Interesting. I think you need to work in some sort of monthly subscription option as well. Perhaps something that crosses multiple publications as well. Maybe like a digital newstand? A place where you can shop around different publications and pay all at once.

I also think memberships with value added features will start growing. But what can you add of value behind the pay wall? Exclusivity? I think this is what you need to sell. Perhaps discounts on products, first reserve on tickets to talks and other events, things like that. Hell, maybe even with a membership where you can get direct access to the journalists. Like access to private group chats and talks.

I think people will pay but these publications need to clearly demonstrate that they're providing a value that enriches the digital media experience. Or provide such a superior product that consumers feel guilty about not paying for it...

posted by bryanF at 11:48 AM on February 9, 2009

"Sure, but things like Adblock are used by <1% of the users, so I'm not too worried about that."

Hmm, I don't use Adblock, even though I'm aware of it, but ads don't really bother me. But there's a huge difference between seeing ads and paying x dollars per month -- people will go to great lengths not to have to move anything out of their accounts. If this became a dominant model, I could imagine Greasemonkey or some alternative get-around getting up to a 20-30% usage rate -- and in the very set of users that probably link to NYT articles the most.

#4 seems more realistic -- a company partnering up with Google so that their articles appear in searches but are not publicly available until after the micropayment is made.

(BTW, the $5 threshold idea is solid.)

posted by crazymonk at 11:53 AM on February 9, 2009

Rex, I like this. I think it could dovetail nicely with the "Times People" or whatever it's called thing that that the website added a few months ago and which I have used zero times because it seems pointless. (Update: I just clicked on my username and I guess I have "recommended an article" twice - don't even remember doing that. It also saves your NYT blog comments. Cool! I like it better already.)

Digital Locker I like. Would be nice when you're having one of those "wasn't there some article in the Times..." moments.

The $5 tipping point thing is useful and could also avoid the problem of banks thinking that small pennyish transactions are fraudulent.

Do you think having a yearly subscription option there would a) make them more money or b) scare people away?

Also, I guess my biggest problem would be the preview. I would be leery of paying for something based on seeing a few words on the margins. On the other hand, that adds extra work on the Times' side - writing snappy article summaries and all.

(PS: "dropped their support" confused me - I guess you were using it in the music industry sense rather than the abandonment sense? Anyway.)

posted by katiebakes at 11:55 AM on February 9, 2009

Ack, changed "dropped their support" to "announced their support." It implied the opposite of what I meant.

posted by Rex at 11:59 AM on February 9, 2009

"Hell, maybe even with a membership where you can get direct access to the journalists. Like access to private group chats and talks."

One thing that some places - well, one place at least, I'm thinking about the Brooklyn Museum of Art here - have done is provide access to locked Twitter feeds as a membership perk.

In the museum's case, it's thankfully not a lame spammy Twitter; they partner with an artist and/or curator to "man the Twitter" on a monthly basis, which I think is kind of cool.

Not sure how the Times could do something like this - lock the Twitters of all their writers? WWBrianStelterD? - maybe have a special Twitterer of the Month like the BMoA's model. But access to chats/preferred treatment at conferences or panels would do more to entice me when it came down to it.

posted by katiebakes at 12:01 PM on February 9, 2009

I am also concerned about the viability of the current availability of content remaining accessible. If I have to pay, I'll pay. Just make it simple and I am in. We are conceding then that an ad supported internet is doomed?

posted by ZuDfunck at 12:03 PM on February 9, 2009

i agree with bryanF on the value add (it would be a must, we already no that users are fatigued)....also, one consideration that oft goes unnoticed, and yet an extremely crucial one is in that sign-up process itself. is a user going to balk at the 4 cents or the actual sign up? you might be surprised its the actual sign up. now, if said media site has adopted OpenID or (gasp) FBC, then that is a large step in the right direction.

i will add one more thing, we know that users will always gravitate towards the path of least resistance...this means too that users will migrate to where they can find these sources for free.

