Posts Tagged ‘micropayments’

Micropayments and the gift of laughter

December 23, 2011

If you are a regular reader of my site, you know that I’m an advocate of micropayments, which are defined as online purchases of $5 or less.  Given the $5 pricing point as the threshold for micropayments, that means that comedian Louis C.K.’s recent DRM-free direct-sales video experiment can be classified as a successful micropayment sale.

One of the biggest backlashes/criticisms/questions my colleague Jameson Hayes and I get about our “Modified News Micropayment Model” (MNMM) and our “Modified Media Micropayment Model” (4M) is about cheating.  In other words, what is to stop people from stealing the content that others must pay for?  Our answer is that microearning is designed to prevent that, but we’re pleased to know that even without microearning, Louis C.K. reports that few people have stolen the video.  Louis C.K. was on Leno (in the video embedded below) talking about his successful micropayment experiment and the lack of people stealing the video (starts around the 2 minute mark).

And if you like Louis C.K. and need a last minute gift idea, I’d recommend the $5 video direct from the comedian.

Enjoy, and Happy Holidays! 

http://www.hulu.com/embed/nbd_NTqv5f9NgwRX-SzwVg

Modified News Micropayment Model In Action

September 30, 2011

The theoretical idea that I and Jameson Hayes developed, PBS MediaShift wrote about and we presented at Texas is now a fully-vetted, peer-reviewed,  published scholarly journal article.

The Modified News Micropayment Model (for newspapers on the Social Web) is fully outlined in this International Journal on Media Management article (note: you have to pay to access the article- we are paid content advocates afterall!).
Now that our work is published, as we wrote in the piece, “the next logical step would be to test the model in local communities. Implementing the model concurrently with the design of firm-level strategic plans-of-action would make for compelling case studies, as well as test the viability and practicality of the concepts.”
That is our goal.  Of course, we are not developers, which is why it has been rewarding to see our key concepts become reality.  Hong Kong-based CarrotPay has come the closest to providing the technology to enable our model (based off of our work).  Whereas we introduced the theoretical contribution of microearn, they have dubbed this the much more industry marketable term Share-n-Earn.  This video below does an excellent job showcasing how microearn/Share-n-Earn for news can work using the CarrotPay digital purse.

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.

The economics of The Daily: 1, 1 million, 1 billion

March 4, 2011

The Daily, the Rupert Murdoch-funded first ipad-only newspaper/newsmagazine is doing well, according to publisher Greg Clayman.

Clayman spoke at the annual PaidContent conference at the New York Times yesterday.  This AFP article provides an excellent recap of Clayman’s talk.  Clayman said that “hundreds of thousands” of people have downloaded The Daily app since the publication launched a month ago. He wouldn’t disclose how many people have paid for the app (the free trial period for The Daily has been extended for a few more weeks), but joked that it’s “more than 1 and less than a billion.”

Earlier in the conference, Forrester analyst Sarah Epps said that The Daily would need close to 1 million subscribers to recoup the investment.

I had the opportunity to chat with Clayman briefly when he arrived at the event. We talked about some of the technical glitches that have occured (they’ve released three versions to correct early technical issues).  As I’ve blogged about before, the design and hands-on aspects of The Daily are impressive.  I also commend The Daily for creating a hybrid micropayment subscription model.

I enjoyed the opportunity to meet the man leading this new digital publishing effort.

 

The Daily dose of hands-on news

February 4, 2011

Now that The Daily, the first iPad-only newspaper, has arrived I wanted to provide a quick analysis based on my first impressions.  For starters, the iPad is clearly a game-changer for news designers.  The content is designed specifically for the iPad and the interactivity is impressive.  The Daily  is visually appealing with fun hands-on elements and in-app video streaming.  The Daily gets high marks for its interactivity, design and ease of use.

