is that micropayments can work and work well with other approaches.  Thoughts?

 

 

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The birth, death and resurrection of micropayments

March 7, 2011

Are micropayments dead? They were never born.- Jeff Jarvis, blogger and CUNY J-school prof

My favorite panel at the paidContent 2011 conference was “Paying it Forward: Paywalls, Meters & Subscriptions,” which consisted of an all-star panel including Journalism Online Co-Founder (and former Wall Street Journal publisher Gordon Crovitz), Financial Times.com Managing Director Rob Grimshaw, Atlantic President Justin Smith and Google’s Director of Strategic Partnerships Jim Gerber.

Toward the end of the 50-minute talk, moderator Robert Andrews, UK editor for paidContent, asked a question about micropayments. Surprisingly, most of the panelists were dismissive of micropayments. Gerber, who has helped lead Google’s OnePass initiative, said they had not heard much interest in micropayments from the public because of the friction involved in transactions.

Despite early press materials indicating the inclusion of micropayments in its PressPlus platform, Journalism Online continues to primarily advocate for a metered freemium model.

“Down with paywall, up with freemium,” was Gordon Crovitz’ final salvo during the session.

Grimshaw told me after the conference that the Financial Times’ experiments with micropayments were unsuccesful, but I suspect that has more to do with the nature of its business content (in other words, people are still likely to seek out business news, rather than have it find them as is the case with other types of news in the social web environment).

If the expert panel is any indication, then mainstream newspapers appear to have given up any hope in trying out micropayments just two years after headlines proclaimed them as the way to “save newspapers.”

This, in my humble opinion, would be a huge mistake.  Just a year ago, my colleague Jameson Hayes and I outlined how micropayments could work for newspapers (opens PDF document) at the International Symposium on Online Journalism (a more advanced and refined version of that paper is in press in the International Journal on Media Management).

The bottom line is that the only way to tell whether micropayments will succeed as a viable model for online (and mobile and tablet) news is to try them.  As CUNY professor Jeff Jarvis tweeted during the conference, “are micropayments dead? They were never born.”

This isn’t entirely true.  As we point out in our paper, micropayments were tried in the late 90s and early 2000s to no avail. A 2000 Boston Globe article, for example, shouted “MICROPAYMENTS COULD BE THE WEB’S NEXT BEST HOPE.”  Flooz, Beenz, CyberCash, Bitpass, Peppercoin and DigiCash are a few examples of failed micropayment companies from what can be considered the Micropayment 1.0 era.

The difference between Micropayment 1.0 and Micropayment 2.0 is the emergence of the Social Web.  Newspapers may be  (wrongly) hesistant to adopt micropayments, but that does not mean they are not alive and well.

Micropayments have thrived for song and video downloads on iTunes, and micropayments are poised to become even more prevalent for digital goods, gaming and virtual currencies with big time players like Facebook (Buy with Friends)and PayPal (Digital Goods) enabling them.

Not all newspapers have given up on micropayments, either.  At 99 cents for a week’s worth of issues, The Daily is basically a subscription micropayment option.  Hong Kong-based CarrotPay also offers microsyndication technology for newspaper companies to enable seamless micropayments.

Mainstream American newspaper companies may be reticent to try micropayments as a new digital pricing strategy, but there are at least two other huge underserved markets that could experiment with the new business model. Non-American media markets are ripe for micropayments (Google’s OnePass is already in play in many European countries), as are community daily newspapers (under 50,000 circulation) and non-dailies.

Don’t write off micropayments for newspapers just yet.  Newspapers are perfectly poised to contribute in a big time way to the resurrection and rebirth of micropayments on the Social Web.  The models and technology are both in place.  All that is missing are willing newspaper partners.

Now is the time for newspapers to act.

SoCon11 Recap 2: The tablet takeover

February 5, 2011

The second breakout session I attended was led by James Harris, co-founder of Elemental Interactive and focused more or less on the social sharing of news content.

According to Harris, 2011 will be “The Year of The Tablet” as about 30 new makes and models flood the marketplace, joining the likes of the iPad.  According to a Forrester study, one-third of all U.S. online customers will own a tablet computer by 2015.  Harris believes that the future of all media will be digital, expertly curated and highly personalized. To Harris, the combination of social magazines and tablet computers leads to a state of reading Nirvana.  He said that backward-looking, month-old printed mail magazine subscriptions will be rendered close to useless.

Harris said that a magazine in today’s day and age should be real time, current and fresh. He considers tablet (at this point really iPad) apps Flud, Flipboard and Newsmix as social browsers (I would add OnGo News to this list) and contends that social browsing allows us to rethink the magazine and newspaper formats.

I agree with the basic premise that Harris lays out about the significance and spread of socially curated news content, as well as the emergence of tablet computers in the coming year.  My overall impression of this session, however, was mixed.

For starters, there was much debate and disagreement over what a magazine is.  I chimed in that while there are standard conventions associated with design of newspapers, magazines and newsmagazines there are also standard conventions associated with the new platform that is a tablet.  The tablet is literally a hands-on device.  The ability to touch, swipe, move and shake adds a much more value-added user experience to the consumption of news.  Murdoch’s The Daily, although only days in its infancy, is a perfect example of combining traditional news conventions with the conventions of the iPad platform.  When it comes to interactivity, The Daily offers an immersive hands-on news consumption experience unlike anything you’ve ever seen or held before.  Simply put, it’s awesome.