and lastly, i'll say it again....marketers spend money on ads in order to reach people, right? you know why ads sales are declining? because (we) marketers don't find value in the CTR anymore...BUT we would be willing to pay VOLUMES to be able to engage and foster relationships with consumers on your media platform...and we'd pay a lot more than that CPM your charging...

posted by alisa at 12:04 PM on February 9, 2009

I really like the digital locker and $5 threshold. Great idea. You could work out deal with PayPal whereby payments of not greater than and not less than 5 at a freq. of not greater than one per month would be automatically approved?

posted by Chris Fitz at 12:49 PM on February 9, 2009

Rex whoever lifts this idea from you had better pay you. Lots of people have been talking/thinking about how to bring back the pay model (Premium subscription? Threshold for payment? iTunes model?) but you've gone ahead and thought out something that could really work - the most difficult transaction cost involved is typing in your credit card information once, and how many of us have done that? (I know I have done it way too many times.) If we can store our information with iTunes and Amazon we can do it with the NYT, and should (and the model you cite is actually close to what they used to charge for their archived material back in the day, which yes of course I bought).

I also like that you're not charged until you hit $5 - it means that you are lulled in with a small-enough gateway to not feel like you were tricked into racking up a huge bill, but it doesn't hit you with the annoying credit-card request right at the outset (New Republic, I'm looking at you).

I'll disagree with Alisa where she said "we know that users will always gravitate towards the path of least resistance...this means too that users will migrate to where they can find these sources for free." I actually don't think that's the case. It was a PAIN to look for MoDo et al under TimesSelect because whichever blog would have had to copy the whole column, or maybe would have MoDo but not Krugman, etc. etc. I do believe that people want to own and archive things, even to have a history of a thought processs like Amazon's Wish Lists. (And as a social element to be able to browse other people's lockers, to recommend stuff or what not.)

Also it looks pretty. That always helps.

p.s. I'd pay for Twitter, Facebook, YouTube and Dodgeball, if it wasn't almost dead. And I paid for Flickr without batting an eye.

posted by Rachel Sklar at 1:38 PM on February 9, 2009

Good post, Rex. I like the idea, and agree with other commenters here.

Note: theladders.com appears to have the lightbox interface you describe for payment, although it appears with first pageview. Maybe inquire with them if anyone has been able to block/game their pay-for-content flow?

Question: Do you see publishers still serving up display ads to those who pay?

posted by Karl Pearson-Cater at 3:12 PM on February 9, 2009

I think the key issues here are social, and not technological or even about design (though good design can help a lot). Ultimately it costs me WAY more than 4 cents of brain power to decide if I want to pay for something or not so that's the cost that is a problem for me. Useful solutions will attack this key part of the problem.

Even if I didn't use the train every day I'd still buy a monthly subway pass. I don't want to be thinking about the $2 cost every time I ride.

Also, some discussion of RSS is needed.

posted by harryh at 3:15 PM on February 9, 2009

Oh, and by the way Google Checkout was absolutely first conceived as a micropayments system with the NYTimes specifically in mind. I was on that team back when it was a demo written in PHP.

posted by harryh at 3:19 PM on February 9, 2009

Hey Harry,

Perfect context on the Google Checkout thing.

Also, look at some of the name links I used above. A few of them provide decent evidence that $.03 per story would be more than enough... we can debate the numbers (and how the system would increase or decrease traffic), but I'd say it's definitely below $.10/story.

posted by Rex at 3:22 PM on February 9, 2009

This is an easy decision on NYTimes, or the couple other publications where I know I'm getting a well-written article.

But if I pay for a five-graph AP story, I'm going to have that in the back of my head the next time you ask me for money. I probably want a better look at what's beneath the veil.

posted by Mitch at 3:23 PM on February 9, 2009

Mitch: Oh yeah, totally. There are a few things that I don't think would fall under the micropayment model -- and wire stories are definitely one of them.

Karl: I thought about adding in a "no ads" option too. Like maybe instead of $12/month, you pay $20/month. Or whatever the economics would dictate. But then I thought -- well, that's complicating the simplicity of this. Maybe it's an option that's "deeper" into the site...

posted by Rex at 3:27 PM on February 9, 2009

Rex, I agree: No-ad feature complicates things. Maybe publisher could limit a consumer purchased page to one ad position.

