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Is micropayment the killer revenue app for blogs?

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No wine blogger in his right mind expects readers to pay $25 or $50 a month for access — that pipe dream is dead — and no reader would pay that, even for a great blog like Fermentation or The Pour. But what if the price were far less — 5 cents a day, on-demand? Would readers pony up?

Former TIME managing editor Walter Isaacson thinks so. Check out his fascinating cover story, “How to Save Your Newspaper.” It appears in the Feb. 16 issue of the magazine. (Credit to my boss, Adam Strum of Wine Enthusiast, for alerting me to the story.)

Isaacson uses as his jumping off point the fact that, if people are willing to pay 99 cents to download a song from iTunes, they might be willing to part with five cents to read a blog. It’s called micropayment: shelling out small, even negligible amounts of money for something you really want. “The system could work for all forms of media,” Isaacson writes, “magazines and blogs, games and apps, [even] porn…”.

Isaacson’s analysis comes as the realization dawns on us all that the future of print journalism is very much in doubt. Advertising is drying up, and newspapers and magazine cannot depend on subscriptions to make up the difference because, with almost everything available online for free, why would anyone pay for access? (I read the New York Times for free online every day, thereby saving myself $348.40 a year.)

Micropayment assumes several things. One is that readers are inherently moral and understand that nothing creative can be produced unless the creator is paid a fair price for his work. Another is that the technology of micropayment must be, in Issacon’s words, “cheap and easy.” If it takes more than a click (once the reader has registered), it’s doomed. (One model of easy micropayment familiar to motorists in the Bay Area is FastTrak: the driver sets up an account and the cost of crossing a bridge is automatically deducted with each transit.)

There is currently no working model for a micropayment approach to blogging, so far as I know, nor is there currently a technology that exists that could accommodate it. PayPal, Isaacson writes, “has transaction costs too high for impulse buys of less than a dollar.” Other emerging micropayment models include Bee-Tokens, Kindle (Amazon.com’s digital book service) and Tipjoy, which links to Twitter, which itself has a form of micropayment, Twitpay.

Assuming that the technology — fast and easy — is forthcoming, will it be a game changer for wine bloggers, the killer revenue app that bloggers are looking for? Admittedly, Isaacson’s motive for pushing micropayments is to preserve journalism for civic-minded purposes, not to enable bloggers to make money. (If print journalism dies and online journalism is free, then “who will…be able to fly off as freelancers to report in Rwanda…?”) Putting the question another way, who can afford to produce high-level wine blogs day after day, month after month, year after year, if there’s no money coming in?

Let’s crunch some numbers. This blog had 50,000 visitors during the month of December, 2008. If each of them paid 5 cents for access, that would amount to $2,500. But would all 50,000 pay? Isaacon is hopeful. “Some surfers would balk,” he writes, “but I suspect most would merrily click through…”. I, myself, am not so sure, but if only a few hundred did, it would still be more than I’m making now, which is zero.

  1. Thom Calabrese says:

    One of my concerns would be the Govt. Once blogging becomes a revenue source for the writers of blogs, fed state and local govts will find a way to have some kind of excise tax state tax or whatever.
    I like things the way they are now.
    I like being able to go and read what I want and do it when I want.
    Look at all the great content available for free. What could any blogger offer that would make going to their site worth paying for?
    I would not pay. Those that want to blog will do it because they enjoy it and it gives them pleasure. Those looking for money, as far as I’m concerned, will have to go to “plan b”
    I for one, would not pay, even 5 cents. Not everything has to be about making a buck.

  2. For the most part, are blogs not merely today’s expedient vanity publications? Instant gratification without the risk and investment?
    No risk, no reward?

    Steve, as the apt shepherd of perhaps the most intelligent and thoughtful wine blog (okay, so you’re not as humorous or titillating as some) you provide a well managed valuable arena of and for fresh and frequently divergent ideas. Priceless.

    “Priceless” doesn’t mean without value. Donations smack of corruption and advertising of bribery. Guess that leaves memberships or subscriptions. Count us in.

  3. It’ll be fascinating to see what happens with this. My guess is it won’t change the blogging landscape too dramatically; as Thom’s note suggests, most bloggers would find most of their audience vanishing if they charged even a small amount for access (and then they’d have to decide whether their desire to reach people outweighed their desire to make a minuscule amount of money). But a small number of bloggers who provide unique, exceptional content might find a worthwhile revenue stream. And if they do, more power to ‘em. The beauty of this technology — assuming it evolves as Isaacson suggests it will — is that it will allow everyone, creators and consumers alike, to decide for themselves the value of blogs.

  4. This idea is not unlike that employed by on-line scientific paper brokers.
    You pay per view – so to speak. It’s a solid model.

  5. This makes sense until you consider that to earn micropayments people would have to register for a site and there is heaps of research that indicate people don’t register for sites, even for free content. Tons of newspapers have tried this and largely failed.

    i think they figured they could add it to the database for direct marketing of subscriptions if the person was in the geography.

    Technological issues aside, to get to micropayments, we still have to traverse subscription and advertising supported models, and the wine reader hasn’t shown a very strong proclivity for either online.

    Good post, as always.

