Will Online Micropayment Systems Help Save Newspapers?

Newspapers are not dead. Even with the Internet providing free content on just about anything, people still do read newspapers for a variety of reasons. These days, though one big challenge faced by newspaper publishers is how to bring their mainstream business online while still being profitable and sustainable.

Newspapers–and other periodicals–are said to have a three-pronged approach when it comes to revenue streams. It’s comparable to a tripod, in which if one leg fails, the whole thing collapses. First is the subscriptions: the good number of businesses, establishments and individuals who pay a subscription fee to receive copies of a paper or magazine regularly. Second is advertisements: sponsorships are a lifeline of the publishing industry. Third is newsstand sales: these are people who are not regular subscribers, but buy off the stand anyway.

The argument here is that the three-tier revenue scheme provides a good check-and-balance system for the focus of the publication’s editorials and content. If one only relies solely on advertisers, then a newspaper stands to lose editorial integrity. If one relies only on subscribers, then content tends to be monotonous. If one relies only on newsstand buyers, then you tend to focus on sensational news to get people to buy each issue.

The challenge with bringing content online is that users tend to prefer “free,” and so a publication is therefore effectively taking out the newsstand revenues from the picture. There is therefore a heavy reliance on advertisements, and to some extent regular subscriptions. If newspapers find a way to bring the newsstand to online readers, then this might bring back the balance to its revenue streams. In a proposal by Google to the Newspaper Association of America, they propose a micropayment system that will allow users to purchase content.

Fast Company discusses the implications of this proposal.

As newspapers seek to generate new revenue channels by switching to online publishing, there’s a fabulous business opportunity opening as the provider for their payment systems. The micropayments system will apparently share revenue in a similar fashion to the iTunes App Store, and Android Marketplace, so it’ll be a profitable system for Google as well as the newspapers. The upshot for Google is that it will remain at the core of the process (a position it loves to be in) and able to monitor its user’s habits in the hope that it can glean more information about them–useful for tailoring its own operations, selling advertising and so on.

Google, after all, has been digitizing content for some time now, and therefore it is not new to the game of bringing us content from books and even old newspapers. But to the end-user, what makes this different from existing checkout or subscription systems, such as those powered by PayPal and the like? Perhaps it’s the trust factor that the Google brand brings in. Perhaps it’s Google’s ability to aggregate content from various sources and bring these together under one portal (think Google News).

And so with a system for bringing the newsstand right at your fingertips, do you think this will help newspapers thrive in the ever-competitive world of distributing content online? To me, if it’s a matter of paying a few cents to access a newspaper or magazine issue, then it will be all right. But the clincher here is whether it will be an easy enough process, and whether the price will be reasonable enough.

Then there are the pros and cons of having all your content in digital format. First, there are the green implications. Less paper means less trees cut down, less ink used for printing, and less material to recycle. Being fully digital also means I can access the content from anywhere–my computer, my smartphone or even an e-book reader. Content is now also more easily searchable than physically printed material. On the other hand, paper is sometimes more convenient to use, and there are people who prefer the actual feel (and sound, and scent) of paper.

For now, I’m still content with buying my weekday paper from the newsstand each morning when I drive the kids to school. I still read my share of online news from various sources. This means I get a mix of digital and print content in my daily consumption of information. The question is how easy will it be for me to fully make the move to digital?

Image credit: flickr/inju