Agree with @harryh that RSS discussion needed. Would be huge nut to crack.

posted by Karl Pearson-Cater at 3:52 PM on February 9, 2009

You could also sell it by making the user experience ad free (for all other content)if they pay. When the NY Times was charging for their stuff, I just carefully navigated around it and Googled for coverage on articles that they wanted to charge me for. I might have considered paying though if I was guaranteed not to see ads on the site (or in my inbox) for a month.

posted by Mike Simon at 4:00 PM on February 9, 2009

I've got 2 issues w/ this model. A) micropayments is success by a million paper cuts. Macropayments (http://culld.us/3421633 ) are easier all the way around. B) In this post-scarcity age - charging for access has been replaced with charging for filtering.

posted by Garrick Van Buren at 4:24 PM on February 9, 2009

also @harryh & @Karl Pearson-Cater, one of the goals of my http://cullect.com project is to make full feeds reader-supported.

posted by Garrick Van Buren at 4:26 PM on February 9, 2009

I'll play devil's advocate with that and respond to each with....

A) To apply the macropayments scenario for NYT, it would probably look something like NPR -- or an endowment. I have a whole slew of reasons why I don't think either of those will work for NYT, but that's for another essay.

B) That's a more historical fact than a necessity fact. The thesis espoused by micropaymenters is that quality still matters -- and that quality actually is a scarce commodity. And I guess the voracity by which I still read the Sunday New York Times is probably good evidence of that.

posted by Rex at 4:31 PM on February 9, 2009

For the sake of this conversation, I posit micropayments as you describe already exists (aka pay-per-click ad models).

Yes, quality is a scarce commodity. Awkwardly, quality can only be determined afterwards. So, exposing $$ paid & payer count - a la Amazon reviews - would help minimize this.

Additionally, I posit if an article is of any quality, it has added at least $5 of value to the reader.

posted by garrick Van Buren at 4:45 PM on February 9, 2009

Ok, a few things...

Rachel- people do gravitate towards that which is free...hence the mess media finds itself in right now...that said, a few other notes: the whole "locker" idea has nothing to do with a paid model, unless Rex you are suggesting that access to said locker is part of the value exchange to the consumer who purchases per post?

Rex, you mention a micropayments solution whereby "This system could be scaled up to become the micropayment system for all news consumption." Are you suggesting the creation of microformats? would this ultimately be a part of the Open / dp movement whereby my universal identity included purchasing data? (it would make sense if it did)

And finally, re: presonlization and "digital lockers"....this is where we get into the idea of data portability... what good is my firewalled NYT data if it is not portable and accessible from any application or access point on the Web? this is backwards to where we are going--which is to say towards the free exchange of data, data being all of the personal, explicit (profile info, content uploads) and implicit (content i've viewed, like, commented) actions I take (including friend connections). basically, yes, Rachel people do want access to their data histories...and with data portability the sharing of that data can happen not only on-site but off (a passive traffic-driver)

if this micropayments could be tied to my universal identity, then i would say this might have more legs. i think it will be wonky for a while until we have an open web in which my identity is 1) universal and 2) my identity data is accessible anywhere on the Web (again this includes my purchasing info that would be used in said NYT scenario)

posted by alisa at 5:18 PM on February 9, 2009

Alisa:

Sure, tie it to the universal identities movement. I suspect that's even further away as a realization than micropayments (unless Facebook shocks us by the end of the year). These aren't mutually exclusive movements.

The "digital locker" idea is like a meter of things you've purchased. It's a small attempt to start to visualize your purchase history. And in theory, it can include other "pro" features that get added later.

Also, NYT already has a robust API, and recently announced article search. This isn't social graph data, but it's definitely important.

In general, I'm not sure anything in my post runs counter to data portability... I'd argue that it actually lays the groundwork for some of it.

posted by Rex at 5:34 PM on February 9, 2009

This should get added to the link mix: Micro Economics | Why Steve Jobs and micropayments won't save the media.

