<p>A great deal of online content is profitably charged for — notably music and porn — but news struggles. With the exception of some high-value material from publications like the ‘Wall Street Journal’, news doesn’t seem able to turn a buck. Experiments in charging have largely failed — and the advertising-subsidised model has reigned supreme.<br /><br />However, with recession, advertising revenues, always marginal at best, have dried up. Publishers are in a nightmarish situation; they know the print side of their business is struggling, they know punters want their news online, but they can’t see how to make it pay. In desperation others may follow Murdoch’s retreat behind the paywall.<br /><br />Not good news for news addicts. It isn’t so much the money, it’s the usernames, passwords, subscriptions ... Actually, it is the money. But publishers need a profit. Information might want to be free — but food and housing isn’t. So is there another way? Some model that brings in more than advertising, but doesn’t exclude casual visitors, either by cost or inconvenience? Well yes — an idea that won’t go away: micropayments.<br /><br />The basic concept of micropayments is that you charge at a price that doesn’t deter consumers at all, but will aggregate enough profit, via mass sales, to sustain a business. Classical micropayment theory states that payments should be of the order of 1/1000 of a US cent. <br /><br />Two schools of critics<br /><br />A cent would be the minimum now. Fans claim this is beneath the mental threshold at which resistance to a purchase sets in. Critics divide into two camps — those who feel it’s a dumb idea, and those who feel it’s evil. Dumb because similar schemes have failed in the past. Evil because it swipes your money under the radar, and an effective scheme could easily expand to diminish the entire web by fencing off vast quantities of content.<br /><br />The dumb argument can be countered — we can implement a scheme today that beats previous implementations hands down — I’ll explain how in a moment. I pretty much accept the evil argument, but it’s the lesser of several evils — the main one being that journalism goes down the pan unless we find a way to fund mainstream media online.<br /><br />So, how could it work? Step forward Google. Many of you will be familiar with Google Ads — perhaps not with how the system works. Basically, you sign up, create a bundle of code using their site tools, wrap it into your own pages and presto, ads appear, and when your visitors click on those ads, you get paid. Not immediately. Payments — tiny payments — are tracked and added up. To reduce payment transaction costs, you’re paid one sum, once a month. The transfer potential of this technology to a micropayments scenario is clear.<br /><br />The key difference from other micropayment schemes is scale — and that’s what beats individual site subscriptions too — sign up with one scheme, and you get access to thousands of sites. That’s my theory, at least. <br /><br />The fact is that in the boom years micropayments looked like a lot of fuss, and a leap into the unknown. I get the impression publishers’ pride got in the way of being asked to sell for pennies. But now the boom is over, micropayments aren’t an option — they may be the only way forward.<br /><em><br />The Guardian</em></p>
<p>A great deal of online content is profitably charged for — notably music and porn — but news struggles. With the exception of some high-value material from publications like the ‘Wall Street Journal’, news doesn’t seem able to turn a buck. Experiments in charging have largely failed — and the advertising-subsidised model has reigned supreme.<br /><br />However, with recession, advertising revenues, always marginal at best, have dried up. Publishers are in a nightmarish situation; they know the print side of their business is struggling, they know punters want their news online, but they can’t see how to make it pay. In desperation others may follow Murdoch’s retreat behind the paywall.<br /><br />Not good news for news addicts. It isn’t so much the money, it’s the usernames, passwords, subscriptions ... Actually, it is the money. But publishers need a profit. Information might want to be free — but food and housing isn’t. So is there another way? Some model that brings in more than advertising, but doesn’t exclude casual visitors, either by cost or inconvenience? Well yes — an idea that won’t go away: micropayments.<br /><br />The basic concept of micropayments is that you charge at a price that doesn’t deter consumers at all, but will aggregate enough profit, via mass sales, to sustain a business. Classical micropayment theory states that payments should be of the order of 1/1000 of a US cent. <br /><br />Two schools of critics<br /><br />A cent would be the minimum now. Fans claim this is beneath the mental threshold at which resistance to a purchase sets in. Critics divide into two camps — those who feel it’s a dumb idea, and those who feel it’s evil. Dumb because similar schemes have failed in the past. Evil because it swipes your money under the radar, and an effective scheme could easily expand to diminish the entire web by fencing off vast quantities of content.<br /><br />The dumb argument can be countered — we can implement a scheme today that beats previous implementations hands down — I’ll explain how in a moment. I pretty much accept the evil argument, but it’s the lesser of several evils — the main one being that journalism goes down the pan unless we find a way to fund mainstream media online.<br /><br />So, how could it work? Step forward Google. Many of you will be familiar with Google Ads — perhaps not with how the system works. Basically, you sign up, create a bundle of code using their site tools, wrap it into your own pages and presto, ads appear, and when your visitors click on those ads, you get paid. Not immediately. Payments — tiny payments — are tracked and added up. To reduce payment transaction costs, you’re paid one sum, once a month. The transfer potential of this technology to a micropayments scenario is clear.<br /><br />The key difference from other micropayment schemes is scale — and that’s what beats individual site subscriptions too — sign up with one scheme, and you get access to thousands of sites. That’s my theory, at least. <br /><br />The fact is that in the boom years micropayments looked like a lot of fuss, and a leap into the unknown. I get the impression publishers’ pride got in the way of being asked to sell for pennies. But now the boom is over, micropayments aren’t an option — they may be the only way forward.<br /><em><br />The Guardian</em></p>
