How to Get People to Pay for News

Rupert Murdoch explains, in an interview with his Fox Business Network:

"Simple. You turn them off. They've got to sign on. They give you their credit card number. And that's it. And then you e-mail them and say you're putting the price up or you're taking it down or whatever."

Sounds simple enough. The catch is how to make it easy for readers to pay without feeling like they're paying. The psychological cost of repeatedly taking out your wallet to pay for something you're taught to consider free, like news, is nearly equal to the financial cost of actually paying for it. Take iTunes, for instance. I'm more likely to buy a song if the system has and remembers my credit card information, so that action of purchasing is as simple as clicking on a button that says $0.99. Too much friction drives people away from paying for media.

The trick is, if we're going to ask people to pay for online articles and subscriptions, what's the best way to reduce that friction?

Pew's State of the Media report came up with two strategies I wrote about a few months ago. They are:

1) Microaccounting: Think Hulu, with payments. Microaccounting brings publishers together to create a network. Readers get billed every month for reading X number of articles across various networks. Presumably this conceals the cost of reading and makes users more likely to pay because they're only confronting costs once a month or so rather than confronting a price for each new revelation about the state of health care reform. This is close to the "Hulu for Magazines"* that Steve Brill with Journalism Online is trying to build. Essentially it's a clean way to introduce bundled payments to online journalism.

2) Circulate Bar: Think Hulu, plus Facebook. You enter your demographic information into one gateway page for the rights to view multiple Websites free of cost. So Conde Nast could create a standard welcoming page to ask readers to share demographic information in exchange for a free reading experience. Then Conde sells that aggregated information to its advertisers, who pay premium for display and video ads. I suppose smaller magazines companies like The Atlantic and The New Republic could also band together to create a Circulate Bar for our readers and advertisers.

*Brill's team writes to correct: "We are not aggregating content and posting it on a site. That's not what we are doing.  We are simply creating an e-commerce platform that publishers launch on their own sites to generate revenue from readers." Right on. I didn't mean to suggest that JO was aggregating content on a single page, only that they were building a single platform that would connect readers to multiple media sources, which is similar in spirit to Hulu's project. I thank them for the correction.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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