It focuses a little too much on the iTunes model to be completely useful as a global discussion, but it's good counterpoint nonetheless.

posted by Rex at 6:01 PM on February 9, 2009

I don't know, my consumer anxiety is going kind of wacko right now. Someone else said it somewhere, but I don't want to be nickeled and dimed. I often click on articles because I'm a little curious; with this new model, I'll be less likely to "broaden my horizons." I don't want to decide if an article is going to be worth the click.

posted by Robert at 7:24 PM on February 9, 2009

I hate the idea of paying for news or of doing any kind of subscription for anything (as opposed to one for one purchases), but I think some of your ideas are good. I think the $5 threshold is a very smart idea for beating surcharges, for example, and for drawing people in in a nonthreatening and seemingly charitable/trusting way. It would put people at ease and get them past an important threshold. The only drawback I see is that it would require a login to even start accruing sub-$5 microcharges, which is already a barrier to use.

I think information still wants to be free, though. In the limitless plane of the internet, I think there will always be somebody or many somebodies who will provide for free what pay news sites would charge for. I don't even like being prompted to log in at news sites, much less pay for the content. When I get prompted to login or subscribe, I just go somewhere else and have what I want in a few seconds.

I do think micropayments are much more likely to work than subscriptions. I base that on my behavior with cheap mp3s. 99 cents just doesn't seem like real money to me, and credit cards already feel kind of not real, and it just takes one click, so I now buy mp3s whenever the impulse registers or the song is in my head. And I never even really keep track of how much it adds up to over time. I think people are more willing to spend small amounts of money over time because it never seems like anything of consequence at any one time.

But in the case of news, I think people will just flow like a river around a rock if a site tries to charge, even if it's a small amount of money. When something has been free for so long, internet news in this case, it just doesn't make sense to people to start paying for it when they can just as easily get it from somewhere else for free (and legally). My utilitarian alarm just starts dinging when I try to imagine that. I think the people who would gladly pay in this scenario are a very small minority.

As to whether quality still matters, it does. But it matters less and less to fewer and fewer. I think again that there is a small minority of people who consume news to a depth that they recognize and appreciate and will pay for top quality, and they aren't enough to make the model viable. More and more we aim for shorter and more concise summaries, which leave less room for thoughtful analysis. Using myself as an example of a syndrome I've seen decried here and elsewhere, when I see one of those stories that has like 12 additional pages linked at the bottom of an already long story page (or really even more than a few), I give up on the article just about every time right there, just absorbing what I can from the initial page, once in a blue moon skipping to the last page to see how it ends, and then moving on. I wasn't that way in the past and would read a whole print paper. The new medium is changing our behavior.

As for revenue, what we used to pay for print papers wasn't really their revenue model - charging 50 cents or whatever was just so you'd associate some value with the paper and not see it as a throwaway. The real revenue has always come from the ads. I know the landscape is changing with the ability to block ads, but I still don't see subscription or pay to play as viable.

A solution like yours is probably the kind of medicine we would need to take to preserve the news industry in its current form. But I think what's more likely is that the industry will continue to change until the ecosystem supports it naturally, even if we are the worse for it. People won't embrace plans to save the current system out of enlightened self interest because we never do that. We will respond to incentives, but it takes so much more input to get the same level of output than when we are inconvenienced, deprived, threatened, or hurt. That's what really moves us to change.

All of this is not to say that it won't necessarily work. Somehow Comcast has me paying $125/mo. for cable and internet subscriptions, for example, which is nuts. Somehow they made that work. I'm an unwilling customer and yet a paying one. Cable reeled us in back in the day by saying they were replacing an ad-supported model with a subscription-supported one. Now we pay crazy subscriptions to watch lots and lots of ads. Somebody somewhere is laughing at that. So smart cookies could probably figure out how to trap us in this scenario too. Reel us in, block off other options, and then start jacking things up. Don't help the Dark Side, Rex!

