Monday, 1 June 2009

Micro-Payments for On-Line Contents: Is the The Long Tail No More ?

I almost let pass the recent announcement that the Wall Street Journal (read News Corp) plans to introduce micro-payments for individual articles. What I read is that the micro-payments will apply for readers who choose not to pay a $100 annual subscription fee. Reports have noted that Financial Times is also considering a form of micro-payments for its contents.

These announcements are the latest salvo in the Armageddon drama in which the print media seeks to find a business model that can offer some type of economic viability in an age of promiscuously available free on-line content. The old mainstays for supporting contents in the print era--subscriptions, want-ads and other forms of advertising--appear to be inadequate by themselves in the on-line environment (e.g., Craig's List makes the want ads service a virtual online non-starter for such news organizations).

I recognize full-well that the drama that is unfolding for a business model for online news contents still has a number of scenes, if not full acts, to go. In particular, I recognize that cultural mores are such that there is an aversion to paying for heretofore free contents. Don't get me wrong, I am as an avid a user of free online contents as anyone. Still, there is a deep-rooted residue of the Old Media within me that rationalizes that subscription support for online content is part and parcel of a vibrant press. But when I tell this to my kids, I tend to get a bit of a glazed reaction. Acculturated to wholesale access of free contents, the learning curve towards an alternative conception of content availability is a daunting, uphill, battle.

Against this backdrop, I still hold out a lingering hope that a business model for online news contents will take root based on something other than nostalgia for the print media. I see this hope as based on a marriage of copyright and trademarks, where the latter is the driver to monetize value in the former.

By this I mean that a smallish number of strong news brands will succeed in being able to charge for their contents primarily due to the fact that such contents are made available under the brand. In a rough analogy to brands in the bricks and mortar world, just as a strong brand succeeds in extracting monetary benefit for goods that would otherwise not enjoy this pricing advantage, so to will the strong news brands succeed in monetizing contents that would otherwise be sought for free. Stated otherwise, a strong brand will always be able to monetize value, even in the exaggerated case where the value of the non-brand (content) product will approach zero.

If that be correct, then one wonders how Chris Anderson's "long tail" will fit in. As readers will recall, Anderson posits that the on-line world frees up both supply and demand at the speciality tails of a product category in comparison with the limited offerings that are inherent in a bricks and mortar world of distribution. Instead of a small number of mega-winners, the "long tail" promises a potentially large number of niche winners.

That view may be correct for the sale of widgets in an online environment, but it would seem to have less currency in the micro-payment world for online contents, as I have suggested. The reason is clear: If the model succeeds, there will be a few winners, able to monetize their contents, and a large number of other content providers that will struggle or simply be unable to monetize their products. How such a bi-bifurcated world, bereft of the long tail and with only a few winners will impact on the nature and quality of the contents themselves, is worthy of a separate posting.


Howard Knopf said...


The NY Times gave up on charging for online a while ago. So it seems in large measure for The Times of London. WSJ was going to do that, but Rupert clearly has had second thoughts. Still, big chunks and long "previews" of WSJ article are available for "free".

A few newspapers can get away with charging for online - or charging for at least some online material that is more analytical and less in the nature of "hot"news, which is now pretty much "free".

That makes sense because "hot" news becomes old now in a few minutes. Not in a few hours, like it once was.

Now, there are reports of what may be what we used to call "naked horizontal collusion" amongst some of the media going on....and, if true, it will be really interesting to see what the Obama DOJ and/or FTC and EU have to say. Canada would likely not even notice. See:

I really wonder if the whole aggregation and "free" online debate isn't similar to the P2P debate in the music industry. The times are changing for many complex reasons - but everyone just wants to kill the messenger.


Mary Adams said...

You are on to something with the allusion to the "long tail." Today's newspapers have a little bit of everything, including national and international reporting.

Maybe the long tail for most newspapers is to focus on local news/content.

Local focus would solve the value question. But they still need to figure out how to get paid.

The answer lies somewhere in the value of local focus with recognition of the value of journalism.

Of course, an on-line strategy would eliminate 90-95% of the average newspaper's cost base.

Could the $35/month I spend on home delivery of the Boston Globe help pay for local journalism?