September 08, 2003

Would You Pay a Nickel to Read This?

Mike Gaynor, the founder of Redpaper, believes you might. Redpaper is a digital newsstand that offers creative contributors a platform to sell their essays, music, photography or, as Gaynor puts it, any of the other "stuff inside peoples heads" for micropayments of as little as 2 cents.

The Wall Street Journal writes about Redpaper (and a similar operation, Lulu.com, which also sells books) and notes that business-model belief behind Redpaper and Lulu is "that Web users will warm to the idea of paying -- as long as the content has artistic merit or other value."

In the world of online newspapers (and other media), the debate over whether to charge for content (more revenue) or not (more readers) draws well-reasoned and emotional commentary from both sides.

Internet culture maven and technology consultant Clay Shirky argues that micropayment-based publishing will continue to fail because "the trend towards freely offered content is an epochal change, to which micropayments are a pointless response." The underlying force driving that change, says Shirky, is "a huge increase the power and reach of the individual creator."

Digital publishing technology, of course, makes personal publishing of all types, from the pure creative to the journalistic, not only possible but affordable. [ Read: J.D. Lasica's report on participatory journalism ] Sharky compares the economics of analog and digital publishing:

"Once you have a computer and internet access, you can post one weblog entry or one hundred, for ten readers or ten thousand, without paying anything per post or per reader. In fact, dividing up front costs by the number of readers means that content gets cheaper as it gets more popular, the opposite of analog regimes."

More interesting than the economic scalability of micro-publishing, is what Sharky calls the disruption of the "fame and fortune" equation. "For an author to be famous, many people had to have read, and therefore paid for, his or her books. Fortune was a side-effect of attaining fame. Now, with the power to publish directly in their hands, many creative people face a dilemma they've never had before: fame vs. fortune."

Sharky argues that media companies, such as newspapers, that charge for generic news will fail, even on a micropayment basis. He says: "It's easy to think a newspaper is worth a dollar, but is each article worth half a penny? Is each word worth a thousandth of a penny? A newspaper, exposed to the logic of micropayments, becomes impossible to value."

Sharky handily sums up the paid vs. free argument thusly:

"The economics of content creation are in fact fairly simple. The two critical questions are 'Does the support come from the reader, or from an advertiser, patron, or the creator?' and 'Is the support mandatory or voluntary?' The internet adds no new possibilities. Instead, it simply shifts both answers strongly to the right. It makes all user-supported schemes harder, and all subsidized schemes easier. It likewise makes collecting fees harder, and soliciting donations easier."

In short, weblogs and other personal publishing tools enable consumers to view content first then decide whether to voluntarily pay for it - the opposite of the traditional publishing and the opposite of these new digital marketplaces like Redpaper, where, even though you're only forking over a nickel, you still have to pay first.

Jeff Jarvis, responding to Sharky's article, points out that some companies, Apple, for example, with iTunes, are gambling on micropayments, but flips Sharky's thesis that micropayments won't work and restates it smartly this way: "But what he's really saying is that free content will work in ways that are more revolutionary than we even know."

Jarvis debunks what he calls the "mythical nickel payment" with this Appalachianism: " 'Gee, if I had a nickel for every time somebody read me, I'd be rich, I tell you, rich!' - with (to which my West Virginia pa would reply, 'Yeah, and if a frog had wings he wouldn't bump his ass every time he jumped').

I'd pay a nickel for that line. Ribbit.

For newspapers, which derive revenue from a mix of subscription, advertising and newsstand "micropayments," the proliferation of free content will further devalue their journalism.

To entice readers, especially coming generations for whom the Internet's all-you-can-browse smorgasbord of content will be their primary news source, newspapers must distinguish themselves with quality not quantity.

Links
 Wall Street Journal Web Sites Offer Unsung Writers Chance to Sing
 Clay Shirky Fame vs Fortune: Micropayments and Free Content
 J.D. Lasica What is Participatory Journalism?
 Jeff Jarvis The free me

Posted by Tim Porter at September 8, 2003 09:18 AM
Comments

quote: Once you have a computer and internet access, you can post one weblog entry or one hundred, for ten readers or ten thousand, without paying anything per post or per reader. "

When are we going to kill this myth: any blogger who has an audience of any size knows that more readers mean more bandwidth expense and aggravation. I don't know the ratio of extra readers to extra bandwidth cost, but this guy greatly simplifies something that's fairly complicated.

Posted by: tom mangan on September 8, 2003 10:39 AM

Interesting post.

I'm happy to give it away. As an academic, I'm already paid to think and write by Park University. My blog offers me the opportunity to work out what I'm thinking in public. It keeps me writing, which keeps me thinking, which helps sustain my "normal" academic output.

I just don't see any point to getting paid for it or asking readers to hit a tip jar. I'm already getting immeasurable benefits from giving it away.

Posted by: acline on September 8, 2003 10:42 AM

Tom ... you've got a point, but bandwidth has shelves so I can serve up 100 pageviews a day or a thousand for the same price. It's unlikely I'll ever be Instapundit, so my cost remains the same. For "small" bloggers like myself, bandwidth isn't an issue.

Like Andrew, I use First Draft as a way to keep my writing current and also, because I am a horrible procrastinator, as a way to "kick-start" my "real" work every day, the stuff people pay me for.

Posted by: Tim on September 8, 2003 10:56 AM

Pretty much all of us get into it for the fun; others have higher ambitions but unless you know stock market secrets or other proprietary things people will pay for, voluntary sponsorship seems like a vague dream for making individual journalism pay online. I read somewhere that Romenesko gets $80k a year from Poynter, which, adjusted for inflation, is about what any reporter at a major metro would make when you take benefits into account. How many visitors would you need contributing to the tip jar to make a living? Pretty soon you'd be joining forces with friends and colleagues to generate more content and in a few years you'd have something very much like a newspaper or TV station. And be back to square one. I'm not saying it can't be done, but guys like Drudge and Romenesko are definitely the exceptions.

Posted by: tom mangan on September 8, 2003 02:56 PM
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