Micropayments for news articles are a terrible, horrible, no good, very bad idea

Why charging people per story is doomed to fail and could actually make things worse.

One of the ideas tossed around a terrified and desperate newsroom is charging readers per article, similar to micropayments found in free iOS or Android apps. Or when you login to iTunes and buy individual Taylor Swift songs for your workout playlist (I don’t judge).

When someone is resistant to the idea (like me), people like to point out that both David Carr and Walter Isaacson wrote extensively in favor of the “iTunes for news” business model. How can anyone disagree with the former managing editor of TIME and the best media writer of his generation?

Nobody likes to mention that Carr and Isaacson floated the idea six years ago. For reference, the No. 1 single in 2009 was “Boom Boom Pow” by the Black Eyed Peas. Apple’s App Store, which didn’t even exist when Carr and Isaacson wrote about micropayments, launched in mid-July. Let that sink in.

A tech start-up in the Netherlands, Blendle, is already charging per article through its tablet app — and recently announced content partnerships with The New York Times, The Washington Post, and The Wall Street Journal. The New York Times has sunk considerable money into the company.

But underneath the hoopla is a pile of underwhelming stats: the Dutch venture only managed to entice 1.2 percent of the region’s population to join the service, and only 1 out of 5 users users actually pay for content. Another 5 percent of articles receive a refund request.

So I’m not sure why people are excited about an overseas venture that doesn’t seem to be much more than an inconsequential revenue stream for a handful of papers with established audiences.

Now we have learned the Winnipeg Free Press will be the first newspaper to try the micropayment business model in North America. The newspaper publisher will allow users to pay 21-cents per article or a flat monthly fee to jump over its newly erected paywall. But the micropayment ploy is likely to fail. And I feel confident the move will prove what I wrote just recently: the market value for traditional journalism is approaching zero. Articles are not worth 21 cents. Or 27 cents in Canadian currency, which I’ve been told is quite colorful. I’m not even sure articles are worth 5 cents.

Many problems face the Winnipeg Free Press experiment, which I’m sure some experienced and educated editors will refer to as “ambitious” and “bold.” That kind of talk is counterproductive. It dooms others to repeat similar mistakes by overvaluing the content many dailies currently produce and veers conversation away from how to reinvent news content entirely. We need to talk about how to monetize actions, not how to monetize traditional content. We’re searching for a silver bullet when the barrel has rusted shut and we’re about to lose the gun fight.

Consumers pay for convenience, habits and actions. If you’re Candy Crush, you pull the hat trick and create habits that can be conveniently satisfied by actions. All for a nominal fee, of course.

But there’s nothing habit-forming about articles in the year 2015, nor truly convenient. The convenience of an online article is limited to the scarcity of supply (of which there is none). The only action is passive enlightenment and possible shareability. The chance to transform a news story into anything of consequence is very limited. I've talked about focusing on actionable content in the past, not just because it’s a priority for consumers, but also because consumers are willing to pay for it.

Asking consumers to agree to a value proposition for news articles is a no-win scenario, and will expose publishers to the fact that their content is worth far less than current market value. I find it difficult to believe publishers could ever possibly reach consensus on how to uniformly price news content. Is a long-form article honestly worth the same amount as a piece of spot news? Do we discount content with no original reporting? Once the burden of pricing is put on on the free market, it becomes a race to the bottom.

“Should I pay to read this online news story? Is it worth 27 cents? What if it’s not? What if it’s a short read? Think, Jonathan! Think!”

And that’s because, regardless of what anyone thinks, micropayments force consumers to determine the value of each story before agreeing to pay for it. The mental gymnastics required to make such a cost-benefit analysis are quite substantial; it simply won’t happen in a world where people consume news on mobile devices in short bursts of time. And I’m not the only one who thinks so — Clay Shirky was saying the same thing back in 2000, nine years before Isaacson and Carr were writing about micropayments. Consumers will either refuse to pay or a small percentage will do so very selectively, and the end result for publishers will be ruinous.

That’s not the only potentially destructive side-effect of micropayments. When Nick Geidner and Denae D’Arcy, two journalism professors at the University of Tennessee, researched the effects of micropayments on online news story selection, the pair discovered something troubling for both proponents of the model and news consumers: micropayments also decimate any value attached to the element of discovery.

While the data is not conclusive, their findings suggest micropayments significantly change the type of content consumers are willing to pay for:

“Individuals who had to pay for news were significantly less likely to select stories from an opinion-challenging source than individuals who did not have to pay for news.” (New Media and Society, April 2015)

Consumers who are forced to pay per story are not going to invest in content they do not want to read. They won’t look at outside sources that challenge their world view, but are more likely to pay for articles that reinforce their opinions. They’ll lean toward the familiar. Publishers will be left with consumers more polarized than ever before.

But the biggest farce in this whole “iTunes for news” debate is that the pay-per-song model isn’t even the preferred business model for music consumers anymore. People are no longer paying per song, they’re paying for a license to listen to every song on every device. The music industry, like the news industry, is in a free fall. Why are folks so keen on this idea again?

Individual song downloads are in decline. But for old-school types, just look at those vinyl sales! (via Forbes and StatistaCharts)

TL;DR: Micropayments for news articles will not work and for the unlucky publishers who do participate in this model, they will have contributed to the toxic echo chamber increasingly defining online communication in the 21st century.

Look, I’m not openly rooting for the news business to fail, but this falls into the same category as last year’s Aaron Kushner debacle: media pundits and industry veterans need to challenge business decisions that send publishers off a financial cliff with other people’s jobs. We often greet ill-conceived business notions with some kind of bizarre sense of cautious optimism, like we’re hoping someone else finds the escape route before the rest of us suffocate to death. Then everyone piles on the unlucky, adventurous sod after he or she is burned alive. “Oh well, they should have known better.”

I’m not pointing the finger at everybody and especially not at folks like Mathew Ingram, who has come out publicly and declared this idea will tank. (However, I must take away two points from Hufflepuff because he still referred to the Free Press’ gamble as “ambitious.”)

Instead of trying to look outward for a model to replicate, or ape a digital playbook from six years ago, we should look inward and have a serious conversation about a much-needed total overhaul of journalism. Let’s grab a cup of coffee or a beer and talk about how to fix this thing. But this isn’t it.

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