'American Idol': Micropayment Model?

Last Updated May 21, 2009 8:25 PM EDT

The Wall Street Journal and Financial Times charge people to access some of their content online. And the New York Times is set to launch its own online payment scheme in a few weeks. Yet new media pundits like Jeff Jarvis are still convinced that a micropayment system will never work for the news industry. People just won't stop to pay a few cents to read a news story or gain access to a news site for the day when they can click away to a free, ad-supported platform, or so the thinking goes. Even if you get a few people to pay, the loss in overall readers that jump to free sites would be devastating to the advertising side of the business.

The problem, in my view, is not that people will be offended if you ask them to pony up a few cents--the issue is that making payments online is still a hassle. If you are like me, you make a handful of purchases through third party payment systems like PayPal each year. Whether I am buying a book or paying a vendor, the system has been safe and the transactions have been quick. But since I only make payments occasionally, it is a pain to dig through my email accounts and find my old user names and passwords. And getting people to fill out a new credit card form for a few cents just won't happen.

Yet when paying is as easy as typing a code into your a cell phone, Americans have no problem making micropayments. Last night, over 100 million micropayments were made to FOX as text "votes" for 'American Idol.' At about a buck a pop, FOX is probably pulling in more money per text "vote" than your metropolitan daily gets on the newsstand.

Still, most news content is not worth paying for and any successful micropayment system won't return the news industry to its former level of profitability. Of course, most of us would never pay for a "news" story on the results of 'American Idol,' for example. However, as the Economist has noted, "people's willingness to pay for a story is inversely correlated with the size of its potential audience." Hardcore sports fans will pay to access ESPN.com's insider features and financial analysts will pay to get accurate industry reports from the Journal.

Your time is money. When faced with the choice between the exact report you want, which costs five cents and the time to make a text (or some similar, easy micropayment option), or taking five minutes to dig around online for an inferior knock-off, which would you choose?

Image by Flickr user "nayrb7," CC 2.0.

  • Stefan Deeran

    Stefan Deeran helps environmental nonprofits and green businesses develop and execute their new media campaigns. He also publishes The Exception magazine, a nonpartisan news platform serving his home state of Maine. You can follow him on Twitter @RStefanDeeran or via Facebook.