Posts Tagged ‘social web’

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.

Advertisements

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.

 

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.