No offense to those involved in the publication, but the journalistic quality of the content is average at best.  Of course, you get what you pay for.  At 14 cents per issue, I don’t expect the type of quality, explanatory, long-form interpretative journalism that I could find in, say, The Wall Street Journal or The New York Times.  In pricing The Daily so cheap and devaluing the content it offers, Murdoch may actually be improving the value of his other newspapers.  I’m certainly willing to pay a premium price for content from The Journal.  The Daily dishes up journalism-lite.  But the lack of breadth and depth make for a quick daily read.

In pricing The Daily at 99 cents per week, Rupert Murdoch has effectively invented a new digital business model.  In essence, Murdoch has created a subscription micropayment.  For news content, micropayments are the idea of consumers paying pennies or less per article.  For non-news content, micropayments are usually priced from about $1 to $5.  The iTunes model of charging $1.29 per song download or the mobile modile of selling ringtones for a few bucks are examples of successful media micropayment models.  The Daily, however, offers 100 iPad pages of content per day in a weekly subscription rate of 99 cents.  Subscription strategy meets micropayment price.

The pricing point and iPad-only distribution strategy could very well work. The Daily could prove to be immensely popular and ultimately a success. But what works for one of the world’s biggest media barons does not a successful business model make for the rest of the industry.  While there’s a lot to like about The Daily, the product still remains a destination-seeking site.  You must find the news by downloading the app, pay the subscription and log on and in, rather than news stories finding you through social networks.

I have serious doubts that this app-fueled micropayment-subscription hybrid iPad-exclusive content model could ever work for the majority of the newspaper industry.  Certainly, most of the local daily newspapers with circulations less than 50,000 would lack the resources and capital to create and staff such a publication.  Few, if any, would be able to draw enough readers to justify the ridiculously low pricing point.  This does not even factor in all the non-daily community newspapers with strong print products.

The purpose of offering digital content and digital pricing structures is to obtain new paying customers.  For Murdoch, The Daily will almost certainly achieve that aim.  Other newspapers, with strong print subscribers but few paying online customers, need a platform that will allow them to earn revenue off new readers whose stories find them through the Social Web.  Micropayments are needed.

Imagine this scenario: You are the owner of a community newspaper.  An odd tragedy strikes your town that captures national attention. The national media converge on your town to cover the story, but no media outlet can provide the same level of coverage as you.  Your reporters write compelling, original pieces that no other media outlet carries but the public is clamoring to read.  In essence, your paper has a viral news story.  With a micropayment platform, you could charge a small amount per article.  Suddenly, you have a new revenue stream from thousands of new readers. Granted this is a one-off source and you wouldn’t want to bank on a once-in-a-lifetime occurrence to add money to your coffers, but the principle ideas behind this scenario remain relevant.

The bottom line about The Daily is it is right for Murdoch, (mostly) good for journalism, but the wrong approach for the newspaper industry.

Nevertheless, I look forward to seeing what The Daily continues to offer. I will gladly plunk down 99 cents each week to read it.  No, scratch that.  I will gladly pay the weekly price to experience The Daily.

Who to Watch in 2011

January 6, 2011

“Innovation” and “entrepreneurship” have become buzz words that are loosely jockeyed about when describing the changing nature of journalism.  You know, you’ll hear “newspapers are horrible innovators” on one side of the coin or “journalists need to develop an entrepreneurial spirit” on the other.  These words often appear again and again on both sides of the digital media debate.  The need for innovation, the need for experimentation among news organizations and traditional legacy media is clear; just as evident is the desire to develop new ways of thinking among would-be startups.  With that in mind, I wanted to provide a list of a few people and organizations worth watching this year for their efforts in social media, news, or digital content.  Some are familiar names and faces from conferences I’ve attended, while others are people I’ve never met. These efforts in entrepreneurship and innovation are worth keeping an eye on in 2011.  Any of these have the potential to be game -changers in a big way:

