Paying for Premium Content Still a Hot Topic

The raging controversy over paid content on the Internet just received a dose of reality from David Moore, the founder of 24/7 Real Media and chairman of the board of directors of IAB (Interactive Advertising Bureau).

In addressing the IAB Annual Leadership Meeting on February 21, Moore proposed an “easy pay” system that he said would need to be adopted by all premium publishers. The idea would be for publishers to collect 10 cents per session, or one cent per page, from consumers who wanted access to preferred content. A consumer would have to spend at least $10 before being charged by a publisher.

Moore believes the program will only work if publishers cooperate and agree to implement it broadly. “Totally free content is dead,” said Moore, who pointed out that 10 cents for a user session is equivalent to $100 CPM, an incredibly attractive advertising rate. Basically, Moore said, people will inevitably have to pay for premium content, since advertising alone will not be able to support it.

Moore is essentially lobbying for a micropayment strategy to be institutionalized across web publishers. While his solution makes sense, the micropayment argument isn’t universally accepted by any means. In a recent blog, Freakonomics co-author Stephen Dubner asked four industry observers whether they thought micropayments would work.

Alan Mutter, a media/technology consultant who’s on the adjunct faculty of the Graduate School of Journalism at the University of California, Berkeley, agreed that a micropayment system was possible, but “it wouldn’t work for one publisher if a competing publisher decided to provide the same, or nearly identical, content for free.” Mutter seems to agree with Moore that widespread adoption is essential, he says it “would require a critical mass of publishers to agree to collaborate more earnestly, more broadly, and more smoothly than any group of humans in history. Could it happen? Theoretically. But don’t hold your breath.”

Marshall W. Van Alstyne, an associate professor at Boston University and a research scholar at MIT, depicts the problem this way: “Putting micropayments on news is like putting tollbooths on an open ocean. … the interests of a free society are rarely served by building barriers between people and the news.” Instead, Alstyne thinks other solutions are needed. He mentions three possibilities: Charge technology vendors a flat fee to put free content on cell phones, e-book readers, and laptops; offer two versions of information, one free and ad-supported, and one that’s faster-loading and more graphics-rich for a modest subscription price; or, find a way to match people to content, and in so doing, offer advertisers the ability to micro-target.

William Baker, an executive-in-residence at Columbia University, thinks combining advertising, subscription, philanthropy, and micropayments into a single comprehensive solution could work.

Clay Shirky, an adjunct professor in New York University’s graduate Interactive Telecommunications program, thinks micropayments are doomed in part because “the competitive loss of hiding them behind a paywall reduces the users’ ability to share them with friends, and it is this secondary distribution that creates the most important new opportunities online.”

I credit David Moore with putting an “easy pay” system on the table, but it seems that the micropayments issue is about as complex and controversial as national health care reform – and we all know where that stands right now.