Very funny, saying you want to stay out of this one, btw. You know they'll call you now for a brainstorming consult. Smart thinking.

posted by Eric at 9:00 PM on February 9, 2009

Rex, I'm a little disappointed you didn't address "the penny gap" counter-argument because it is the biggest factor working against it. It doesn't matter how you package it, design it, market it - some people just won't pay for this stuff and will always seek free alternatives, which btw, will always exist.

Please go back and read Clay Shirky's "The Case Against Micropayments" from 2000. He's right, case closed. Human psychology hasn't changed that much in 8 years.

(Now waiting for you to reply with how Shirky actually PROVES your point. I'm waiting!)

Also, don't forget Slavoj Zizek's "secret": Communism will win.

That said, offer me a compelling subscription and I'll pay for it. I have a Flickr Pro account, paid for Yahoo mail in the past and was once a paying user of Times Select too! Those aren't micropayments.

posted by krucoff at 9:50 PM on February 9, 2009

Walter Isaacson is on the Daily Show talking about this.

posted by Eric at 11:29 PM on February 9, 2009

I admire the idea in general terms, and as others have said, the $5 threshold is a great idea.

I wish I had the space to dissect this idea more, but my biggest objection is one of human nature and business practices.

At the end of the day, NYTimes Select didn't work because the pool of people willing to pay wasn't large enough to be a real business. And by charging people for access, you almost guarantee that the number of subscribers is self-limiting (I think this is known inside the biz as the "Stern On Sirius" effect).

Micropayments have the same problem, but with a larger scale. It only works if the majority of publications opt in, and that the list of opt-ins tends to be the publications with the highest quality. Otherwise, there are still too many free options. And let's be honest, how often is there some "must-read" content that we can't wait to read somewhere else. And any publication with the balls or the deep pockets can skip the micropayments route, and build traffic and mind-share at their competitors expense.

Hey, as an under-employed journalist (and a former distant co-worker of yours, Rex), I'd applaud an idea that makes everyone money. I've just never been able to imagine a scenerio in which micro-payments work on a large scale.

posted by Rick Ellis at 2:07 AM on February 10, 2009

I'll read the cached version, thanks.

posted by bubba at 2:56 AM on February 10, 2009

add a few bucks to everyone's ISP and distribute it to content providers based on aggregate usage stats.

oh wait. wasn't that AOL?

posted by josh at 3:18 AM on February 10, 2009

Nope. Try again.

posted by karenuhoh at 11:34 AM on February 10, 2009

I am curious as to how this model would play out at the institutional level. I'm referring specifically to university libraries, public libraries, and other institutions that still most likely subscribe to the paper edition of the NYT.

posted by Tony at 1:15 PM on February 10, 2009

(oops...cont'd)

...but increasingly provide more and more of their access to materials and resources digitally.

posted by Tony at 1:16 PM on February 10, 2009

Rex, not saying that it would run counter to dp....

Also, I do want to point out one thing in regards to the digital locker...that is the kind of data that marketers would pay through the nose to get a hold of. Now, marketers would literally pay individual consumers (of which the NYT could get a cut) for access or visibility into said data in return for some kind of value exchange.

For example, if I am Lexus, and I know that reader X of the NYT reads all the auto articles and comments frequently about Lexus...I would be will to pay anywhere up to $500 to specifically target and acquire that customer. As a marketer, I would be willing to pay such a hefty CPA because I know that that reader is exactly who I want to target (it would help too if in their 'digital locker' was other identity data such as age, gender, HHI, etc). And again, I would be paying him, reader X, to effectively talk to him. He owns the data but NYT, being the arbiter of said data, would get a cut of that payment too.

It may sound a little convoluted, but this is seriously what marketers would rather do than buy ad space. Monetize attention data, not content is how the saying goes marketing-side.

posted by alisa at 2:08 PM on February 10, 2009

Also, the concept of a "threshold" (be it $5 or $10) has been around since the idea of micropayments was first hatched. Do you really think it never occurred to anyone how best to process this stuff? Doesn't anyone remember the race for universal digital wallets for precisely the purpose of storing all this info to make purchases across sites easier and to handle small payments?

