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Home » Micropayments. Elon Musk thinks he’s got a “major win-win” for news publishers with…micropayments.

Micropayments. Elon Musk thinks he’s got a “major win-win” for news publishers with…micropayments.

One of the remarkable things about watching Elon Musk “run” Twitter is the ability to observe his learning curve in real time.

People have been running social platforms and media companies for literal decades, after all, all while Musk was busy with cars and spaceships and whatnot. A fair number of lessons have been learned! But Musk — so resolutely convinced of his own genius — has dedicated himself to making old mistakes new again, compressing a lifetime of bad ideas into six short months. It’s his most reliable pattern: announce a crazy new policy, preferably on a weekend; face huge blowback from users; reverse the policy, claim you were misinterpreted all along or just pretend it never happened.

So when I saw this tweet on Saturday afternoon, I wasn’t sure whether to laugh or cry.

Since embeds of his new longer-than-280-characters tweets don’t show the full text, here’s what it says:

Rolling out next month, this platform will allow media publishers to charge users on a per article basis with one click.

This enables users who would not sign up for a monthly subscription to pay a higher per article price for when they want to read an occasional article.

Should be a major win-win for both media orgs & the public.

Fiiiiiiiiiinally, Elon turns his attention to micropayments. (Pretty sure this is in the Book of Revelation somewhere.)

The idea of news publishers charging readers by the article is not a new one. At least once an hour, someone tweets about “why hasn’t anyone figured out how to let me buy one article????” Literally dozens of micropayments-for-news startups have come and gone; dozens of publishers have run tests of various models; none have gained much traction.

Even today, well into the 2020s, you can find people saying the dream is an “iTunes for news” that — as the iTunes Store did 20 years ago — allows you to buy a single song (an article) rather than the full album (a subscription). (They say this despite the fact that approximately zero people still buy MP3s that way; instead, they pay a monthly subscription fee to Spotify or Apple.)

I’ve long been a micropayments skeptic. Not because I have any philosophical issue with the idea; I’m all for publishers making money and readers consuming news. My skepticism is driven by it being a strategy that sounds appealing but works poorly in practice. Others have written about the problems with micropayments at great length, but here are, to my mind, the most significant:

Friction at the story level.

What do people do when they hit a news site’s paywall? We have some data on that question, from a Gallup/Knight Foundation survey last fall. They asked American adults: “Suppose you were trying to access a news story online and had to pay to keep reading or watching it. Which ONE of the following would you be most likely to do?”

48% said they would “try to access the information elsewhere for free from a different news outlet.” 28% would “move on to something else or to a different news story.” 7% would “try to find information about the news story on social media.” 4% would “sign up for a free trial if available.” 3% would try to “get the story through friends or family who already have access.”

A measly 1% would “pay for access to the story or outlet.”

In the overwhelming majority of cases, a person faced with the need to pay a news site money will say “no, thank you.” You can view that as an artifact of subscription models, or you can view it as evidence of how transient most news stories are in people’s information lives. It’s hard to evaluate how much an individual article is “worth” before you’ve actually consumed it — and there is always free competition available, either on the same topic or in the broader universe of “things to click on in my feed.”

Friction at the payment level.

If an individual publisher sets up their own micropayments system, getting money will require readers setting up an account, attaching a credit card, and all the usual stuff that moving money online requires. Not many people will do that to read a single news story.

So maybe they sign on to one of the many micropayment startups that want to create an industry-wide network of news sites using a common payment platform — either as part of a pan-publisher subscription or on a pay-per-article basis. Unfortunately, none of them have the scale to be appealing or the appeal to build scale. (“Just sign up with your NewzBux account!” isn’t much of a pitch to your readers if they’ve never heard of NewzBux, or InfoCents, or FactCoins, or whatever.) And the companies that might be able to start with scale (Google, Facebook) are not ones that publishers trust with their money. And whoever owns the pipes, they’ll want their 30% cut.

Most paywalls aren’t that hard.

In a digital universe where every news story is behind a hard paywall — one impenetrable to the non-paying reader — then a micropayments model might make sense. But that’s not the digital universe we live in. The number of completely paywalled sites is low and typically either hyperlocal (a county-seat weekly with no competition) or high-end (think The Information or Politico Pro). Nearly all news sites will let a random web user read a story (or two, or five) for free. It’s only after a given number of clicks that the wall goes up.

If you want to think of that as “news sites already offer micropayments for those first five articles — they’ve just set the price at $0,” be my guest. And for those times when someone really wants to read just one article, that free allotment allows all the paywall workarounds that the savvy digital news consumer knows about. (We’re all adults here; we can talk about incognito windows.) If most paywalls aren’t that hard, there’s little pressure for a paid product to get around them on a single story.

