The Truth About Micropayments

by Mielle Sullivan, Janus Networks

In recent weeks, there has been a lot of buzz about micropayments and if they can save journalism as we know it. With more local papers closing monthly and even giants like The New York Times teetering on the brink of collapse, newspapers and loyal readers are crying out for something, anything that will preserve their way of life.

Presumably, mircorpayments would allow users to pay small amounts of money–a few cents to a few dollars–to have view web-content and thus fund a publications journalism. A few different models have been proposed: a “pre-pay” or “top-up” structure wherein a user loads up an account that is incrementally billed as content is viewed; a bundle model where users pay for access to severaldifferent sites or networks at once and a classic subscription model with monthly payments per publication. There have even been calls for Apple to extend their successful iTunes environment to other transactions for content and services.

I wish micropayments would work, I really do. But, sadly, even if they do work–which is doubtful at best–it won’t be enough. Even by optimistic estimates, user payments would have to be much more than micro to level the dropping revenues of papers for institutions like The New York Times which always made their profits from ads, not subscriptions.

If the bastions of traditional news from The Economist to Harper’s to the The Wall Street Journal fail, there will indeed be an informational void no blog yet can fill. But they probably won’t all fail. Some will die and others may become smaller, leaner organizations, but it is doubtful every one will disappear. We also must acknowledge that most local newspapers are not The New Times. The majority of stories printed in most local newspapers for last several years have come not from local reporters, but are reprinted Associated Press articles.

World wide competition has come to an industry that used to have a local monopoly. The result is that once large organizations will need to learn to be lean and compelling. Local papers need not have a national and international section, but instead report only on the compelling news in their area. Even national and international papers now compete for the same sets of eyeballs. In short, we still want quality investigative reporting we just need fewer reporters and papers to get it.

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