Here's another proposed idea for monetizing content.
By Steve Outing
You're not listening; I can tell. Many people in the industry are already in full-fledged panic mode, and one of the recent responses has been a wave of calls to resurrect an online publishing business model that has not yet worked: micropayments.
Charging for content is a dead horse. Most news content on the Web has been free for 15 years, and attempts to charge for commodity content have failed again and again because, for example, what most news companies produce is easily replaceable, for free, with a few clicks elsewhere.
There is a better way for online publishers to get people to pay for their content -- and of the many recent articles about how the industry can get people to start paying for their content (since online advertising alone doesn't bring in enough money to support large newsrooms), I've yet to see any suggestions like a model that I learned about recently from a California start-up venture called Kachingle. I'm not sure if this company has the answer to save magazines and newspapers, but if Kachingle succeeds, it'll make a lot of digital publishers (from bloggers to newspapers to Time magazine) a lot of money.
Problems with Micropayments and Paywalls
The new wave of micropayment promoters -- while genuine in their desire to save the jobs of journalists and editors and to stop the decline in the quality of content resulting from layoffs, cutbacks, and bankruptcies -- is actually suggesting something that will dig an even deeper hole for the industry.
A significant problem with micropayments is that it walls off content and makes it difficult to share with others and spread it around the Web. If I like an article and promote it in one of my Twitter posts, many of the people will not read it if they encounter a pay demand even for 5 cents; it's a barrier that will turn many away, especially if to get to the article the prospective user first has to sign up for some content payment network account. If I've paid 5 cents to read an article and want to promote it to my social network friends or followers, will the URL that I share even work? Perhaps not if the publisher hasn't set up the system to account for that. Internet users from other countries may not be able to access the content at all because they can't sign up for the micropayment system.
And of course there's Google, and the various news and blog search services. Will they index your content if it's behind a micropayment pay wall? If Google can't point people to your content, you may as well not be on the Web. And you're out of business.
Publishers have to get over the idea that they are going to get paid directly by the user. For the vast majority of a publisher's content, there can be no barriers before an article asking the user if he wants to pay a penny or a nickel, or buy a $2 monthly subscription, to read on.
The user must be given the option of whether to pay for a website's content (by financially supporting the site), or read it for free. I'm betting this one will be a tough pill to swallow for many industry executives with traditional media mindsets, but it's critical because it fits the culture, indeed the nature, of the Internet. Traditional micropayment schemes for online news content -- "pay up or go elsewhere" -- fight it, and thus are doomed to fail, in my view.
Executives also have to grasp the notion that few publishers will be able to get very many people to pay for their content specifically. Most newspapers, for instance, will only be able to charge online users directly for truly premium content that is not replicated somewhere else -- for example, e-books and other high-value content that's not typical fare.
Also perhaps hard to accept (but you have to): The online consumer samples many brands, from the New York Times to Joe's Blog. Most online users visit many websites on a typical day, bouncing around the world of free content. They'll have a few media brands and bloggers that they visit regularly, but they also encounter new ones frequently, via the serendipitous link spotted when reading something from a known media brand, to the recommendation of a friend on Facebook or Twitter or e-mail. Your once-powerful brand doesn't mean as much as it used to, and to get paid for content online, it must become part of a giant pool of content that's financially supported en masse.
Think of it this way and you'll understand the core concept behind Kachingle: Just as online users currently pay an Internet provider $30 or more a month for their computers to access the Internet, and perhaps a monthly fee for all the music they want from a service like Rhapsody, they'll also pay a monthly fee for all the news and blog content on the Web. Only the last fee is voluntary, and it will be up to publishers to educate the public on the importance of paying for content online. (National Public Radio has been doing this for itself for decades. Now commercial publishers and bloggers need to do it to benefit all of them, not just one entity.)
The next important point to grasp about the Kachingle model is that it allows individuals to financially support the online content providers that they like best. So if a publication wants to get paid for its content when a website visitor clicks through to one of its articles, it should ask that the visitor support the site via Kachingle.
Educating the Market
The power of the system is in its many participants. The trick -- and this is the part that traditional-thinking publishers will have trouble accepting -- is that you are not just asking users to support your content, you are asking them to support all the news, blogs, and other content online.
But if this bothers you, think about it for a minute. When you get your users to sign up for Kachingle and start paying for content, you're helping lots of other Web publishers. And as all those other Web publishers and bloggers encourage their users to sign up for Kachingle, they are helping your site earn more money. Call it the power of the commons. The winners are the blogs and websites with the best content and that attract the most visitors and fans. Publication sites can win at that game, right?
No one has tried the donation model applied in a user-simple manner across all manner of online content. If charging for news content on the web won't work, and micropayment barriers will just turn legions of potential readers (and viewers of ads) away, why not put heart and soul into this "crazy" new model and see if it can work to adequately supplement Web advertising?
Will Kachingle Save Online Publications?
Will Kachingle save giant news corporations and supplement online advertising income enough to maintain large buildings and newsroom staffs? I think that if Google used this same model, its size and power could in time get Internet users paying billions of dollars for online content.
Remember, the Kachingle model is just one revenue source that online publications should use. Many get money from participating in Google AdSense, for example; that has no effect on the rest of a site's business model. The main way that most news websites will earn enough money to survive will continue to be advertising. A main focus for them should be on reinventing their ad models, because selling banner ads and classifieds advertising is broken. Kachingle is just another revenue source.
The Editorial Angle
Recently, New York Times executive editor Bill Keller wrote in his column some answers from readers about why NYTimes.com doesn't charge for its content. (You'll recall its TimesSelect paid-content experiment with Op-Ed columnists and archives put on a subscription plan, which failed to bring in enough revenue so was scrapped for a return to free content, more readers and more ad dollars.) Keller said he favors the general idea of Times online content being paid for by consumers who value it, but leaves an open mind about what approach to take.
Keller also commented on the Walter Isaacson Time cover story, "How to Save Your Newspaper" (February 2009): "Walter doesn't really grapple with the main puzzle of a pay model: how to keep it from stifling traffic, especially search-driven traffic, so much that online advertisers go away. I'm not saying that problem is insoluble. Just that, as far as I know, no one has solved it yet."
I think that Keller and other editors, struggling to survive a nasty downturn in print revenues and unable to find a way to adequately replace them on the digital publishing side, would approve of the Kachingle approach. That is, if they can get their minds past the hurdle of the payment for their content being voluntary, and that their content payment is mixed up in the big pile of money with all sorts of publishers, down to the pajama blogger. Otherwise, the Kachingle approach addresses Keller's concerns about stifled traffic, search engines, and fleeting advertisers.
The Bottom Line
KISS -- keep it simple, stupid. Online publishers are more likely to convince people to pay a monthly "Internet content fee" if everyone is in it together and there's one ubiquitous medallion on every content site that an individual visits (which always remembers you). The publishers who make the most money will be those that produce the best content, and thus get the most people to support them via the Kachingle system. That should be to the advantage of publication websites' quality content, right?
So now you've got it, folks. This may be the model publications have been waiting for to receive money for their "free" content. And at least one company has the system built and ready to go today.
Steve Outing is a journalist, consultant, entrepreneur, and blogger at www.SteveOuting.com, and also former columnist for Editor & Publisher magazine. He can be reached at steve [at] outing [dot] us.
Editor's Note: About half a year after the above material was originally written by author Steve Outing (in articles on his website and for Editor & Publisher), he began serving as an occasional advisor to Kachingle and acquired a small financial stake in the company.
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Here's another proposed idea for monetizing content.