The other issue I have about this session is I feel the economics of such “social browsers” was glossed over.  An audience member asked how do you pay for social news.  There wasn’t really a good answer.  But as I’ve written on here before, economics are important.  The Daily is an important first-mover game-changer but I doubt others will be able to replicate its success as what I believe will be a financially-viable iPad-only publication. When discussing the economics of these social curation magazines, there are two points to keep in mind:

1)Legacy media are already getting in on this game.  OnGo News is a joint collaboration of The Times Co., Washington Post Co. and Gannett, aka The Big Boys of News.  The New York Times will soon launch News.Me, their social news answer to Murdoch’s The Daily.  (Harris focused much of his talk on Flipboard).

2)Paywalls will fundamentally change social curation.  Third-party devices like Flipboard effectively poach content from other sources.  In some instances, these are partnerships with willing media partners.  In other instances, it is not.  Once content from The New York Times goes behind a paywall, it will be incredibly difficult if not impossible to socially curate and share that content on a device like Flipboard.  Social curation as we know it is predicated on the ease of disseminating online content that is presently free.  Once you have to pay for that content (and all indications are that you will have to increasingly pay for more and more of the online content we love) , the game changes.  Once the online media eco-system shifts from free to fee, you need platforms, devices and a workable business model that will support the drastic change from the status quo.

Of course, that is an entirely different debate and one  in which the industry does not agree.  I continue to advocate for micropayments, specifically in the modified form I co-developed in the Graybeal & Hayes’ “Modified News Micropayment Model.”  (in press in The International Journal on Media Management).

I welcome discussion on these points.  Thanks to James Harris for sharing his knowledge and starting the debate at SoCon11.

Ongo: a good start for paid social news but far from perfect

January 26, 2011

As one who has devoted a significant amount of time researching new business models and news platforms, I  was pleased to see the debut of Ongo.  According to this PaidContent.Org post, Ongo is a social news site that combines aggregation and paywalls.  Ongo has significant backing from some major newspaper companies, including the New York Times Co, Washington Post and Gannett.  This is the first effort I’m aware of that harnesses socialization, but also adds a payment component.

This is an excellent start, but in my opinion this model/product still misses the mark in many ways.  First, this is a destination site.  The product appears to be an aggregator of social news much like Flipboard.  Aggregation in many ways is an old notion because it is predicated on the idea that people are seeking the news, rather than news finding the reader as often occurs on the Social Web environment.

The second problem with Ongo is subscription.  Seeking to charge for online content is good.  A subscription model, however, is just a tired retread of a print business model.  Social news consumption comes from multiple sources.  The ability to pay for a single piece of content is needed.  Micropayments were in high demand just two years ago, but there seems to be a sudden hesistancy on newspaper publishers’ part to experiment with micropayments.  Newspapers have not given micropayments a fair chance in earnest despite the widespread success of micropayments for other types of media content, such as music files and mobile ringtones.

I firmly believe that micropayments can succeed for newspapers.  The Graybeal & Hayes’ “Modified News Micropayment Model” outlines four drivers- socialization, microearning, hyperlocal focus and a centralized banking system- that would allow micropayments to work for newspapers.

I wonder what incentive would-be users of Ongo have to subscribe.  In the Graybeal & Hayes model we suggest using foreign currencies or points rather than real dollars and cents because it helps to remove the anxiety involved in the consumer purchasing decision.  We also suggest that the ability to microearn is a vital factor.  None of that is in the Ongo model that I’m aware of.  I’m basing my evaluation on the press materials because I do not have an Ongo account yet.  (Update: According to this Gigaom post , Ongo will provide credits to users who recommend the service to would-be new users.  Credits for article referral, however, would be much more beneficial.  In essence, micropayment and microearning is still missing and sorely needed. Also, thanks to Rachel Stults for giving me trial access to the site. I’m looking forward to trying it out.)

In some ways, placing content on a new platform may actually hurt the major newspaper companies investing in it.  In a recent study I did with Amy Sindik* published in the current issue of the Journal of Media Business Studies we found that brand loyalty increases user likelihood to adopt micropayments for online newspapers.  Brands matter.  Brand names like The New York Times or Washington Post carry far more weight than Ongo. The Times fared quite nicely, in fact.  Survey participants indicated a greater willingness to pay for Times content online than any other newspaper.

Ongo has tremendous potential, especially for establishing a mindset for paid social news.  I, for one, will be watching closely its development throughout the year.

Sources:

*Sindik, A., & Graybeal, G. (2011).  Newspaper micropayments and Millennial Generation acceptance: A brand loyalty perspective.  Journal of Media Business Studies, 8(1), 10-20

*An article about the Graybeal & Hayes “Modified News Micropayment Model” is currently in press in the International Journal on Media Management.

Continuing the ISOJ discussion about ‘MNMM’

April 24, 2010

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.