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.1 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.

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.…

— Elon Musk (@elonmusk) April 29, 2023

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.

.@elonmusk describes the issue of reading articles with paywalls. In clips never shown before in our interview he alludes to the value of what Twitter can bring. He also talks about how the media wants to own their subscribers. @kgee @EliBurton_ @klwtts pic.twitter.com/WsA2lUHo0S

— Tesla Owners Silicon Valley (@teslaownersSV) November 1, 2022

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 they 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 lets 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 insurmountable. Smart people might come up with solutions, even if they haven’t so far. Indeed, 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.) And Apple News+ is the closest thing to an all=news subscription that currently exists.2

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.

1. I believe it was Techdirt’s Mike Masnick I first saw using this metaphor for Musk, specifically around content moderation.
2. Pro tip: Apple News+ now includes, along with roughly all the magazines, The Wall Street Journal, the L.A. Times, The Times of London, The Globe and Mail, and the metro dailies in Charlotte, Dallas, Fort Worth, Houston, Kansas City, Miami, Raleigh, Sacramento, San Antonio, San Diego, San Francisco, plus a few more. If you run into a random local-news paywall, there’s a pretty decent chance that searching for the headline in Apple News might find it. It’s now a much better product for newspapers than it was at launch.

One of the more promising micropayment startups has been Blendle, the Dutch startup with millions of dollars in investments from The New York Times, Nikkei, and Axel Springer. Even last year, two more investors put $4 million into the company. But Blendle has yet to turn a profit and is now pivoting away from micropayments to premium subscriptions, cofounder Alexander Klöpping told a Dutch newspaper last week. (H/T to Dutchnews.nl, which had the news in English.)

“I can lead a team of 50 people and we have 60,000 subscribers in the Netherlands and hundreds of thousands of users who pay per article. But I have to be honest: We are still not making a profit,” Klöpping said.

He said they’re leaning on subscriptions (which launched in 2017) instead because, well, they’re more valuable than people who pay in quarters: “Premium members turn out to be much more active and read or listen to considerably more pieces. On average, they spend 22 minutes a day on Blendle, three times as many as users who pay per item. For us, of course, premium offers a much more stable source of income, which means we can continue to develop great features for our users.”

Here was Blendle’s model, back in 2014, with 130,000 registered users:

Blendle takes content from 15 or so of the Netherlands’ top newspaper and magazine publishers and allows users to buy stories individually, with just a click, no matter where they were originally published. The publishers set the price and take 70 percent of the revenue while Blendle takes the other 30 percent. But Blendle needed a way to convince readers that they weren’t risking too much by, say, clicking on that overwrought trend piece about gezichtshaar. (That’s Dutch for facial hair.)

There will be a limit to how many times a user can get a refund based on a ratio of how many stories they actually pay for — so the more you spend, they more you can return.

Blendle expanded to Germany in 2015 and then in the U.S. with 20 publishers in closed beta: The Wall Street Journal, The New York Times, The Washington Post, The Economist, The Financial Times, Mother Jones, and others you could guess:

Its initial U.S. launch will be restricted to 10,000 users, and stories will be priced between 19 cents and 39 cents for newspaper articles and 9 cents and 49 cents for magazine stories…In the Netherlands and Germany, 650,000 people have signed up for the service. Blendle gives new users credits to try it out for free, and Klöpping said about 20 percent of users who initially sign up end up connecting a credit card to their account…

The Wall Street Journal has also been publishing on Blendle’s European editions. Though she wouldn’t share specific figures, Dow Jones chief customer officer Katie Vanneck-Smith said that because of Blendle’s young audience — more than half of its users are under 35 — technology stories have done well on the platform while U.S. politics coverage hasn’t been as popular, though she noted that those are “starting to pick up with Trump.”

The Journal has charged for full access to its website since the web’s earliest days, and Vanneck-Smith said that Blendle was just another way for the paper to get readers to pay to access its journalism. Journal stories will cost 39 cents each.

In all, Blendle has paid out a total 8 million euros to publishers in its five years of existence, Klöpping said. But now, “quarters per article are not going to make the difference.”

He added that the company is continuing to focus on its recently-launched audio arm, in addition to its premium subscription service, which is now adding a new selection of magazines. Individual article sales will cease in August. He announced the change with a video. (It’s in Dutch, but YouTube’s auto-translate captions can give you the gist.)

Blendle Premium’s target is 100,000 subscriptions, the level Klöpping says is needed for Blendle to reach profitability, and they’re halfway there now.

Blendle has been mostly quiet in English-language circles in recent years after it launched its U.S.-focused app, which didn’t seem to gain much traction, in 2016. In recent months, its iOS app has ranked between No. 750 and No. 1,500 in the News category of the U.S. App Store. Last year, Klöpping told a Dutch interviewer that “in retrospect, we went abroad too quickly” and that “we are not investing” in the U.S. app.