    Jeff

  6. Morton Leslie says:

    I would pay a nickle to read Heimoff or to see what notion is in Jancis’ head, but I do a lot of surfing, partially read things, lose interest two sentences in and move on. That’s pretty much how I read a newspaper too. So, in order for this sort of thing to work it would have to allow free “grazing” for a while and then, if a reader wants to regularly feed at the trough, shut off their IP address subject to receipt of payment.

    I probably wouldn’t pay a nickle to read someone I have never read or whose post title mildly interests me. For sure, the standard subscription model keeps me from reading Jancis. I don’t even bother with her free content.

    But there is a way around subscriptions if you can find like minded friends who want to share. My brothers and I share the cost of my Dad’s WSJ online subscription and all use it. That’s $2 a month for each of us. I have a similar arrangement for the W.S. That price seems fair to me. ;-)

  7. Paul Gregutt says:

    Agree with Pete – “a small number of bloggers who provide unique, exceptional content might find a worthwhile revenue stream.” Let’s face it, the “fun” of blogging, at least for those of us who have actually been paid to write all of our working lives, is bound to wear off. But surely there are some among us who can find ways to provide unique and exceptional content. I know I plan to do just that once my new site is launched. And Steve, for the record, I’ll give you a nickel for your thoughts any day.

    PaulG

  8. Paul, you are a gentleman, a scholar — and a big spender!

  9. Morton, there is a site, wine.alltop.com, that allows you to hover your cursor over the first sentence or two of a blog, and decide if you
    want to click through. It’s quite clever. In a for-pay scheme, you could use this to decide if you wanted to commit yourself.

  10. Steve, Micropayments – DOA. Perhaps your shouldn’t rely on Dinosaurs, I mean, retired Journalists for ideas on how to make money with your blog?

    Read Techdirt’s Michael Masnick, who’s covered this topic to death now. Here’s one of his excellent posts:
    http://www.techdirt.com/articles/20090205/2247123666.shtml

  11. Jack, I read Masnick’s article. His key statement is: “someone much smarter when it comes to business than Isaacson will create a new news site that doesn’t charge. And they’ll make it high quality, and they’ll be able to make money through other means.” But Masnick doesn’t define what “other means” they are. Advertising? Nope. Then what? How do you give something away for free, and then make money doing it?

  12. There has been some serious thought devoted to online monetization ideas.
    And as we know, its not just a conundrum for blogs, highly successful sites like Twitter have the same challenge.
    Information is widely available and free online.
    So the obvious conclusion is that you still have to sell a product or a service to make money. Now how you choose to tie in that service or product to your site/blog is the challenge for all.

  13. I read blogs for information in many different fields, but also read lots of technical stuff also. For me, the best part of blogs is the ability to read about a topic I am interested in, and then interact with the author within a day. How many times over the yrs have I read a journal or news magazine and wanted to ask the author a question… I couldn’t count. In brief, it is semi-instant communication, or instant gratification, if you will.

    To be able to communicate with a well known wine critic would have been unfathomable five yrs ago, even 3 yrs ago. Now it is commonplace, a lot of people have enjoyed this experience(not to mention learned from it), we get to read tons more articles than had this format been in a magazine, etc. Blogging, financial aspects aside, is a cure for the uninformed; ie, it is a great way to get an education, even if YOU happen to be the expert. In my first love, medicine, there is more out there than one could ever read.

    Re: the financial aspect, I am used to paying $150/ yr for a single monthly journal, medical specialty texts that cost $200, $300…it had gotten to the point that one had to almost be wealthy to keep up. Not now. Information is out there in various forms, Steve’s for example, and it is free. That turns the medical writing community on its head, but at the same time probably helped spur the blogging effort. NYTimes is hanging on by a thread…a very Carlos Slim thread, altho he did drop $270 million on them. Know what? That was a bad bet, because no amount of money is going to change the tsunami of blogging…and the futility of print media. If it costs a nickel, or if it’s a dollar a week, or month, to read Steve’s blogs, it is a bargain. That doesn’t apply for most blogs, which would still endure in a fee for blog environment(but wouldn’t flourish), because there just wouldn’t be the interest in less interesting blogs, or blogs written by non professionals. At the end of the day blogs have to provide interesting thots, they should be informative(you actually learn something), and they should be enjoyable.

    I was unaware of how many hits this site got, but 50,000 is really quite an accomplishment. Certainly many of us return multiple times during the month, but that still is a lot of folks. Steve, say a buck a month, just for grins, and I bet you would still make over $2500 on current readership; and that would mean that all 2500 readers came to this site 20 times/mo. More likely there are a lot more than folks out there that visit fewer times. Based on this hypothesis, it would seem that there are enough readers to charge a very low sum, and still do well.

    Maybe I don’t understand the nickel concept, but microsums would seem like an ardous task to actually pull off. Tiny sums, like a buck? Considering $150 journals and $300 specialty texts, I could see a dollar (just an example) as very doable. That would be incredibly cheap compared to WE, or WS, and has the added feature of “ask the author”, plus there are a whale of a lot more articles to read. How could someone beat that?

  14. Steve, Here’s yet another from Masnick, today:
    http://techdirt.com/articles/20090217/0248493795.shtml

    As for How they’re going to make money, that is the Billion Dollar Question. But micropayments it ain’t.

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