Archive for February, 2009

Micropayments – Saviors or Enablers?

Friday, February 20th, 2009

In a recent essay in the TIME magazine, Walter Isaacson (former managing editor of TIME and currently president and CEO of the Aspen Institute) has lamented about the crisis in the newspaper and magazine industry and predicted that micropayments will be the saviors of the industry.

It’s easy to agree with his view that newspapers have brought their current crises upon themselves by giving away content free in the hope of making up for revenues through advertising, which have unfortunately taken a nosedive in recent times due to the financial meltdown.

However, his suggestion that micropayments are the savior of the newspaper and magazine industry is a bit skewed. Just because iTunes and a recent crop of micropayment providers have made it easy to make micropayments at social networking and massively multiplayer online (MMO) gaming websites doesn’t automatically mean that people will pay for newspaper and magazine content.

All leading music purveyors charge for MP3 song downloads. Just as an original record label doesn’t give away its music for free, all reputed online music stores like iTunes, Yahoo! Music, Wal-Mart Online Music and AOL Music charge anywhere from 85 to 99 cents per MP3 song. Unless someone wishes to dabble with pirated music websites, they have no choice but to pay for music. Agreed that micropayment providers like SpareChange, BeeTokens and TipJoy have made the purchase quicker and more convenient, but that’s really incidental — and not the reason why people pay for music.

Whereas, if you take news, you can find it free of cost on the websites of most newspapers (one exception being the Wall Street Journal, as Isaacson points out) and reputed news agencies like Google News, Yahoo! News, Reuters, AFP and Bloomberg. 


Let me cite my personal experience. A few years ago, everytime I had to refer to an old article I’d read in the print edition of FORTUNE magazine a few months earlier, I used to visit the magazine’s website and be told to pay between 10 and 25 cents for it at a partner’s website (BlueMountain, if I remember right). Since I used to have a subscription (still do) to the print edition of the magazine, I could enter my subscription details on the website and download the article free of cost. So, while current issue content was available for free, you had to either pay a small amount for each past article or have a subscription. Whereas, when I checked now, I find that past articles are available to everyone on the website – no need to pay per article nor enter subscription details.

So, let alone getting the news and magazine content free from news aggregators, people can get them free from the publisher themselves! Therefore, just because there’s a new crop of micropayment solutions available out there isn’t going to make a difference to the sad state of affairs of the newspaper and magazine industry.

Publishers first have to decide to charge for content on their own websites and then make sure that leading news aggregator websites don’t give it away free. Only that can save the industry. Micropayments can only be an enabler.