Hacker News Reader

Comment by TylerE | Hacker News Reader

Reposting what I posted two weeks ago when this was posted the first time (and promptly ripped to shreds and then deleted)

Where this utterly falls apart is that it doesn't consider that the major barrier is NOT the price. It's overcoming the friction of getting the user to pay anything, at all. If you can do that, conversion rates are similar at $0.10 and $10.00. That is why micropayments are dumb. They're leaving money on the table.

NB: I work in the industry and this is coming from direct professional experience. I'm not really at liberty to go much more in depth than I did, but I have strong real world data that says micropayments are a disaster, plain and simple.

View on HN

So the solution is to have some sort of premium content Internet pass. It costs $10 a month, but can be used to get free content at whatever sites are signed up with it. Kind of like Amazon Prime, but with an arbitrary number of vendors. Then, the $10 per user is split among all the products that the user uses it with.

Now here's the kicker -- come up with a marketing deal with various ISPs, where they can include this with their subscriptions. Either as a premium that comes automatically with their higher-speed tiers, or something that can be billed as extra for the lower speed tiers.

Yea, pretty much, that's where I think it should go. Sort of Spotify for written content.

Some very high profile outlets (WSJ, NY Times, New Yorker, the Economist) might be able to make their own things work, but those are the exception, not the rule.

I'm sorry but you're wrong with the elitist view you're taking on paid content. The problem is not that high profile publishers succeed while others fail. The real problem is that no new monetizing mechanism is used. Take in-app purchasing as a payment model for news and voila, money rolls in the coffers.

To make a point, FarmVille is not high profile. It is for everyone who is anyone. On the other hand EA bought a game called Pet Society which had a loyal following whom I knew some of. The first thing EA did was change the payment model and then all hell broke loose. People I personally know started complaining and EA eventually closed down that game. The problem is not in either elitism or micro-payments but rather in the sales approach.

Sort of Spotify for written content.

Wouldn't this end up leaving even more money on the table? Spotify pays artists based on their share of total plays.

Say two sites (X and Y) join up to offer a $10/month pass for unlimited access to both sites, with the say pay scheme as Spotify. Site X has 3 times as many articles/videos as Site Y. If every user reads/watches 100% of Site Y's content, Site X may still receive an equal or larger share of the payouts even though users consumed a much lower percentage of it.

I don't know - but I suspect some reasonably equitable scheme could be figured.

If you make the assumption that each piece of 'content' takes the same amount of effort/money to produce, that's not really a problem. Site X has presumably spent 3 times as much on content creation, so it's fine for them to get 3 times the revenue (assuming equal quality).

The problem I see is that with spotify it's pretty easy to determine the rate of content consumption (e.g. songs or minutes listened). News sites are pretty adept at turning one piece of content into many (multi-page articles or slideshows), and the system would have to protect against that.

Another option might be to proportion revenue in accordance with membership sources into the cartel. E.g. if site 1 delivers 10 new subscribers, and site 2 brings in 2 new subscribers, the money goes to the sites in a 5:1 ratio, minus maybe 10% off the top for operating expenses.

I've thought that for years. But not only has nobody done it, I've never seen any of the publishers even try. I thought it would have happened by now.

I'm wondering why not. Spotify did it for music. Netflix does it for some movies/TV. Why are periodicals not?

Heck, if airlines can band together in FF mile "alliances", why can't newspapers do the same? It would be a good way to start -- subscribe to NYT and get Washington Post + 20 other city newspapers.

Netflix replaces DVD rentals and purchases, not the initial product, which is the release in theatres or the initial broadcast on television. You can still make money in the box office and on advertising. For news outlets and periodicals, their websites replace their initial product, the publication itself. Spotify falls somewhere between the two: streaming music can replace the intial product of a CD, LP or download, but it's also allows you to offer a new product to people that would never purchase the initial one.

Another point to consider is that piracy has had a huge impact on the music, movie and television industries. They had to compete against free. Netflix and Spotify may make less money for labels and producers than DVD and CD sales did, but it's more than they get from everyone who would torrent their stuff instead.

If you bundled unlimited access to multiple publications for a monthly fee, and distributed payouts to publishers based on their share of views/reads, you'd just end up reproducing the current situation, where the competition for pageviews is a race to the bottom.

Sounds like a lot like the old Readability (except with a hard paywall instead of donation model). I liked Readability idea in concept, but it didn't exactly take off.

Readability made three errors, in my opinion:

1. They charged too little. Far too little.

2. In an attempt to be more viral, they took payment for websites that were non-participants, with the theory that this would entice them to sign up to receive payment. What happened is that they ended up with a pile of zombie cash that they could not touch.

3. They routed everything through their servers, meaning that a large fraction of their costs was controlled by third parties. This is connected to 1.

You'd have a hard time setting a monthly price that is acceptable to both consumers and publishers. The New York Times runs anywhere from $16 to $30 per month, depending on which level access you're willing to pay for. The Washington Post is $9.99 per month. You'd likely need to bundle in at least one top publication to sell people on the subscription, and every site you add will jack the price up based on the price they can demand for access to just their site.

I think a better solution be an E-ZPass equivalent for the web. Subscribers add credits to their accounts ($1.00 = 100 or 1,000 credits), and publishers can set the tolls for their content however they want, i.e., 1 credit per article, 5 credits after your 10th article, 1,000 credits for a week on the site, etc.

I'm not convinced that micropayments can't work in combination with other revenue models.

