Garve Scott-Lodge's

Sorry Excuse for a Blog

A possible revenue framework for Newspapers

08 February 2012

Despite over a decade of moving their content over to the web, newspaper publishers have yet to come up with a business model which makes them money. (My evidence is anecdotal and I stand ready to be proved wrong).

There are currently two commonly used options:

  1. Provide all content for free, attempting to make revenue through advertising.
  2. Create a Paywall system, forcing users to register and pay a monthly subscription to view articles.

In the first case, Google's Adwords/Adsense system probably benefits from more organic and inorganic thinking power than any other enterprise in human history, and yet in my experience rarely pays for a website's hosting costs, never mind enriching writers and press barons. To my mind a breakthrough in funding newspaper websites through advertising isn't going to happen - if you're not making money from ads now you never will.

As for the second, it fails badly because of a major difference in the way many news readers consume content now compared to the days of paper.

I get my news in the first instance from Google or through links in social media. I want to read articles on subjects on which I'm interested, in a variety of newspapers and periodicals. I do not want to read the Times, the FT or the Herald as a whole. I'm a butterfly - I want to flit from newspaper to newspaper without hindrance.

To read the news the way I want, I'd need to buy monthly subscriptions for all newspapers even though I might only read one article a month in them. This simply isn't going to happen. There is NO CHANCE I will purchase a subscription to get me through a Paywall.

What I would be prepared to do is pay a small amount to read a particular article if it was really easy.

This is the realm of Micropayments. Multiple micropayment systems have been postulated and created over the last 15 years, and all seem to have failed miserably. As this article from as long ago as 2003 points out, they haven't failed because of technical challenges, they've failed because the underlying idea is wrong. In those days Micropayment systems were seen as a way to charge for any content on the web, but you won't succeed by charging users for content which is free elsewhere. If you're going to charge me to see cute pictures of your cat, I'll find some free cat pics somewhere else.

But I think times have changed, and news is a distinct area separate from the rest of the internet's content.

As we move towards more paywalls, micropayments would mean paying for content you CAN'T get elsewhere.

I'd envisage the following:

An industry wide body sets up a central 'bank' system.

You can register and make a small payment (say £10, umpteen Euros or howevermany Dollars) to purchase (say 1,000) credits. (Note that the bank probably wouldn't store any payment details - security risks only involve you losing your tenner).

All newspapers sign up to the system (which could work alongside paywalls - the two systems aren't exclusive).

You read the headline and first paragraph of any article - if you want to continue reading you need to click the 'Pay' button, which would work as easily as a Facebook Like button. Some of your credits are transferred to the specific newspaper's account in the 'Bank', and the rest of the article loads on the page. Shouldn't take more than a second.

The 'Pay' button would clearly specify how much this will cost you - 1 credit, 10 credits, 50 credits. (Let's assume a credit is roughly 1 pence). The newspaper is at liberty to charge as many as it thinks appropriate. It might be the case that they charge 1 credit for a bit of celebrity gossip, and 20 credits for a carefully researched article on the economy, but sadly it's likely to be the other way round.

Newspapers might also charge more for an article depending upon how recent it is - 25 credits for the first 2 hours, 10 credits for the first day and 1 credit for older 'archived' stories.

I believe this is a workable solution, but has to be taken up industry-wide, on a national or international basis. The 'bank', owned by the newspaper publishers would take a certain amount off the top for running costs and dividends, but ought to be able to remit around 70% of deposits to the newspapers. This would allow the system to be opened up to individual bloggers too, as the newspaper publishers would still make a small amount from their margin, and bloggers would earn some beer money or better.