Blocking Google isn’t the answer (or why Murdoch has it wrong)

November 11th, 2009
Blocking Google isn’t the answer (or why Murdoch has it wong):
Rupert Murdoch’s recent interview with Sky News in Australia [link: http://www.youtube.com/watch?v=M7GkJqRv3BI], has raised more than a few eyebrows this week. In it, he claimed that once his papers started charging for online content, they’d give the boot to Google, along with other search engines and news aggregators. With the exception of Mark Cuban [link: http://blogmaverick.com/2009/11/09/rupert-murdoch-to-block-google-smart-twitter-has-changed-it-all/], who lives in a fantasy world where more people find news content through Facebook and Twitter than through search engines, the general reaction online has been predictably hostile to Murdoch’s approach. If you watch the interview, though, Murdoch actually makes some noteworthy observations on the future of news.
Of course the move to block search engines is ill-advised. Google sends over a billion visitors to news websites every month. And whether you’re monetisation strategy is based on advertising or direct payment, the first step is getting enough traffic to monetise. Removing your news site from Google (or, more importantly, Yahoo News) is akin to taking your newspaper off the stands because you’re afraid people will read the ledes above the fold instead of buying the paper itself. Like a news agent, search engines are an integral part of news distribution…only they don’t charge for connecting you to your readers.
Murdoch’s real beef is with changes in consumer behavior: he wants loyal readers for his news sites. But he’s forgotten that the medium affects the content. A newspaper is a discrete editorial artefact, but the web is an atomized collection of individual pages, and nothing will change that. A newspaper will have regular readers who buy the paper every day, whether through subscription or regular purchase. Others will buy a particular paper on a particular day because the splash is appealing. Online behavior is, in some ways, analogous. Those who consume online news regularly will visit certain sites (or read certain RSS feeds) with some frequency. Casual news consumers are more likely to seek information about a particular topic through search. Regular news consumers use search engines, too, when they’re interested in learning more about a topic of interest (in part because even some very good newspapers on the web today have very poor site search).
Two things differentiate online behavior from its offline counterpart. First, non-unique content is commodified. In the offline world, the grand majority of people only encountered one newspaper in a given day, so even a healthy padding of stories from a newswire was tolerable (or even welcomed). The same is not true online. The second difference is that switching is extremely easy online: it’s literally a click away. Unless your content is unique, making it difficult for your users to find and/or read your content means they’ll quickly find similar information elsewhere. Offline, people who buy a newspaper may not like the coverage of story x, but they’ve paid for the whole package, and even if they buy another paper to learn more about story x, the first paper is no worse off in the short term. The same isn’t true online, where a single disappointing story will drive users to other sites.
Fighting changes in consumer behavior is a losing battle, so it will be interesting to see how News International navigate the waters ahead.

Rupert Murdoch’s recent interview with Sky News in Australia has raised more than a few eyebrows this week. In it, he claimed that once his papers started charging for online content, they’d give the boot to Google, along with other search engines and news aggregators. With the exception of Mark Cuban, who lives in a fantasy world where more people find news content through Facebook and Twitter than through search engines, the general reaction online has been predictably hostile to Murdoch’s approach. If you watch the interview, though, Murdoch actually makes some noteworthy observations on the future of news.

Of course the move to block search engines is ill-advised. Google sends over a billion visitors to news websites every month. And whether you’re monetisation strategy is based on advertising or direct payment, the first step is getting enough traffic to monetise. Removing your news site from Google (or, more importantly, Yahoo News) is akin to taking your newspaper off the stands because you’re afraid people will read the ledes above the fold instead of buying the paper itself. Like a newsagent, search engines are an integral part of news distribution … only they don’t charge for connecting you to your readers.

