Paywalls are going up all over the
internet, hurting both publishers and readers. A better solution is possible,
but no one is offering it. TBR can describe the solution but cannot explain why
the market is not working to produce it.
The internet is smothering publishing
Online reading is harming both
print and online newspapers and magazines, reducing the number of journalists
and the available volume of news and analysis. Online advertising revenue is
increasing, but most of the increase is going to a small number of social media
companies. The remainder is going to content-creation companies, that is to say
publishers, but to a decreasing number of them, all large successful sites such
as The New York Times, The Wall Street Journal and The Washington Post.
This leaves smaller publishers —
whether local, regional or specialized — in an increasingly difficult position.
For years, small publishers have been reducing costs by cutting back on
writers, but this makes their content less desirable, consequently reducing
readership and thereby revenue. To compensate, these publishers have allowed an
ever-expanding volume of increasingly obtrusive advertisements to be placed on
their pages, reducing usability and consumption. This is a vicious cycle.
Publishers have tried to attract new readers by allowing their content to be
used on social media sites, but most readers simply consume the content on the
social sites and do not follow the articles back to their sources.
Publishers are building walls
Increasingly, especially in 2019,
content-creation sites have erected paywalls, requiring paid subscriptions to
consume their content. This works well for large, popular sites, bringing in
additional revenue and creating a relationship with readers. However, paywalls
are a forbidding barrier to entry for smaller, more specialized publishers, as
occasional readers often choose to skip reading the content that would
otherwise have brought them to the site.
Some publishers allow readers to
view a limited amount of their content through a free subscription, enabling
them to connect with readers while still controlling their access. This also
imposes a barrier to potential readers, albeit a much lower one, as many
readers choose not to create another new account, manage another new password,
and deal with more promotional email.
TBR believes paywalls will hurt
most publishing sites and their potential readers. The vicious cycle will spin
faster.
A solution is possible
What can be done? A solution, or
at least a partial solution, is available. It would benefit publishers, readers
and, most important, the business that creates the solution. TBR can find no
evidence that anyone is pursuing the solution, and the reason for this failure
of the market is not apparent.
The solution could be described as
pay-per-view option for published content. Readers would each have a single
paid account across all member publishers, with a balance to which they could
contribute, and publishers would offer content for which users could choose to
pay, on a per-item or per-issue basis, with the cost debited to their account.
Dave Winer, a software and internet giant, likened such a system to E-ZPass,
where drivers can pay tolls across the interstate system from a single account.
In addition to enabling payment
for content, such a system would allow publishers to get to know their readers
and offer attractive packages that would increase both readership and
consumption, including subscriptions. The business running the pay-per-view
system would collect a fee for each view or subscription and would manage the
entire process. TBR believes consumers are already experiencing subscription
fatigue from online publications and over-the-top (OTT) video services. A
single point of contact for at least a subset of their content providers would
lower this barrier to increased consumption.
It is not clear why such a service
has not emerged. Content bundling is common in video OTT services, but the
patchwork of offered content is frustrating to users. Apple acquired a text
content consolidation service, Texture, last year, and is now offering it as
News Plus. This is similar to video OTT services in that the bundle is not
comprehensive and that the revenue to the individual publishers is necessarily
small, as the total monthly fee is only $9.99. In addition, the content is
isolated from internet links and searches and is not available on Windows.
The pay-per-view content system would
not be a bundle; it would not provide unlimited access to a collection of
publications, but available content would be constrained to the member
publishers. For publishers, however, there would be no visible downside. They would
set the prices, so the system would not cannibalize subscriptions. It would not
be exclusive, so that publishers’ content could be distributed through other
consolidators and, at their discretion, through social media. There would also be
little downside for subscribers to the service. It is likely that the service
would use a “freemium” method to attract users, and increments to user accounts
could be used for a variety of online incentive programs.
There would be a cost to starting
up the service, and any system involving financial transactions and user
accounts requires strong security. User privacy is also a concern. These
problems are well understood at this point in the evolution of the internet.
The service would have to create a critical mass of both content providers and
users before it started generating revenue and profit, but much higher startup
costs are typical in the current business climate. Once a service is
established, potential competitors would be challenged to sign up already
satisfied readers and publishers.
A pay-per-view system could be set
up by an independent startup, but it could also be established as part of an
existing business. Companies with many individual publications, like Condé
Nast, could begin by offering their own publications and expand the offering to
others. Bundling companies like Apple that already have relationships with many
publishers could add the pay-per-view system to their offerings. Large
publishers like The New York Times could also create such a system,
demonstrating that they do not fear it would cannibalize their thriving
subscription business. Lastly, large online retailers like Amazon could
leverage their large user bases with pay-per-view content offerings.
Similar solutions have been tried and failed
When the internet first became
available to the general public, several companies attempted to address the
issue of pay-per-view content through what was known as micro-payments. IBM
created IBM Micro Payments in 1999, but it was never made generally available.
iPIN was a 1998 startup that intended to add charges to user’ ISP bills; it
never made it to market. Millicent (a pun: milli-cent) was a Digital Equipment
Corporation project that also did not reach the market. NetBill was a project
at Carnegie Mellon University that had user accounts like the solution proposed
here. It eventually became part of PayPal’s portfolio, and PayPal does support
relatively small payments, but not as small as is necessary for content
distribution.
TBR believes these systems failed
because they were too ambitious. They aspired to support very small payments,
or they were intended to be open to buyers and sellers without establishing
accounts. For most of them, the point of failure was the connection to existing
payment systems, where individual transaction costs were too high for very
small transactions. The pay-per-view system described here suffers none of
these handicaps.
Summing up
The diminishment and consolidation
of publishing is a problem, and a solution is available that would at least
reduce the size of the problem. TBR hopes the market acts to deliver the
solution soon.
