The Elusive Pricing Model for Journalism
By Arnold Kling
Joshua Gans discusses a pricing model for long-form journalism that appears to be i-tunes-ish.
Put simply, $0.99 makes sense in the world of $0.99 but it is less clear it will carry the weight in the would of free.
I have been thinking about this problem ever since Varian and Shapiro’s Information Rules (and indeed before that, because Hal Varian had stimulated my interest in it).
My first thought was the micropayments were the answer. However, Clay Shirky made a convincing case that “mental transaction costs” with paying a few cents per article were too high.
My second thought was bundling. Over ten years ago, I wrote,
the “silo” model tries to maintain an anachronistic wall between the content in one silo and content in other silos. In the world of physical magazines, it certainly makes sense that a subscription to “Business Week” does not entitle you to read “Forbes.” Clearly, they are two separate physical collections of paper.
On the Internet, however, this distinction is not a physical necessity. Most consumers in fact pick and choose articles from a variety of online magazines. In contrast to the physical world, consumers can engage in extensive content aggregation without imposing meaningful costs at the margin.
I proposed instead that as a consumer you would pay an annual fee to belong to a “club” that allows you to access many journalistic efforts at once. Today, I could see Amazon adopting that model.
A few years later, I decided that patronage was a more likely model. I wrote,
In the future, it may very well turn out that both independent journalists and newspapers will require philanthropic support in order to operate. At that point, newspapers, with their high overhead, will be less likely to survive than independent journalists. However, I am sure that the New York Times and a few other newspapers will have sufficent nostalgia value in the eyes of some future wealthy mogul to ensure ongoing funding.
Note that the venture Gans is discussing was launched with what I call the micropatronage model.