Micropayments Lead to Piracy

If micropayments take hold, the news information business will likely see the same sort of piracy that has affected the music, movie, software, and video game industries.Published February 15, 2009

Written by Joey

Photography introduced me to the 'new media' evolution. I currently do community management at Meraki in San Francisco, but this blog is about journalism, some UX design, and the occasional rant. more →

@joeybaker | joey@byjoeybaker.com

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Since the TIME cover story that re-rose the micropayment debate last week the topic has been beaten to death across the web, but I want to raise just a few more points that I haven’t seen elsewhere. Information wants to be free. No matter what, people will find a way to get it online. We’ve proven this time and time again with music, movies, software, and video games. No, don’t laugh – video games are a multi-billion dollar industry, that represent some of the greatest achievements in technology in the past decade. These three heavy-weight entertainment industries have proven that charging for content online leads to … quasi success. Yes, iTunes, Netflix, and Steam have been able to deliver paid content to a mass audience, and they do if far easier than if you try to pirate download the same, but piracy is still rampant. Make it free, or the pirates will. The TIME article, and others like it, refer to the ‘iTunes model’ when the talk about micropayments for news. Yet, this analogy is flawed:

Music, movies, software, and video games are content that has ‘repeat use’ value. News is read once, then mentally file away.
Music, movies, and video games are entertainment, a luxury good that carries a far different intrinsic value than an essential good like news. Software isn’t a luxury good, but it is a productivity tool that also doesn’t have the intrinsic value that news/information has. Besides, software doesn’t really have the micropayment model either.
It’s easy to preview content on iTunes, it’s near impossible to provide an accurate preview of information without providing the … information.

I’d be willing to bet that if a news service tries the paid content model people will find someway to get around the pay wall. If they’ve found a way to steal entertainment goods, trust me, they’ll find a way to steal the news. And that sure doesn’t sound like a Fourth Estate to me: a system where the people have to steal their information!? Better to let the traditional newsroom die, or run a smaller operation. You can’t tell me that every reporter in a current newsroom actually earns their keep. If micropayment schemes ever actually gain traction, people will opensource the news. We can mashup twitter, youtube, blogs, and aggregators to get a reasonable approximation of the information that we get now. Granted, it would be much shorter form content. But since we mostly skim the news right now anyway, the user wouldn’t see much lost.

A list of related reading (via Joey’s Publish2)

Forget Micropayments — Here’s a Far Better Idea for Monetizing Content

Editor & Publisher

Steve Outing endorses Kachingle, a micro-payment service for websites with one distinct caveat: paying is still optional. The user decides on how much they want to pay for their news, and all the sites they visit take a cut of that money. Seems like people will just not pay. Also: the tech is very limited. A site that is clicked on 10 times online gets one share of the money.

Op-Ed Contributor – You Can’t Sell News by the Slice: The New York Times; A New York Times op-ed on why paid content won’t work. Oh, and that even if it did, the revenue wouldn’t “save newspapers.”

Reflections of a Newsosaur: How to charge for content. Theoretically.: newsosaur.blogspot.com; Alan Mutter jumps on the micropayment bandwagon as the most “logical way” to make money online. He makes the wrong assumption that “Consumers might not like being micro-nickled and nano-dimed for every article, but they would get over it, if the content were sufficiently compelling.”

Bill Keller — Talk to the Newsroom – Reader Questions and Answers: The New York Times; Bill Keller, The Executive Editor at the New York Times gives an insight into many aspects of how he and the company think about the future of news. Highlights: • Keller describing his typical day (turns out, he’s got a sense of humor :) • His openness to look at any business model that might work. • He doesn’t ascribe to the philosophy that “information wants to be free”

Notes from a Teacher – Paying a little: www.tamark.ca; A good ‘fisking’ of the micropayment idea: • people get so much news from too many sources to make micropayment accounts easy – it would be too much $ spread across too many accounts • The mass media is no longer the sole provider of content. Bloggers aren’t going to charge. • Who’s going to pay to read an article based on a headline and a lede? The value is determined after the article is read.

Can journalism go with the flow? BuzzMachine: www.buzzmachine.com; Jarvis sums up the current state of proposals for making money off the news, and reviews why none can possibly work. I’m not sure that _none_ will work, but he does make a very succinct case for why micropayments and paid content just don’t work.

Death Of Print: How Not to Save Newspapers: Gawker; A really good argument against the micropayment plan for journalism.

Will Sommer

Smart stuff. If micropayments = piracy, then newspapers are losing the money they get from online ads and the business situation becomes even worse.
Daniel Bachhuber

Quick thought: what would news that has "repeat use" look like? I don't think that news has to necessarily be "mentally file way". What if the service that a news organization provided was the ability to make news timeless in some sort of useful way?
Joey Baker

Well, yes, newsorgs still have the responsibility of being the 'paper of record' for their coverage area, but that's not necessarily repeat-use value. We've already tried charging for access to the archives — that doesn't work.

My argument is that news inherently doesn't have a repeat-use value. We shouldn't be trying to charge like it does.