Why Small Payments Won’t Save Publishers

With continued turmoil in the advertising market, people who work at newspapers and magazines are wondering if micropayments will save them, with recent speculation in this direction by David Sarno of the LA Times, David Carr of the NY Times, and Walter Isaacson in Time magazine. Unfortunately for the optimists, micropayments — small payments made by readers for individual articles or other pieces of a la carte content — won’t work for online journalism.

To understand why not, there are two key pieces of background.

First, the label micropayments no longer makes any sense. Some of the early proposals for small payment systems did indeed imagine digital bookkeeping and billing for amounts as small as a thousandth of a cent; this was what made such payments “micro”. Current proposals, however, imagine pricing digital content in the range of a dime to a dollar. These aren’t micro-anything, they are just ordinary but small payments, no magic anywhere.

The essential thing to understand about small payments is that users don’t like being nickel-and-dimed. We have the phrase ‘nickel-and-dimed’ because this dislike is both general and strong. The result is that small payment systems don’t survive contact with online markets, because we express our hatred of small payments by switching to alternatives, whether supported by subscription or subsidy.

The other key piece of background isn’t about small payments themselves, but about the conversation. Such systems solve no problem the user has, and offer no service we want. As a result, conversations about small payments take place entirely among content providers, never involving us, the people who will ostensibly be funding these transactions. The conversation about small payments is also not a normal part of the conversation among publishers. Instead, the word ‘micropayment’ is a trope for desperation, entering the vernacular of a given media market only after threats to older models become visibly dire (as with the failed attempts to adopt small payments for webzines in the late ’90s, or for solo content like web comics and blogs earlier in this decade.)

The invocation of micropayments involves a displaced fantasy that the publishers of digital content can re-assert control over we unruly users in a media environment with low barriers to entry for competition. News that this has been tried many times in the past and has not worked is unwelcome precisely because if small payment systems won’t save existing publishers in their current form, there might not be a way to save existing publishers in their current form (an outcome generally regarded as unthinkable by existing publishers.)

Faith in salvation from small payments all but requires the adherent to ignore the past, whether existing critiques (e.g. Szabo 1996; Shirky 2000, 2003; Odlyzko 2003) or previous failures. Isaacson’s recent Time magazine cover story on micropayments, How to Save Your Newspaper, a classic of the form, recapitulates the argument put forward by Scott McCloud in his 2003 Misunderstanding Micropayments. That McCloud advanced the same argument that Isaacson does, and that the small payment system McCloud was proselytizing for failed exactly as predicted, seems not to have troubled Isaacson much, even though he offers no argument different from McCloud’s.

Another strategy among the faithful is to extrapolate from systems that do rely on small payments: iTunes, ringtone sales, or sales of digital goods in environments such as Cyworld. (This is the idea explored by David Carr in Let’s Invent an iTunes for News.) The lesson of iTunes et al (indeed, the only real lesson of small payment systems generally) is that if you want something that doesn’t survive contact with the market, you can’t let it have contact with the market.

Cyworld, a wildly popular online forum in Korea, is able to collect small payments for digital items, denominated in a currency called Dotori (“acorn”), because once a user is in Cyworld, SK Telecom, the corporate parent, controls all the distribution options. A Cyworld user who wants a certain kind of digital decoration for their online presence has to buy it through Cyworld if they want it; the monopoly within the environment is enough to prevent competition for pricing of digital goods. Similarly, mobile phone carriers go to great lengths to prevent the ringtone distribution network from becoming general-purpose, lest freely circulating mp3s drive the price to zero. In these cases, control over the users’ environment is essential to preventing competition from destroying the payment model.

Apple’s ITMS (iTunes Music Store) is perhaps the most interesting example. People are not paying for music on ITMS because we have decided that fee-per-track is the model we prefer, but because there is no market in which commercial alternatives can be explored. Everything from Napster to online radio has been crippled or killed by fiat; small payments survive in the absence of a market for other legal options. What’s interesting about ITMS, though, it that it contains other content that illustrates the dilemma of the journalists most sharply: podcasts. Apple has the machinery in place to charge for podcasts. Why don’t they?

Because they can’t afford to. Were they to start charging, their users would start looking around for other sources, as podcasts are offered free elsewhere. Losing user attention would be anathema to a company that wants as tight a relationship between ITMS and the iPod as it can get; the potential revenues are not worth the erosion of audience.