Murdoch’s real beef is with changes in consumer behavior: he wants loyal readers for his news sites. But he’s forgotten that the medium affects the content. A newspaper is a discrete editorial artefact, but the web is an atomized collection of individual pages, and nothing will change that. A newspaper will have regular readers who buy the paper every day, whether through subscription or regular purchase. Others will buy a particular paper on a particular day because the splash is appealing. Online behavior is, in some ways, analogous. Those who consume online news regularly will visit certain sites (or read certain RSS feeds) with some frequency. Casual news consumers are more likely to seek information about a particular topic through search. Regular news consumers use search engines, too, when they’re interested in learning more about a topic of interest (in part because even some very good newspapers on the web today have very poor site search).

Two things differentiate online behavior from its offline counterpart. First, non-unique content is commodified. Before the Internet, most people only encountered one newspaper in a given day, so even a healthy padding of stories from a newswire was tolerable (or even welcomed). The same is not true online. The second difference is that switching is extremely easy online: it’s literally a click away. Unless your content is unique, making it difficult for your users to find and/or read your content means they’ll quickly find similar information elsewhere. Offline, people who buy a newspaper may not like the coverage of story x, but they’ve paid for the whole package, and even if they buy another paper to learn more about story x, the first paper is no worse off in the short term. The same isn’t true online, where a single disappointing story will drive users to other sites.

Fighting changes in consumer behavior is a losing battle, so it will be interesting to see how News International navigate the waters ahead.

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The Platform: Key to Micropayments’ Success

October 12th, 2009

In my last post, I wrote about why consumers may be more willing to pay for some types of news content over other types, and how publishers that are focused on creating original, unique content for their readers will benefit most from the transition to paid (or partially paid) distribution models on the web.

I also mentioned, though, that’s only half the challenge. ¬†As Google pointed out in its recent submission to the Newspaper Association of America:

When it comes to a paid content model, there are two main challenges. First, the content must offer value to users. Only content creators can address this. The second is to create a simple payment model that is painless for users.

That second challenge has been at the front of our minds for the past six months, as we’ve been building the bitcents platform. We started with a simple goal: to make micropayments work for publishers, consumers and the web as a whole … and not just now, or in the next year, but in the long term.

In short, we believe that for news micropayments to flourish, the systems adopted by publishers will need to:

  1. Operate at scale
  2. Be easy to use
  3. Earn and keep user trust
  4. Embrace the web

Future blog posts will go into greater detail, but here’s a rough overview of these four principles, which we’ve built bitcents to address.

1. Operate at scale
A successful micropayments system will need to work as well for a site that receives five million visits a day as it does for a site that gets fifty thousand … or five hundred. But the system must also offer scale to users, by allowing them to access content from a broad range of publishers of all shapes and sizes. A micropayments platform solution like bitcents benefits consumers (who won’t need to deal with different siloed payment systems for each publisher site they visit) and benefits publishers (because all consumers on the platform will be able to easily access and pay for publisher content).

2. Be easy to use
From a consumer side, that means integration with participating publisher websites needs to be smooth and intuitive, the sign up process needs to be fast and straightforward, and (more than anything else) each individual transaction needs to be completely frictionless. For publishers, it means that the system must be both simple to integrate and offer enough flexibility to keep the publisher in full control of their content.

3. Earn and keep user trust
Competition on the web is only ever a click away, and any successful micropayments system will need to earn the trust of both consumers and publishers. How? By being reliable, secure and privacy-sensitive. The privacy settings we’ve built into bitcents allow a consumer to pay for premium content without having it associated with her account if she prefers greater privacy.

4. Embrace the web
The other three principles could be applied to any web app, which is why we’re particularly excited by the fourth one: embrace the web. We think of it as having two main components:

First, there’s the link-driven nature of the web. Links are, to put it bluntly, what makes it a web, by connecting each page to other pages. Links drive traffic around the web. Whether a publisher’s revenues come from advertising, micropayments, or some combination of the two, they’ll need to start with traffic … and therefore with links. That’s why Rupert Murdoch or Tom Curley’s complaints of exploitation by search engines are red herrings.

