Tag Archives: online payment systems

Online news – Not whether to pay, but how to pay


It should be abundantly clear by now that the news industry is in all sorts of trouble. Just the kind of trouble you’re in when your business model has recently collapsed in front of you: less people buying newspapers and less companies finding it in any way affordable or effective to place ads in these newspapers. And it’s also the kind of trouble you have when the new business model you’re going for isn’t working: more and more people consume their news for free on the internet, but online advertising doesn’t quite cover the costs. Yes, there are exceptions to the failure of both the old and the new newspaper business model, but overall, that’s the picture we get at the moment.

I’m an optimist. I’m convinced that 15 or 20 years down the line, two managers will sit in a pub, and one will say to the other, “Hey Paul, remember those days when we didn’t know how to make money on the internet?” And Paul will say, “Yeah, those days were crazy… we really thought those ad banners were gonna save us. Thank goodness we came up with that direct payment system where people pay for some of the articles they read.” And then they will recapitulate how the newspaper industry reinvented itself, briefly mourning those thousands of staff who got fired in the process and all those papers who didn’t make the transition quickly enough.

You read it, you pay for it

But how will they do it? I’m also convinced that in the next few months, newspaper companies will figure out a way to make people pay directly for (some of their) online content. They have to (see trouble above). And it’s also legitimate that they do. Information is a valuable good, especially in this so-called information society. News companies produce this good at quite a cost, since quality journalism doesn’t come for free. Hence, they should receive revenues for providing this good.

So far, news companies have predominantly played around with indirect revenue models, such as advertising, providing the news for free. The problem is, I can’t tell you much about these ads because my browser makes them disappear. I have also heard and read from a number of people in the industry that it takes a lot more online visitors than newspaper readers to generate the same amount of advertising revenue.

In light of these problems, news companies such as Murdock’s News Corp. or Germany’s Axel Springer Verlag are right to consider direct revenue models, i.e. making people pay for some of the online content they provide.

What’s the problem?

My guess is this: There are enough people out there who would be willing to pay for online news, just as they were willing to buy a newspaper or a magazine. Right now, there’s one major obstacle though. Paying for stuff online is terribly, terribly inconvenient. If we find an online payment system that alleviates this problem, a whole new world will open up (sorry, got carried away there, but still…).

Paying with credit cards on the internet is shit not a good way to go. Reading news online is a very quick process. It’s not like buying a washing machine. So when I want to pay for an article that I come across, I don’t want to punch in an entire credit card number or fill out a form.

Some websites like amazon have invented one-click payment systems. Fair enough, that makes it a bit easier, but I would still have to fill out a form and register with the news website. I firmly believe that having to fill out registration forms is currently one of the biggest constraints in e-commerce of any sort. When I go shopping in a mall, I don’t have to register with the candy store to buy my sweets. Why would I have to do that online?

Open standard e-wallets

While searching around for some more convenient online payment system, I came across the idea of digital wallets, or e-wallets, again. There must have been a bit of talk about these in the late, late nineties, as you see here. I don’t quite know what happened since then, but it doesn’t look like e-wallets have been very successful. However, they may offer a solution for the troubled news industry.

Let’s say I’m surfing around the web to get up-to-date on what’s going on around the world. On most news websites, I get the basic information for free. Every now and then, I want more in-depth information about a topic. Whatever news website it is, it shouldn’t take me more than one click to pay for it and it should always be through the same payment system. No credit card numbers, no registration form, no nothing. Just a click and the website charges me 10 cent, or whatever it is.

I’m not an e-commerce or software specialist, but it seems to me that what we need is an open industry standard that is compatible with most, if not all, news websites. This standard would allow the reader to have a payment account that she manages like she’s managing her Skype calling credit. The service would be web-based but the reader could download a little task bar icon that quickly tells her how much credit she has left – much like the printing credit on university computers.

You may say, I’m a dreamer

Sure, there are services such as PayPal, which are similar to what I have in mind and it would be very worthwhile to understand what’s good and what’s bad about them, especially with regard to security and fraud. For me personally, an online news payment system would have to be a whole lot more convenient and simplistic that PayPal currently is.

The greatest problem, you may think, would be to get enough news companies to agree on an open industry standard. You’re right, that will be quite difficult. But hopefully, they will realize that such a standard could help them get their direct revenue system off the ground. It would also make it easier to sell the idea to the readers. “Look, everybody’s doing this now so it’s okay for you to pay a few cent for this article…”.