Without the RIAA et al, Apple is unable to corner the market on podcasts, and thus unable to charge. Unless Apple could get the world’s unruly podcasters to behave as a cartel, and convince all new entrants to forgo the resulting vacuum of attention, podcasts will continue to circulate without individual payments. With every single tool in place to have a functioning small payment sytem, even Apple can’t defy the users if there is any way for us to express our preferences.

Which brings us to us.

Because small payment systems are always discussed in conversations by and for publishers, readers are assigned no independent role. In every micropayments fantasy, there is a sentence or section asserting that what the publishers want will be just fine with us, and, critically, that we will be possessed of no desires of our own that would interfere with that fantasy.

Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends.

This is superdistribution — content moving from friend to friend through the social network, far from the original source of the story. Superdistribution, despite its unweildy name, matters to users. It matters a lot. It matters so much, in fact, that we will routinely prefer a shareable amateur source to a professional source that requires us to keep the content a secret on pain of lawsuit. (Wikipedia’s historical advantage over Britannica in one sentence.)

Nickel-and-dimeing us for access to content made less useful by those very restrictions simply isn’t appealing. Newspapers can’t entice us into small payment systems, because we care too much about our conversation with one another, and they can’t force us into such systems, because Off the Bus and Pro Publica and Gawker and Global Voices and Ohmynews and Spot.us and Smoking Gun all understand that not only is a news cartel unworkable, but that if one existed, their competitive advantage would be in attacking it rather than defending it.

The threat from micropayments isn’t that they will come to pass. The threat is that talking about them will waste our time, and now is not the time to be wasting time. The internet really is a revolution for the media ecology, and the changes it is forcing on existing models are large. What matters at newspapers and magazines isn’t publishing, it’s reporting. We should be talking about new models for employing reporters rather than resuscitating old models for employing publishers; the more time we waste fantasizing about magic solutions for the latter problem, the less time we have to figure out real solutions to the former one.

121 Responses to “Why Small Payments Won’t Save Publishers”

  1. news.affigold.info » Micropayments and News Says:

    [...] micropayment what the ailing news industry needs? Will it save New York Times? Like Clay Shirky, I have my doubts about micropayments, particularly from usability perspective. Micropayment UI can [...]

  2. Jay Rosen’s Flying Seminar « Insomniactive Says:

    [...] Carr also got a lot of play for his suggestion of an “iTunes for news.”  But I found Clay Shirky to be the clearest thinker on the prospects of charging for content in a world of zero cost [...]

  3. Aika paha » Raha ei palaa kuin kartellilla Says:

    [...] ajatuksia mikromaksuja vastaan on esittänyt myös Clay Shirky. Lukittu sisältö voisi houkutella joitakin asiakkaita, jos sitä tarjottaisiin jonkin maagisen [...]

  4. [Updated] Baptist newspaper closes & death stalks the rest « BaptistPlanet Says:

    [...] Although more is involved than a simple conversion, even with bells and whistles added, it is still a page-flipping solution behind a pay wall. A low pay wall, BTW, but the Web already has plent of of small-payment publication solutions that failed. [...]

  5. The State Of The ‘Papers - She Loves Tofu Says:

    [...] and Thinking the Unthinkable Why iTunes is not a workable model for the newspaper business Why Small Payments Won’t Save Publishers European Newspapers Find Creative Ways to Thrive in the Internet [...]

  6. Cashing in on content : SupaFeed Says:

    [...] up their content, but paywalls cut content off from Google and prevent what Clay Shirky calls “superdistribution”, “content moving from friend to friend through the social network, far from the original [...]

  7. Cashing in on content | RSS For Gadgets Says:

    [...] up their content, but paywalls cut content off from Google and prevent what Clay Shirky calls “superdistribution”, “content moving from friend to friend through the social network, far from the original [...]

  8. Virtual cash could save news media | Tom Foremski: IMHO | ZDNet.com Says:

    [...] Some in the newspaper industry are hoping micropayments might work, but micropayments haven’t worked anywhere and are very unlikely to succeed this time around. [...]

  9. There’s Real Gold In Virtual Currencies - Is This A Solution For News Media? | Business News Says:

    [...] Why Small Payments Won’t Save Publishers « Clay Shirky [...]

  10. Would you pay to comment on a news site? « The Editor’s Desk Says:

    [...] of an iTunes model in which readers would pay a small amount to read a news story. The proposal has been met with skepticism, however, and Time itself has yet to adopt [...]

  11. almost effortless » Weekly Digest, 3-29-09 Says:

    [...] Why Small Payments Won’t Save Publishers Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends. [...]