By default, bitcents keeps publishers’ content available to search engines. An individual publisher can, of course, decide to override the default, but we strongly believe that for a micropayment system to work, it will have to embrace the web’s linkability.

Secondly, there’s the rapid innovation that happens on the web, driven by constant competition. For micropayments to thrive in the long term, they’ll have to embrace this culture of rapid iteration and change. The problem, of course, is that this need doesn’t naturally fit alongside scale and ease-of-use principles.

That’s why we’ve built bitcents as a platform, on top of which developers can build subscriber networks. Each subscriber network will provide full access to every bitcents publishing partner’s content.

It’s easiest to think of it like using a credit card to pay for something in a store. A publisher’s site is like a store, and subscriber networks are like different types of credit cards (your Amazon.com Visa or US Airways MasterCard). bitcents is the card machine that sits on the counter in the store. Just like different types of credit cards, subscriber networks will be able to offer different benefits, building special tools and services for their users. For example, one subscriber network may offer a recommendation engine based on a user’s social network. Another may manage multi-user corporate acocunts, while a third could allow users to buy and tag stories from a variety of publishers over the course of the week and deliver a personalized newspaper to the user’s door on Saturday morning for leisurely weekend reading.

We think the competition between subscriber networks will drive innovation, which will make micropayments more useful for both publishers and consumers, and the subscriber network will receive a percentage of the revenues it helps publishers to earn.

Conclusion
We founded bitcents because we want to make micropayments work for publishers, consumers, and the web as a whole. It’s a long term project, which is why we think it’s important to get the fundamentals right from the start.

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An honest discussion about charging for news online

October 7th, 2009

Today we announced the launch of bitcents, a new micropayments platform for news publishers online. We built bitcents because we believe that rigorous, ethical journalism has an economic as well as a societal value, and we hope that it will be a tool that publishers of all shapes and sizes will use to make the most of their content online. We’re excited about the potential for paid content on the web, but while everyone from Rupert Murdoch to Steve Brill is evangelizing its benefits, the data are more ambiguous: recent surveys in the UK have found that somewhere between 5% and 84% of readers would be willing to pay for content online. That’s why we think it’s important to engage in an honest discussion about the opportunities and limits of charging for online news.

The basics (supply, demand, and the long tail)

Before we even start talking about micropayments, we should acknowledge some basic prerequisites of any trade:

  1. People must be willing to buy what you’re offering.
  2. It must be easy for your customer to complete the transaction.

These points may seem obvious, but they are missing from many discussions about the potential for paid news content on the web…especially among those who believe such a model can work. We’ve built bitcents to address the latter requirement, and we’re excited to work with publishers to better understand (and satisfy) the former.

What makes something worth buying? Put simply: supply and demand. As paid news skeptics regularly and rightly point out, the supply of free national and international news is huge, and perhaps inexhaustible. It is therefore unlikely that national or quasi-national newspapers will be able to charge for their online content in the foreseeable future. (As an aside, Britons regularly point to the BBC’s provision of free, high-quality news as a source of particular woe, but the glut of general news available in the US and in other countries around the world suggests that the market is equally prepared to provide similar challenges.)

The skeptics would leave it there, forgetting that while general news, by definition, attracts the largest audiences, it is only a small fraction of the total news produced each day. Most news remains specialized, attracting an audience within a specific locality, discipline, or industry. This is the long tail that the Internet supposedly serves so well. Unfortunately, these are the publishers who have been hit hardest by the changes the web has wrought on the advertising industry; sites with fewer than two million monthly visitors struggle to extract the full benefit from online advertising. On the plus side, these smaller publishers are more likely to produce original, high-value content that is suited to direct payment.

Trusted guidance is more valuable than ever (or: the PageRank fallacy)

Newspapers, of course, have always been more than the sum of their parts: by bundling stories together, a newspaper is a guidepost to what matters, and why. The web has undermined the information scarcity that gave newspapers their primacy in this role. Online, readers skip from site to site for information, consuming content in an atomized way that has no parallel offline.

