Sorry, Rupert: Micropayments Mean Microprofits

Considering how infrequently I read Wall Street Journal articles, its threatened plans to bring on micropayments would turn out to be a much better deal for me than for the Journal.

I subscribe to WSJ.com only because I think I should (it’s a legacy of my expense-account days) but I find I read articles rarely because I first go through The New York Times, the Guardian, PaidContent, TechCrunch, and other sources before I get to the Journal. Indeed, I never go to the Journal to see what they have to tell me today; I go there through links to articles that were in one of the above. That is how young people read the news today (remember: “If the news is that important, it will find me”). If I really want to read that article, I might make a payment so small as to be called micro. But I wouldn’t end up making many of them. The knowledge that I could read that occasional piece would give me the confidence to cancel my WSJ.com subscription. In this transaction, Rupert loses.

I did also subscribe to the Journal on the Kindle as an experiment: Would it become a habit? I tried reading it every day but, again, I’d already gone through my primary sources and I found it repetitive. I also have found that media coverage in the Journal has been way down since Murdoch bought it; my Kindle experiment only drove that home.

You see, the problem here is the myth of regular readership. When I started newspaper sites, I had publishers on my rear because they expected people to read them every day, just as (they thought) people read newspapers. But just because the thing plops on the front porch every day, that doesn’t mean everybody reads everything - or sees every ad. That was the myth that fueled overpriced ad rates and overinflated editorial egos. Online, we get to see what people really read - and what it’s really worth to them - and that’s a lot less than we ever thought.

So if the Journal brings on micropayment, I fear for them that they’ll lose doubly. They’ll lose my subscription. They’ll lose my even occasional readership and the ad revenue that can come with that. They will, in a cruel irony, replace digital dollars with micro pennies.

Comments

[desicon:]

To state the obvious, with Internet the news paper business model is not anchored on advertisement dollars. It is content. Exclusivity, superiority of content, option to pay for what one wants and low unit price are key drivers. Apple proved with iTunes selling songs a la carte can be successful.

Legacy businesses have to quickly adapt to these new realities despite shrinking volume. At least it will allow them to operate on new viable business model. Otherwise like NYT sure death is just a matter of when.

May 11 03:53 PM

[Karen Consumer:]

Paying for content only makes sense if you're providing relevent, invigorating, investigative content that absolutely no one else is. Todays newspapers are failing because they went to simply regurgitating AP and UPI stories, printing syndicated columnists and cartoons, and selling ad space. I can get all that on the net and not have to wait about getting my paper in the rain (or out of the machine). They saw the local investigative reporter as their achilles heel and to a point were right, upon cutting said reporter they crippled their abillity to compete. If my local paper (Dallas Morning News) were to stop printing altogether, the independant contractors would be hurt, and there'd be a whole lot of metal recycled from the newspaper boxes being taken off the street, but everything DMN supplies is already on the local news channels or on the national websites. We get more local news reporting from unpaid bloggers and crime watchers than we do from Belo Corp. Facts is facts, and that's that.

May 11 05:57 PM

[Bobby Rifle:]

I'm still waiting for the big reveal, where Jeff Jarvis finally tells us what newspapers' strategy should be. Say what you will about News Corp.'s micropayment idea, but it's still more than Jarvis has ever proposed.

And desicon, bringing up iTunes is comparing apples and oranges. I want to listen to songs over and over again. I don't necessarily want to read the city council story over and over again.

Karen though is right. By cutting editorial staff, the newspaper chains have proven to be penny wise and pound foolish. They're still locked in this idea (naturally with Wall Street's support) that they can deliver 30% profit margins. The chains and Wall Street need to accept that those days are gone, that it's going to have to be more like 5-10%, and stop gutting your staffs.

For that matter, the newspaper companies need to stop listening to Wall Street. About 5 or 6 years ago, the market hucksters were bitching about how much money Lee had on hand after selling a bunch of TV stations. So Lee ended up buying Brown, and later Pulitzer, spending all that cash, and taking on a ton of debt to go with it. Maybe Lee's survival wouldn't be in doubt now if it had told the Street's carnival barkers to do one and instead had hoarded that cash.

May 12 01:13 AM

[NP Refugee:]

You are all correct about what got newspapers to where they are now (and I've had 25 years and a ringside seat). Jeff's correct assertion that publishers have deluded themselves into believing that newspapers were read every single day, cover-to-cover is the problem for which there is no readily available solution. How does one provide a strategy for a business model predicated upon sheer myth?

The NPs thought (wrongly), or perhaps led their advertisers to believe that they were operating all-you-can-eat, when, in fact, their readership was eating cafeteria-style. Frankly, I've never known ANYONE who reads every single line of every paper, but the ad rates were predicated on inflated prices and egos, and the notion that a subscriber spent their entire day reading the newspaper. They actually had convinced advertisers that their subscribers read the paper cover-to-cover, when, in fact, the readership surveys should have given them a dose of reality. They should have been pricing the sections based on the readership of that section. And the whole "pass-around" theory of readership; don't even get me started. It is, after all, just an unproven theory.

I'm afraid the answer, Mr. Rifle, is that there is no strategy for a house of cards. The next evolution of NPs will be where the over-priced, over-inflated, ego-driven writers who really never worked very hard (because no one expected them to) will go to work (and work hard) for suburban papers who will, in the future, have to step up from chicken dinner, eagle scout stories and start holding the powerful accountable from the grass roots. Let's face it, most people in the suburbs really don't care what's happening in a metro center, unless it somehow affects them; but they DO care (dearly) about what's happening in the suburbs where they live .

And those suburban papers will have less ambitious profit goals (which sounds nicer than saying they will be less greedy) and will live very lean. Sort of like how newspapers used to be before fuzzy math and fuzzy logic were applied.

May 12 11:08 AM

[WriterGuy:]

The idea that micropayments can't add up to real money is so 20th century thinking.

You're right to look at Apple, but the equivalent isn't iTunes, it's the iPhone App Store. People are discovering you can make a LOT of money selling apps that cost less than a buck, as long as you sell a lot of 'em. I recently cancelled my WSJ subscription because it was getting too pricey, and I've been enjoying my free access on my iPhone. But I wouldn't mind paying, say, a quarter for every story I read, or even a reasonable flat monthly fee ($2.99?) for unlimited access.

For every person who would give up their expensive annual subscriptions there may be 100 who would love to access the Journal's business and marketing coverage, if the price was right.

May 12 12:33 PM