  12. Internet is spelt “revolution” « The Aesthetic Elevator Says:

    [...] the whole article via this link. Yes, it’s long, but well-written and worth the [...]

  13. Die Mär von der “Generation kostenlos” » netzwertig.com Says:

    [...] Micropayments für nahezu alle Nachrichtensites nicht funktionieren, hat Clay Shirky vor einigen Wochen ausführlich dargelegt. Nochmal: Das hat nichts, aber auch rein gar nichts, mit einer “Kostenlos-Struktur” zu [...]

  14. NYT Article Skimmer: Recreate the Sunday Morning Paper in Your Browser | Techno Portal Says:

    [...] newspaper business is clearly struggling to reinvent itself on the web, and this experiment is only a small step in this direction – but it [...]

  15. Přišel čas na návrat placeného obsahu? : Online žurnalistika Says:

    [...] Why Small Payments Won’t Save Publishers [...]

  16. Business models: things not to do | The Evolving Newsroom Says:

    [...] Clay Shirky a demolition of the notion that some form of micropayments can save publishers: The essential thing [...]

  17. P-I Shifts to Online Only « Cynical Nostalgia Says:

    [...] Shirky disagrees with the micropayment concept: Nickel-and-dimeing us for access to content made less useful by those very restrictions simply [...]

  18. Follow-Up: “No More Free Content” « WiredPen Says:

    [...] Why Small Payments Won’t Save Publishers Possibly related posts: (automatically generated)It’s Just News … Channel Be DamnedUpdateK.I.S.S.Newsosaur’s prescriptions for newspapers transitioning to an online model [...]

  19. Digital News vs. Digital Music | Informationized Says:

    [...] People will pay for songs piecemeal. That won’t work for news. [...]

  20. Will Blog For Food » Boztopia.com Says:

    [...] for–us–and asking for their help. Micropayments by themselves may not work (Clay Shirky thinks they’re overrated), but working in concert with other funding streams, they can do just [...]

  21. Never Later » Blog Archive » End of days, read all about it [while there's still time] Says:

    [...] that charging readers micropayments on a per-article basis will save their business, rather than hastening its demise. Amazon.com is announcing to anyone listening that it’s only using Kindle to get [...]

  22. My iPhone is a Kindle, sort of « tomstandage.com Says:

    [...] proposal has been generally savaged, most thoroughly by Clay Shirky, who noted that “users don’t like being nickel-and-dimed… small payment systems [...]

  23. My .0000002 cents on Micropayments « As We Now Think Says:

    [...] piece outlining some payment models that actually do work. Clay Shirky (not surprisingly) disagrees with the entire [...]

  24. Bookkeeping systems | Accounting Blog Says:

    [...]  micropayments :: Why Small Payments Won’t Save PublishersPosted by rsvp via FriendFeed   [...]

  25. Chartreuse » Blog Archive » the self-inflicted wounds of dead institutions (Why No One Will Really Pay For News) Says:

    [...] Now I am not going to reiterate what folks smarter than me have said about these latest incarnations of trying to stick squares into circles. [...]

  26. Hopeless micropayments - First Drafts - The Prospect magazine blog Says:

    [...] Paying a penny an article won’t save newspapers, or anyone else, says tech guru Clay Shirky. [...]

  27. Internet Evolution - Rob Salkowitz - Why Micropayments Won't Work for Online News Outlets Says:

    [...] Reddit   Email This Walter Isaacson of Time magazine and mass collaboration evangelist Clay Shirky recently mixed it up on the subject of micropayments as a potential answer for cash-strapped news [...]

  28. Printed Matters » Paywall madness: Dec. 2008 - Feb. 2009 Says:

    [...] 09, 2009 – 12:34 pm Why Small Payments Won’t Save Publishers by Clay [...]

  29. Micropayments: Still Doomed | Cord Blomquist Says:

    [...] story about how micropayments will save newspapers. And Shirky once again steps up to the plate to explain why micropayments won’t work any better in 2009 than they did in 1996, 2000, or 2003. (I [...]

  30. | mikolas Says:

    [...] Shirky has a sobering opinion about the discussion that has been revolving around micro-payments recently. I think the real [...]

  31. Yet another plan to save the newspapers at Localoaf - Information: It’s the Magic Says:

    [...] http://www.time.com/time/business/article/0,8599,1877191,00.html [2] http://www.shirky.com/weblog/2009/02/why-small-payments-wont-save-publishers/ [3] I believe the credibility of the summary is enhanced by linking to the original article, but [...]