I had one of these in '98-99 (whatever blur it was in my Jupiter Research days) and one of the features for micropayments was your credit card would be charged $5 or $10 and put in your eWallet balance which would then be deducted as you bought stuff along the way. As soon as you hit zero, you'd then get charged another $5 or $10 and start over again.

Rex, please bring something NEW to this. Next time you try to design a solution to something, it might help if you actually BELIEVE in it. I get the feeling you really don't so I'm not sure what the point of your exercise was. Some ass backwards way to enter the debate?

posted by krucoff at 3:22 PM on February 10, 2009

In all seriousness, I like the idea of bringing micropayments to the nytimes.com and Rex presents a nice design.

Only, they have to move fast. To teenage Web surfers and the digital elite, the New York Times borders on irrelevant. It only remains relevant with the liberal elite, corporations, media circles and PR folks like you and me. Each day that the New York Times Co. wastes in adopting some sort of online payment strategy looses prospective paying customers. It wont be long before even these aforementioned groups come to the realization that they dont truly NEED to read the New York Times online and they surely dont need to pay for it.

posted by Kyle Austin at 3:57 PM on February 10, 2009

I don't really think micropayments will work, but here's a cool idea that I haven't seen anyone else throw into the mix: an affiliate program.

Let's say nytimes.com starts charging a small fee to read each of their stories. They should set up an affiliate program whereby whoever sends traffic their way can earn a proportion of the fee each person pays.

Just for the sake of the discussion, let's say the NYT starts charging 5c per article, then they could pay 2c of that back to the person who sent the reader their way (if the linker is part of their affiliate program).

This actually gives people an incentive to link to the NYT stories even though they're behind a firewall.

I'm still not convinced it would work but it could be worth thinking about.

posted by Matt L at 2:00 AM on February 11, 2009

Make it true micropayments; that is, payment of one to five mils (.001-.005) of a dollar or a Euro. At this rate the payor won't feel anything, if at all, perhaps not even $5 per month. But leverage these payments against the numbers of the Internet-an article with 1 million page views means $1000-$5000 for the content provider. Where payment is painless-much less than a cent-the system will work.

posted by mokane at 2:36 AM on February 11, 2009

Thought-provoking post. I confess that I disagree fundamentally with the approach, but I accept that within its own premise, the process flow makes sense.

I've written a more complete response to this on my own site. The short version is that we should stop thinking of money in terms of payment for product, and start thinking about it as reward for having stimulated the visitor. Intellectually, that is. 8^)

posted by Graham Crumb at 8:49 PM on February 15, 2009

For me, the deal-killer on most micropayment schemes is lack of anonymity. I hate to leave digital breadcrumbs ultimately leading to my credit card number (via Paypal, etc.) everytime I'm interested in something odd or offbeat (and no, I'm not talking about p*rn). What about something modelled on phone cards. Pay cash for a $5-10 card at the convenience store, with no great worries if you lose it. Given the advantages, I would be willing to accept the transaction fees needed to make it profitable for everyone involved. That is, if I only get $4 worth of content off a $5 card, that OK. I wouldn't bother typing in a 16 digit number (or whatever) for aimless browsing, but I estimate I'd use it two or three times a day.

posted by Marc at 12:30 PM on February 20, 2009

Well... You don't have to reimagine the perfect micropayment system. It already exists; it is called Znak it!

And, you are all invited to visit us online www.znak-it.com or come to the next (March 31-April 3) Web 2.0 Expo in SF, where we will present Znak it! our newest (and hopefully the only one you'll ever need) micropayments system. Znak it! is truly easy to use, safe and fair (inexpesive for the Web users and content providers alike)

Or, if you are in Europe, you can come to the Digital Innovators' Summit in Berlin, Germany, on March 3/4 (next week!), where we will be talking about Znak it! and how to use it.

posted by Greg Golebiewski at 5:39 AM on February 23, 2009

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Rex Sorgatz

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