Prepaid micropayments has been tried. It doesn't work because it requires people to think and they hate that.

I happen to be working on exactly this. I call it "microsubscription".

The idea pops up periodically because it's an obvious one. But nobody has made it stick yet. Not Kachingle, or Sprinklepenny, or Contenture, or Readability.

Naturally I think I have the twist that makes it work, but the base rate on this is so far pretty underwhelming.

It's a tough problem. I personally select we would need a great "free internet die-off" as will be coming as the newspapers further collapse before things become amenable to that sort of model. SOMEONE has to pay for the original content creation...and right now that's usually subsidized by some sort of print publication.

Well as I say, I believe I have some twists that will make it work.

I also have a fairly substantial step forward in the tracking technology which underlies it -- the usual methods are borrowed from advertising systems and they are open to all sorts of falsification attacks. It didn't matter because nobody got any traction.

Google has developed this pass, and sell about $15 billion or so of it a year, with roughly $10 billion of that distributed to publishers. (Pulling numbers from memory -- check their quarterlies for the up-to-date ones.) The genius was denominating the end-user price in attention, which doesn't require a credit card number to transact in (single-click transactions, no information required, and no penny gap -- whee!), and then selling attention of desirable users to advertisers for substantial amounts of money.

Given the substantial success of Google at doing this, any micropayments system doesn't just have to clear the "Will this be better than putting up a paywall?" hurdle for every site it signs up, it also has to clear "Is this better than the largest, most entrenched, most locked-in, most supported, most widely distributed economic engine on the Internet?"

Contenture bet on users being prepared to pay to have ad-free sites. They gave up early; but to be honest their "no ads" scheme wasn't going to work anyway. It relied on a piece of javascript removing common ad blocks from the DOM.

The main problem is reliably identifying who is a legitimate subscriber. I happen to have a robust solution for that problem which this margin is too small to contain.

That part is easy...just require logins and don't serve the content at all unless they are authorized to see it.

You're thinking of paywalls; it's a different model.

The most successful selling model for apps by far is in-app purchases. Whether for games items or for a more powerful app. The strategy is always to get your customers' foot in the door first and then give them the option to get more. On the other hand selling an app for a fixed amount does reduce purchases.

This is the problem for conversion rates. Most pay-walls are all or nothing. The New York Times currently allows me to read a page referral but asks me to sign up when I try to navigate elsewhere which is smart but probably not good enough.

I understand your stance on low conversion rates for pay-walls but the problem lies in what users perceive as value. In-app purchases work when users want more however news sites try to sell an all or nothing. I think the right approach to increase conversion rates is when publishers learn from FarmVille.

That being said, the value of Bitcoin is that it allows anyone to buy/sell without going through legal processes. I for one live in Lebanon and I can't for example sell paid apps (only free apps) in Google Play which means I'm not a publisher. The primary reason for that is financial law and what have you. Bitcoin simply bypasses all that allowing anyone to be a publisher or consumer. For newspapers they even can rely less on advertising and start focusing on what users are willing to pay for instead on what hype gets users to click through. What I'm trying to say is that Bitcoin frees publishers from local regulations while allowing them to be international on day one, but the problem is the sales approach not the selling value. The proof is in the pudding: in-app purchases.

The problem is that a Newspaper isn't Candy Crush.... in Candy Crush you can either pay or beg your friends. If it's news an alternative source is just a google away.

Frankly the mere fact that you are making that comparison tells me you don't understand the market at all.

Not all articles are news in the traditional sense. Editorials, opinion pieces, historical perspectives, analyses of markets, etc. are not a google away. The dilution of the news market is because a lot is poured into hype, that is a google away. High quality content gets people back which is evident in how the New York Times manages to maintain loyal readership and profitability.

I don't get why writers try to abuse copyright law to artificially constrain the disbursement of their material. I know anything I've written (fantastic internet rants for the most part, but also code) I'd try to get out to as many people as possible. Emailing everyone a copy of my book would not take more than seconds effort, yet publishers treat it as a limiting factor, when distribution just isn't.

Instead, I'd attach a donation link, except rather than say "please give me $$ for beer" I'd say "please give me $$ so I can write my next book rather than sweep floors". Charge for the expense, and with the exception of an initial ice breaker to get visibility, you have access to the same potential capital, except more, because it is a variable rate. You could see your big fans throwing thousands at you a piece. Even with a 1% conversion rate, having 1000x the audience because your material is free and open would mean more long term sustainability.

I'm not saying don't pay for the dead tree that cost 50c to chop and 30c to print on, that has a marginal cost per unit. But when you are passing around digital material all the time, it is absurd to be trying to bill per unit like its scarce.

> I don't get why writers try to abuse copyright law to artificially constrain the disbursement of their material

That's not an abuse of copyright law, that's it's exact purpose.

> Instead, I'd attach a donation link [...]

Just because you can make up numbers where this is successful doesn't mean it would be successful, or give any insight into the situations that are most amenable to it.

Thank you! Can you link here to any better economic analyses which are not so osecret but worth reading, to enlighten us some more?

I don't really have anything formal that i can cite...just my observations from the trenches. I'll just say that we tried (and promoted heavily) a system where you could buy the access to a PDF of one day's content for a quite low price (Less than $1). In roughly a year that the system was up we sold less than $50 worth...TOTAL, but we have thousands of customers on a paid sub at $10+/monthly.

Reply on news.ycombinator.com