  32. Will Sommer - Micropayments: bad for democracy Says:

    [...] idea won’t work for a variety of practical reasons, outlined best by Clay Shirky and Steve Outing. Basically, people don’t like getting nickel and dimed; iTunes was created [...]

  33. Can small payments save publishers? (No.) | Bits & Bytes 2.0 Says:

    [...] King’s illness can be solved with the application of more leeches.  Clay Shirky2 explains why small payments won’t save publishers: The essential thing to understand about small payments is that users don’t like being [...]

  34. Noch mehr Zitate: 50 waren nicht genug » medienlese.com Says:

    [...] rather than defending it.” —Der New Yorker Professor, Autor und Berater Clay Shirky in seinem Blog, Februar 2009 (via Psj in den Kommentaren) Noch mehr Zitate: Hier geht’s zum ursprünglichen [...]

  35. Veckan som gick - vecka 7 at Same Same But Different Says:

    [...] genom mikrobetalningar. Vi är också väldigt nyfikna på hur det kan tänkas fungera i praktiken. Clark Shirky tror inte att det är lösningen för tidningarna. Det gör inte Jeff Jarvis heller: * Micropayments. Bless them, too. But micropayments simply have [...]

  36. Clay on Why Small Payments won’t save Publishers « Howard Greenstein’s Website Says:

    [...] Why Small Payments Won’t Save Publishers « Clay Shirky Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends. [...]

  37. Links - 15th February 2009 « Curiously Persistent Says:

    [...] Clay Shirky on why micropayments won’t save publishers [...]

  38. Shirky hears all… « Cato vs. Publius Says:

    [...] the article here. Published [...]

  39. Micropayments: Still Doomed | The Technology Liberation Front Says:

    [...] story about how micropayments will save newspapers. And Shirky once again steps up to the plate to explain why micropayments won’t work any better in 2009 than they did in 1996, 2000, or 2003. (I [...]

  40. NYT Article Skimmer: Recreate the Sunday Morning Paper in Your Browser | google android os blog Says:

    [...] newspaper business is clearly struggling to reinvent itself on the web, and this experiment is only a small step in this direction – but it [...]

  41. NYT Article Skimmer: Recreate the Sunday Morning Paper in Your Browser | The Internet Says:

    [...] newspaper business is clearly struggling to reinvent itself on the web, and this experiment is only a small step in this direction – but it [...]

  42. ArticleSave :: Uncategorized :: NYT Article Skimmer: Recreate the Sunday Morning Paper in Your Browser Says:

    [...] newspaper business is clearly struggling to reinvent itself on the web, and this experiment is only a small step in this direction – but it [...]

  43. NYT Article Skimmer: Recreate the Sunday Morning Paper in Your Browser | Spin Valley Post Says:

    [...] newspaper business is clearly struggling to reinvent itself on the web, and this experiment is only a small step in this direction – but it [...]

  44. Weekend Reading Says:

    [...] Why Small Payments Won’t Save Publishers: by Clay Shirky. “micropayments — small payments made by readers for individual articles or other pieces of a la carte content — won’t work for online journalism.” [...]

  45. Small Payments, Publishers, and Bad Ideas Says:

    [...] Clay Shirky: With continued turmoil in the advertising market, people who work at newspapers and magazines are [...]

  46. The Weekender: February 13 : i tell stories Says:

    [...] To Save Your Newspaper I’m not entirely convinced that it will work (in fact, I agree more with Clay Shirky when he says it won’t, but I’m not officially linking to Clay’s article here because I promised no doom and [...]

  47. LSDI : Giornalisti in ”drastica riduzione”? Says:

    [...] Il processo di informazione e di distribuzione non si esaurisce più nella linearità del processo giornalistico. Gli individui mediano le diverse fonti, le rielaborano, le rimettono in circolazione nei diversi network e nella blogosfera. È quanto Shirky chiama superdistribuzione. [...]

  48. Why MicroPayments Won’t Save the Newspapers Says:

    [...] Shirky gives a short lesson in the dos and don’ts of MicroPayments: Such systems solve no problem the user has, and offer no service we want. As a result, [...]

  49. Micropayments: Pros and Cons (Back to the Future) | Jeff Beckham Says:

    [...] Clay Shirky: Why Small Payments Won’t Save Publishers [...]

  50. The value in a niche (or why Clay Shirky is a freeloader) Says:

    [...] – and in fairness everyone else – routinely links to bad news and analysis about the newspaper industry. Recently more newspaper folks have started [...]

Comments are closed.