Return of the Son of the End of Free, Part II

Over the years, I’ve become skeptical of paid content as a viable model for most of the content being published online, particularly for webcomics. In the previous part, I discussed what I believe are the reasons micropayments have historically failed and free content resurged in the mid-2000s.

I believe Rupert Murdoch’s plan to start charging for The Wall Street Journal online will also fail, but for a different, much simpler reason: this recession is much worse than the last one, and end users are keeping their wallets shut much more. Even if the problems with the infrastructure and the immediacy of micropayments are resolved and users finally start understanding the concept, they are going to pinch their pennies, hard, and refuse to pay for anything they can get for free elsewhere. Entertainment, which is much less fungible than news, will not be safe from this: if the money simply isn’t there, people won’t buy it and will instead go with the inferior good that they can afford. Or they will simply entertain themselves: the choice won’t be between a paid Radiohead album and a free Hootie and the Blowfish album as Scott McCloud argued in the essay I quoted in Part I, but between a paid Radiohead album and a game of Monopoly with the family, a free knees-up at the Irish pub or an hour practicing Radiohead songs on the guitar.

However, there are two long-run scenarios in which I micropayments and subscriptions may win out. I hope these won’t come to pass as neither of them will be pretty. They are The Big Content Squeeze of 2010 and the Google Power Grab Scenario. In both, Rupert Murdoch’s assertion that the Internet will never be the same again will be correct.

The Big Content Squeeze of 2010
The recession continues through 2009 and into 2010 and it hits hard. Initially, this means more free content in the form of blogs as newly unemployed people turn to writing. However, it becomes harder to finance the content. Small-time bloggers move from their own hosted space to free bloghosts to save money. Then the free bloghosts stop being free and the blogs vanish.
Meanwhile, newspapers stop treating their free content as loss leaders, and start seeing them as the profit-eaters they really are. Some switch to micropayment solutions, which fail, before shutting own their sites. Others shut down at once. This robs the remaining bloggers of much of their material, because most news/politics/gossip/satire bloggers do not do original news gathering and are entirely parasitic on the so-called Mainstream Media (the idea that bloggers are “citizen journalists” is pure, unadulterated Bloggocks). The quality and interest level of those blogs drops and so do their revenues. Bit by bit, the entire Long Tail of all websites disappears. Comicspace loses its advertising revenues and its venture capital funding at the same time. Keenspot loses its advertising revenues. Both firms close their doors and only the most succesful comics hang on to their existence, on independent hosts and subsidized directly by their users. Eventually, the Short Head, the highest-quality, most popular websites, starts getting eaten as well. By that time, though, content is no longer abundantly available and is indeed getting quite scarce. People who want to read news or blogs or webcomics online have the choice between paying for them or not getting any at all. In this new landscape, micropayments are a viable model once the recession starts bottoming out. By time the recovery is finally under way, micropayments and the sites financed by them are entrenched, the infrastructure for content paid for by advertising is dead and gone and new, free content sites will not be immediately competitive because users will be loyal to the content they have already paid for.

This end result, of course, isn’t all bad. The result of this Darwinian process will be a smaller number of sites that have high quality by a number of metrics. They won’t waste the users’ time, they will be well-made and worth paying for – for a time, at least. They will also have to stay strictly within the mainstream and within the boundaries of acceptable opinion and taste. There will not be a significant Long Tail of niche sites. As the successful media get entrenched, the lack of competition and the need to avoid giving offense may lead to blander, less interesting content – it will continue to very be good at a technical level but will it challenge the reader? And if it doesn’t, where else will you go if you do want to be challenged?

The Google Power Grab
This scenario, on the other hand, is one whose outcome won’t be good at all. In this one, Google develops a working micropayment system (currently, Google Checkout does not support true micropayments as defined back in 2000, but is suitable for larger payments. I don’t know anyone who uses it, though), and sits down with News Corp and all the other big media outfits until they all sign up to use that system exclusively. Because Google already has your data, you probably already have an account with it and most people trust it far more than they should, it is in a position to make its system ubiquitous and immediate in one fell swoop, and it has the funding to ride out the rest of the recession. It can also give preferential treatment to sites covered under its micropayment system, making them show up first in searches and embedding micropayments code into its search links so these sites perform better than non-micropayment sites. People will still be reluctant to use them for as long as the recession lasts, but they will be pressured into accepting them earlier than if any other party supplies the micropayment service (because they will be shut out of the best search results if they don’t) and once they get more money into their pockets again, they will start embracing them.

In this scenario, Google leverages its power to gain even more power, and unlike in the Big Squeeze scenario, the big media win without having to raise their game for even a moment. The landscape changes irrevocably, to the advantage of parties that are already entrenched.

I’m not happy with both scenarios. The first one seems more likely right now than the second, as I recently read an essay (on a Dutch newspaper’s blog, no less – but I unfortunately didn’t take note of where it was and can’t find it anymore) in which the writer recommended that newspapers shut down their websites entirely so they’d stop competing with their paper editions. But I’ll be glad if neither come to pass and consider not having a good, viable micropayments system on the web to be a small price to pay for that.

2 replies on “Return of the Son of the End of Free, Part II”

  1. Yep, that’s the one. Not on a newspaper site at all then – no wonder I couln’t find it.

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