  • Ingmar Miedema: The Dutch businessman contacted Jameson Hayes and I about our Modified News Micropayment Model.  We’ve been in discussions with him about a number of ventures, including an effort to launch the model.  You’ll want to keep an eye on the Netherlands and Europe as Ingmar’s innovative platform comes alive this year.
  • CarrotPay: This Hong Kong-based company also has a “digital wallet” type technology that would enable many aspects of our model to work.  Ricky Rand’s company has been hard at work trying to get news organizations to use his innovative (there’s that word again!) software.
  • Jim Moroney & the Dallas Morning News:  We first heard Moroney speak at the International Symposium on Online Journalism last year. He said that newspapers must do something differently than the status quo and figure out ways to monetize content. The turn of the year brought action as Moroney unveiled new digital pricing structures for the Dallas Morning News.
  • Susanne Rust & HearSay: This Knight Fellow’s project is a social news game that combines points and a rewards system for news consumption on mobile devices, sort of a Foursquare of news.  Aside from a clear way to monetize the content, in many ways this platform would be a ripe avenue to launch the mobile modified news micropayment model we called for in our original paper (note: this opens a PDF).
  • Pinyadda: We really look forward to seeing what this Boston start-up has to offer because the concept of a personalized social news platform really resonates with myself and my micropayment co-author.  This site seems to harness many of the drivers of our model so we hope it is successful.
  • Krissy Clark: Another 2010 Knight Fellow, who studied the digital humanities during her time at Stanford and launched projects surrounding location aware storytelling.  As a former journalist, I love the use of social media to tell journalistic stories and the audacity that “you can click on the world.” Her website is storieseverywhere.org.
  • New York Times:  As the “The Gray Lady” moves its online content behind paywalls, the rest of the news industry will be watching and awaiting the results. I firmly believe that the Times’ effort to charge for content will succeed. Research I did with another University of Georgia colleague, Amy Sindik, found that Millennials were more likely to pay for the Times online than any other newspaper we studied (the Sindik & Graybeal article is in press in the Journal of Media Business Studies).  The Times‘ has a strong enough brand and reputation for quality journalism with content you simply cannot get anywhere else. These are factors that will influence consumers’ willingness to pay for digital content. Nevertheless, the Times experiment could be a harbinger for the rest of the industry considering paywalls and paid content strategies.
  • PayPal: The largest site for electronic commerce has added micropayments and partnered with Facebook. This could go a long way in increasing the popularity and use of micropayments.
  • Other Knight Fellows:  Quite a few of the 2010 Knight Fellows worked on projects with synergies to our work. John Duncan developed audionewspaper.com as an effort to find a way to get people to pay for content, chiefly radio news reports. Andrew Finlayson studied mobile, video, social media and the Semantic web and chronicled his search for a new viable business model on adigitaljournalist.com, while Gabriel Sama’s Thinking Strategically slides (note: links to a PDF) are worth taking a look at (his “DNA of a publication” on slides 43 and 44 is spot on).  We have a hunch that some of these Fellows’ efforts will prove fruitful and that more could come to fruition as a result. We look forward to seeing what else they accomplish and produce in the digital media, journalism and social media realms.
  • John Paton: The CEO of the Journal Register Group has been leading the digital-first charge for newspapers.  Like Moroney, we saw Paton speak at the International Symposium on Online Journalism last year.  He’s an energizing force in an industry often assailed for inertia, a leader not afraid to make sweeping changes. He’s had success with his in 2010 and will be worth following to see if he can duplicate his successes in 2011.

There are many other great minds, dynamic personalities and driven companies hard at work whose efforts could radically alter the Internet and our online media consumption habits as we know them. I, for one, am excited about what changes are in store in 2011, whether they originate from one of the above or not. I look forward to seeing what the new year has in store for social media, journalism and paid digital content strategies. Feel free to join in the conversation and add to the list.

Micropayments 2.0: Model signs emerge

October 28, 2010

Last year at this time, Jameson Hayes and I were scouring through academic and industry literature and thinking conceptually in order to create a new theoretical micropayment model for news.  The result was a paper presentation at the International Symposium on Online Journalism.  At the same time, we recognized that our “modified micropayment model” had a wider appeal for online media content, not just news content.  Our theoretical micropayment papers have been accepted to two of the most prominent academic journals for media management and economics and should be published within a few months.