No one agrees on what micropayments are.

Is a micropayment 10 cents for one article? That was the number Elon Musk was thinking about in this video from November, when he complained that he should be able to pay 10 cents to read an especially good Philadelphia Inquirer story despite not living in Philadelphia.

If there is a sustainable price for journalism, it isn’t 10 cents an article. A large scale data analysis from Medill found that digital news subscribers don’t even visit those news sites on most days. For small local news sites, the typical subscriber visits once every three days. At larger sites, it’s once every five days. Those visits can include consuming multiple articles, of course, but the point is 10 cents an article would be a radical price reduction for most subscribers — and thus a radical revenue reduction for most publishers. Price points will have to be higher — and thus less appealing to fly-by readers.

Publishers don’t want to cannibalize subscribers.

It’s not at all unusual for a business to insist on their product being purchased in a particular quantity. Try to go to the grocery store and buy one peanut M&M, or one tablespoon of ice cream, or a single Corn Flake. They’ll look at you funny, because the businesses that manufacture those consumer goods have been structured around selling bags, pints, and boxes of them, respectively. Go ask the people at Tesla if you can buy a Roadster that’s only for the weekends — at 2/7ths of the price. The economics of information goods (like news) aren’t identical to those of physical goods, but they both require sustainable business models, and for most quality news sites, that requires paid subscriptions.

And that’s the root problem, from publishers’ point of view: If you sell subscriptions for $15 a month, but you sell individual articles at 15 cents each, you’re telling any subscriber who reads less than 100 articles a month they’re an idiot and should give you less money. There aren’t enough payment-willing fly-by customers to make up the difference for even a few lost subscribers. You’re encouraging your best customers to think of you as an occasional treat rather than a service you pay for — and to pause before every headline you click to estimate its worth in cash. It shouldn’t be surprising than “we’ll charge you $10 a month until you tell us to stop” is more appealing than “we’ll charge you 10 cents now and maybe you’ll come back again someday.”

As Tony Haile once smartly put it, news subscriptions are like gym memberships. Imagine a gym that charges $50 a month for a membership — but also let anyone pop in for a single workout for two bucks. Why would anyone pay for a membership again? “If you would take the micropayments version of a gym membership, it would be like, ‘I can turn up and I can pay a couple of quid, and I can go into the gym whenever I want to use it.’ No gym works like that.”

All that said — these problems are not all insurmountable. Smart people might come up with solutions, even if they haven’t so far. In fact, I’ve long believed that if anyone could create a micropayment system for news that worked, there were only two real possibilities: Apple and Twitter.

With iPhones, iPads, and Macs, Apple controls the devices that most paying digital news consumers use. They have hundreds of millions of users’ credit cards already on file and attached to your identity. And with Apple Pay, they have a nearly frictionless payment platform that has already been integrated into countless apps and websites. If they decided to offer a “Read With Apple Pay” button for news sites, the technical problems of micropayments would mostly go away. (Along with 30% of publishers’ revenue, no doubt.)

Twitter, meanwhile, is the center of the digital news universe. There is no place online with more news-curious users clicking links to new-to-them news sites. And it showed interest in the subject, buying Tony Haile’s Scroll and integrating its network of ad-free news sites into Twitter Blue and teasing some sort of paywall integration on the way.

But that was the old Twitter. One of Musk’s first decisions after taking charge was killing off the remnants of Scroll — the closest thing to a foundation for a pan-publisher revenue model anyone had.

Unless you are one of the few Twitter Blue subscribers, Twitter doesn’t have your credit card number. It has no ready payment platform for publishers to integrate into their sites. Twitter would likely only be interested in a payment system that goes through Twitter, not via links that go to a publisher site from Facebook, Google, or elsewhere.

But let’s be honest: The biggest problem is Elon. What mainstream publisher would trust Elon Musk with their money right now? The guy who refuses to pay the rent on his corporate HQ? The guy who has spent the past six months dumping on the media, banning reporters, declaring their work a “relentless hatestream” from “media puppet-masters” that you “cannot rely on…for truth“? This is the guy who says he has a “major win-win” for publishers? The same guy that complains “media is a click-machine, not a truth-machine” thinks the answer is tempting people to pay with a single headline?

(Not to mention that Musk has no deadline cred remaining, and saying that micropayments will “roll out” later this month could mean this summer, late 2024, or never.)

Maybe someone will figure out micropayments for news someday. I think it’s unlikely at scale — but I could be wrong! But I am quite confident the man who has spent the past half-year destroying the news media’s favorite online space won’t be the one to do it.

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