As more people and more information move online, though, the need for trusted guides will only increase. With billions of pages being added to the web daily, people are finding it more difficult to discern what matters. That’s hardly surprising: On the web today, people discover content primarily through search engines and word of mouth. These are invaluable tools for discovery, but they are better at identifying what is popular than what is important. As an example, we can look to Wikipedia, which (for all its strengths) dedicates nearly four times as many words to Harry Potter as it does to the printing press. The wisdom of crowds (and algorithms that tap into it) are well-suited to the recommendation of general interest material, but more specialized interests remain elusive. The value of editorial judgment, meanwhile, has yet to be established online. bitcents provides both publishers and developers with new incentives to provide just such guidance.

The web is good for content (even when it hurts)

There’s no doubt that web has changed the how people consume information: for the first time in history, the average person has access to information on virtually any topic at a moment’s notice — more information than can be consumed in a lifetime. That’s a good thing for humanity (more information empowers citizens and consumers alike), and it also means that more people are consuming more news than ever. But it creates challenges as well. It has changed the economics of offline media, destroying the scarcity that subsidized their advertising revenues.

We are now in the midst of a great transition, and while change is never easy, newspapers have a long history of adapting to change. One thing is clear, at least: the publishers that embrace the opportunities offered by the web — and recognize its limits — will be the ones the thrive in the years to come. Confronted with a fundamental shift in consumer behavior, adaptation is better than the alternative, as Studebaker would no doubt attest.

And finally…

Micropayments are not a panacea. but they do have an important role to play in the future of news in an online era. There are still many questions, of course, but we’re happy to be working with publishers, developers and consumers to find new answers.

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bitcents introduces the world’s first news micropayment service

October 7th, 2009

bitcents, inc. today announced the launch of the first fully-functional micropayments platform for news publishers. bitcents will allow publishers to charge on a per-story basis. It is easy for publishers to integrate and easy for consumers to use. It also provides a platform on which developers can build new products and services.

Aimed at publishers of specialised content, like trade or local news, bitcents will allow readers to purchase premium content across the web using a single account. bitcents is focused on high quality, original content as a first step in making micropayments a viable, sustainable revenue stream for the news industry.

“News publishers should be optimistic about the opportunities they have online,” said Andrew Brennan, the founder of bitcents. “They are perfectly placed to learn from how other content industries have approached the web. The lessons are clear: for paid content to work, the payment system must provide breadth of coverage and ease of use, but consumers must also feel they are paying a fair price.

“We’ve built bitcents to make it fast and intuitive for consumers to buy news content across any number of sites, and we’re committed to helping publishers make the best use of this new tool. The advent of news micropayments will reward those who provide their readers original, high-quality content at a reasonable price.”

bitcents believes that high-quality content is valuable and that the web is good for content creators. Traditional subscription paywalls isolate a publisher’s site from the rest of the web, making it difficult for potential readers to discover or share the content. bitcents, in contrast, recognises that traffic is essential for news to thrive online.

bitcents helps publishers monetise content whilst keeping it discoverable through news aggregators and search engines, which send billions of visits to news sites monthly. That means publishers benefit from both regular and casual traffic. bitcents also provides flexibility and transparency in pricing: publishers set their own prices, which can vary according to the age or type of story, and those prices are communicated clearly to consumers.

bitcents is committed to making news micropayments work for publishers, consumers, and the web as a whole. That’s why, at its core, bitcents is a platform: consumers will not register with bitcents directly, but with a developer-built subscriber network. Every subscriber network will give its users full access to the sites of bitcents publishing partners, retaining a portion of the revenue that they help publishers generate. Developers can build new tools for their users to discover, share and consume premium content.

By creating an ecosystem of innovation around news micropayments, bitcents will help micropayments become more valuable to publishers and consumers alike.

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