Will People Pay, What Will They Pay?

I’ve done a few posts now linking to aspects of the argument about whether people will be prepared to pay for journalism, and if so what they might be prepared to pay.

This is a crucial question for the future of journalism. As I’ve been saying for a while now, we need to remember that journalism is not the same as media. Journalism is the practice of gathering and diseminating  news and information. Media is the business of gathering audiences and selling them to advertisers. The two have been enmeshed ever since the printing press became mainstream technology. Journalism was used to gather audiences. Media businesses sold those audiences to advertisers, and paid the journalists. It worked well for about four centuries, though not without shortcomings.

Now we are living through a technological change at least the equivalent of the invention of the printing press, and it is disrupting this old business model. The size of the audience for any one media outlet is going to shrink, as more options become available. Some kinds of advertising – such as classified ads – are no longer bound to journalism by appearing in the same physical product. And as Rupert Murdoch predicted a short while ago the amount of money media can charge for display advertising online is already much lower than for print ads, and will decline further.

So while the traditional media-journalism enmeshment will continue, it is on the way out as a means of paying the salaries of large numbers of experienced journalists.

So how will those journalists be paid, once the industrial superstructure of media has declined?

Or in other words, will people pay for journalism, and how much will they pay?

Various models are being discussed overseas, including the idea of micropayments – tiny bits of money that you will hardly miss directly debited when you access content online.

In the last edition of the American Editor and Publisher, Steve Outing poo-pooed that idea, and instead touted for a Silicon Valley start-up called Kachingle, which provides the means by which readers of content online can voluntarily click a button to financially support their favourite content.

Says Outing:

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 news 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 newspaper wants to get paid for its content when a Web site visitor clicks through to one of its articles, it should ask that the visitor support the site via Kachingle.

This is a variation on what I called the Community Broadcasting business model in my book The Content Makers. The business model (if it can be called that) rests on the faith that the community will support content they like.

It assumes (and I think this is often missed in the debates) that people will feel an intensity of connection with the content. In the book, I suggest that the community broadcasting model might have legs in the interactive new media world, in which the lines between audience and content makers are blurred.

I anticipate that in the future intensity of connection with audience will become more important than size of audience for many journalism outlets and their business models.

Anyway, the latest entry to this overseas debate is here. Self-described veteran media executive Alan Mutter has crunched the figures on the likely “take” from a Kachingle-style honour payment system for newspapers, and concludes that it just won’t work.

To calculate the potential of the tip-jar system, I obtained the number of page views for several newspapers in 2008 from Nielsen Online. I assumed that site visitors would click the Kachingle button on 2% of the pages, which is a reasonably high response rate for most sorts of voluntary activities on the web. I further assumed that the newspaper would get an average of 2.5 cents per click, net of the commission Kachingle charged to participate in its network.

As you can see in the table below, the tip system might generate revenues of nearly $3.7 million a year for the New York Times, the busiest of all newspaper sites with 7.4 billion page views in 2008. The $3.7 million would pay 24.5 journalists making an average of $150,000 per year. Although that sounds pretty good, bear in mind that the paper has a newsroom staff of about 1,300 individuals. So, Kachingle would cover the cost of only 2% of the staff.

I would point out that Mutter assumes that the Big Media companies he investigates will pretty much carry on as before, dishing out content that they think readers should value, rather than entering in to collaborative relationships with audiences.

If the Community Broadcasting/Kachingle model has any legs at all, I think it will be for smaller, intensely networked groups of content makers and audiences. I wouldn’t expect it to support the present staff of the New York Times, or indeed any mass media model. In other words, it is not THE ANSWER to the problems of the press – but it might be one of an array of answers.

The intensely networked collaborative model raises another possibility – why let Big Media call the shots? If intensity of connection is the way of the future, why not use the possibilities created by the web to allow groups of citizens to directly commission the journalism they want?  Isn’t it more likely that people will pay to get a service they have directly requested? And we do have to think of journalism as a service, I think.

Some readers will know that I have a more than academic interest in these questions. Things are developing. More news soon.

UPDATE: Roy Greenslade has a post on this topic, with some other links that are worth a look.