Our “Modified News Micropayment Model” was featured on PBS’ MediaShift blog, where host Mark Glaser commented that “it’s a hard concept to grasp because it doesn’t really exist yet.”

That is changing.  Ever since we developed our model, we’ve seen more and more movement to a media ecosystem where our theoretical drivers of microearning, socialization, hyperlocal focus and a centralized banking system are in play.

This week alone, PayPal unveiled a micropayment system for digital goods and partnered with Facebook.  As the TechCrunch post notes, “the Facebook deal is pretty significant because there are a massive amount of micropayments that flow through the social network on a daily basis with Facebook Credits, gaming and more.”

Meanwhile, Nieman reports that the Associated Press plans to launch a new “ASCAP for news,” an independent business to business clearinghouse for online news content.  While this is envisioned for businesses, not individuals, this is in essence a form of microearning in action.  The Nieman post also goes on to state that it envisions the AP clearinghouse approach will enable experimentation with “hyperpersonalized news streams,” socially curated news channels and payment processing services.

Hyperlocal content efforts are also increasing, with groups like AOL’s Patch partnering with journalism schools to cover neighborhoods and communities.

While news content is moving behind paywalls, free television on the Web is also becoming a trend of the past.

“Consumers must be made to realize that nothing is free anymore,” TIG Research analyst Rich Greenfield wrote in a blog post quoted in Ryan Nakashima’s AP article.

The media landscape is rapidly changing.  What was once futuristic thinking is slowly, but surely, becoming a reality.

Micropayments 2.0 is here.

 

A sign of the Times?: Paying for news online

March 23, 2010

If this were a news article, would you pay to read it?

If so, under what conditions would you consider it? Does it matter what brand is presenting the news or the source of information when weighing your willingess to pay for content online?  How much would you be willing to pay?

These are just a few of the questions I’ve been studying in recent months.  Regardless of whether you think you should pay for news content on the Web, a majority of newspaper executives plan to start charging online in the next year.

As a result, the debate over implementing micropayments, where a user pays  a small fee per article, has resurfaced in recent months.  As a journalism scholar, I’ve been examining micropayments from many angles.

First, I’ve been working with colleagues of mine in the Grady College to gauge consumer willingness to pay for online content through a series of surveys and experiments.

Earlier this month, my co-author Amy Sindik presented findings of one of our studies at the Association of Educators in Journalism and Mass Communication Mid-Winter conference in Norman, Oklahoma.

The findings of our study, “Newspaper Micropayments and Millennial Generation Acceptance: A Brand Loyalty Perspective” are quite promising for The New York Times, which plans to charge for content next year.

The Times website is a trusted brand, and that brand trust has a statistically significant relationship to willingness to pay for Times’ content online.  Overall, The New York Times itself is a powerful brand that fosters consumer loyalty and gratifications.  Overall, The New York Times clearly appears to be the most strategically poised brand name newspaper to implement a paid system.  Given that consumers are more willing to pay for online content from the Times than any other newspaper, the implication might be that if doesn’t work for The New York Times, it can’t work for anybody.

On the flip end, our study suggests that local newspapers may have a tougher time nudging consumers toward a willingness to pay for online news.  Only 3% of respondents indicated a willingness to pay for content from the local newspaper.

Regardless, local newspapers will want to watch with interest as The New York Times’ foray into online content plays out over the next year.  As an industry leader, and arguably the most viable and credible newspaper brand, the success or failure of The New York Times payment effort could be a harbinger for the rest of the industry.  Our study suggests that readers are more likely to pay for online content from the Times than any other local, regional or national newspaper.

The plan from the Old Gray Lady, however,  is a “metered” model, not a micropayment model.  There are many experts who believe micropayments will never work.  I’m not convinced.  Under the right circumstances, micropayments could succeed.  I’ll outline how next month in Austin.

Along with my co-author, Jameson L. Hayes, I’ll present The Case for a Modified News Micropayment Model on the Social Web at the International Symposium on Online Journalism.

In the meantime, feel free to start a conversation and join the discussion on the future of online news payments.