Walter Isaacson’s lead piece in Time about How to Save Your Newspaper has got people talking. Isaacson argues eloquently that the iPod and the Kindle have paved the way for a business model based on “micropayments,” in which readers pay a few cents for content that’s easy to access, legal and convenient:
“We have a world in which phone companies have accustomed kids to paying up to 20 cents when they send a text message but it seems technologically and psychologically impossible to get people to pay 10 cents for a magazine, newspaper or newscast,” he writes. “The key to attracting online revenue, I think, is to come up with an iTunes-easy method of micropayment.”
Isaacson is dead right. The only salvation to newspapers’ current dilemma is to find a way to reverse that tide that has conditioned readers to believe that information should be free. Now is the time to start.
The End of Free
Can you really put the genie back in the bottle? Conventional wisdom is that once newspapers began giving away their stuff for free, the game was over. But history has shown that that isn’t the case.
A decade ago, Napster briefly tried to make music free. When the Recording Industry Association of America applied legal pressure to shut down Napster, the wisdom was that music-sharing would simply be driven underground in a maze of peer-to-peer networks like BitTorrent and BearShare. That happened, but only to a degree. Apple’s pay-by-the-drink model has flourished and even BearShare has shed its spyware-ridden past in favor of working with music publishers. Free file-sharing will always exist, but the music industry has successfully convinced fans that swapping copyrighted material is wrong.
The recording industry thought it killed Napster, but what really put the stake through its heart were bands like Metallica, who went directly to their fans with a passionate argument that pirating music was killing the golden goose.
Artists Drove Transformation
The evolving model in the recording industry harnesses the best of both worlds. New bands freely give away their music in hopes of generating a following that can be monetized in paid downloads and concert tickets. Successful indy bands like The Airborne Toxic Event enable their fans to stream songs on their websites but charge for the convenience of downloading. These bands are making money by earning the right to charge for their work.
The reason a legitimate paid model is evolving in the recording industry isn’t because recording companies are driving it. It’s because the bands are. The secret has been a grass-roots campaign by individual artists to convince their fans that music has value and that every 99-cent download is a vote for the band to continue its work.
So what’s the lesson for the news business? For starters, it’s that the solution doesn’t begin with newspaper companies but with individual journalists. Newspaper publishers won’t convince readers to pay for information because their motives are suspect. They’re too invested in the print model, just as the recording industry is too invested in CDs. This is the problem with campaigns like The Newspaper Project. It tries to convince people that newspapers have value, but people don’t care about newspapers; they care about information.
The only way a micropayment model can flourish is if individual journalists carry the flag. It’s up to reporters and the emerging breed of online news organizations like Talking Points Memo to convince their fans to fork over a few pennies to consume their stuff. Perhaps these organizations can steal a lesson from the music industry by giving away their content free on their website but charging for downloads to a Kindle. If readers perceive the value, they’ll pay.
The second lesson is that journalists need to diversify their revenue models. Long Tail author Chris Anderson has proposed that in the future, people who make their living producing digital content will have to give away a version of their products for free and charge for something else: perhaps the convenience of a download, a speaking fee or even a printed version of the same information.
The key is to discard assumptions that news can only be delivered by large monopolistic organizations with legions of journalists whose salaries are funded by advertising. In the future, the brands of individual journalists will be just as important as those of the news organizations they work for. If some prominent columnists and editors can mount a campaign to convince readers that content deserves to be funded, a new model can emerge.
Prior to the dot-com collapse of 2001-2002, a lot of information was being given away for free. The bursting of the venture capital bubble forced the survivors to figure out sustainable business models. Most failed, but those who succeeded kicked off a new round of growth. The same can happen in the news industry. It will take a grass roots effort by those who deliver the news to change the minds of the reading public.
What do you think? Can micropayments save the news business? Post your comments here.
This entry was posted on Monday, February 9th, 2009 at 9:11 am and is filed under BusinessModel, Future of Journalism, Journalism, NewMedia, Solutions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.