In the Netherlands, it ran into difficulties: a cofounder departed and high-profile publishers NRC and De Telegraaf pulled out of deals to be included in the premium subscription or reduced their presence in the app. (NRC was blunt about why: “Despite all our sympathy, we sincerely fear that in the medium term Blendle is not good for journalism.” It said it considered Blendle’s subscription product evidence it was “fishing in the pond of our subscribers.”) In 2017, Blendle laid off 9 of its 67 employees.

According to public records, Blendle lost €2.8 million in 2017 after losing €2.4 million in 2016. The tumult prompted headlines like “Will Blendle survive 2018?”

The company has invested heavily in audio, where it sees younger reader shifting their consumption — is the old “iTunes for news” now the “Netflix for podcasts”? — and tried things like selling individual book chapters. And now it’s stepping away from its initial calling card.

Blendle had the best implementation of micropayments I've seen, so the fact that they're shutting the program down is the strongest evidence yet that the concept just won't work. https://t.co/x74ElSYeHY

— Aston Motes (@__aston__) June 9, 2019

Ugh, another media micropayment fail:
Dutch news aggregate website Blendle ditches pay-per-article service https://t.co/9A3LqArpCW pic.twitter.com/6fg46cGP2R

— Michelle Manafy (@michellemanafy) June 7, 2019

Pay per article is dead. I remember when Blendle was the savior/future of Journalism (via @alextohme)

https://t.co/DKffENsU5s

— Mustapha Hamoui (@Beirutspring) June 8, 2019

Blendle was the highest profile experiment to make per-article pricing work in news. But now, it is shutting it down. https://t.co/MwqmrcuyLX

— Rohin Dharmakumar (@r0h1n) June 8, 2019

Micropayments Don't Work For News, Vol. CCXLIV https://t.co/qoL62UuiVj

— Joshua Benton (@jbenton) June 8, 2019

Are micropayments working for anyone? https://t.co/wMVykAQLWS

— Steve Dempsey (@steevill) June 8, 2019

But there are a lot of kinks to work out along the way. In a new AP Insights report, Ryan Nakashima and Anne Cai outline some of the concrete ways that publishers are making the transition — and some of the oh-shit moments they’ve faced in doing so. Here are a few:

— Whoops, the paywall just reset. Digital First’s Bay Area News Group, which added a paywall to The Mercury News and East Bay Times last year, swapped out the art on its regular paywall prompt — from “plain vanilla, blue-background subscription appeals” to ones that showed an image of Golden State Warriors player Klay Thompson reading a newspaper. Then:

Though the company had been racking up nearly a thousand subscribers a month with its metered paywall, the move had the unintended effect of resetting the meter, meaning its millions of visitors got a new allotment of monthly free page views before being asked to subscribe.

The result was a more than two-week lull in which the daily average number of new subscription starts fell by 45 percent from the period immediately prior to the change.

But a series of successful maneuvers helped pull BANG back from that down period — in particular, a dramatic move to expand the $1 trial period offer from one month to three months, which effectively slashed the three-month subscription price from $21 to $1.

— You need to know how to process credit cards. When The Seattle Times rebuilt its digital subscription system in 2015, it didn’t think at first about dealing with credit card declines on digital subscriptions.

For print subscriptions, if a credit card failed, the company would just send a print invoice and deliver the paper with no interruption. But with digital subscriptions and recurring autopay charges, a credit card failure means a stop in service. In fact, when digital subscriptions were launched, 62 percent of all their stops occurred because they couldn’t process a credit card transaction. Though that rate is lower now, they are still working on this problem, addressing it with a range of solutions including reminding customers with impending card expiration dates, using credit card updater services, and setting payment retry rules.

“You need all the technology in place to operate as an e-commerce company,” said [Curtis Huber, director of circulation sales and marketing]. And that encompasses less glamorous, less immediately obvious aspects — such as establishing business practices for managing credit card failures.

— Any startup you work with is going to have its own problems. The Austin Monitor tested micropayments with a startup called PennyPass. But once the trial was up, there was no way to store the customer payment data it had collected easily or securely. “From that experience, PennyPass has since pivoted to solve that pain point for publishers, rebranding itself as Pico and pivoting to become a customer relationship management platform.” That’s fine, but it’s also a reminder to be skeptical about startups that come your way pitching their solutions.

The full report is available for download here.

But what they’ve since learned is that getting people to pay for digital content requires a human touch.

In 2015, the Free Press — one of Canada’s few remaining English-language metro dailies not owned by the Postmedia chain — started asking readers to pay 27 cents for each story; readers also had the option to buy monthly subscriptions. That stood out from what was then and still is the most common newspaper digital subscription approach: a metered paywall, where readers get a certain amount of articles free a month before being asked to pay.

A year into implementation of the micropayment system, the Free Press projected it would generate $100,000 in revenue from digital micropayments in 2016.

But today 2018, that total still hasn’t quite been cracked. According to their most recent quarterly earnings report, while digital revenue for individual articles grew 64 per cent in 2017, it still generated less than $100,000 in revenue.

Bob Cox, the publisher of the Winnipeg Free Press, said the paper has never looked at micropayments as a lucrative source of income. Instead, he sees micropayments are a tool for luring subscribers to higher-priced monthly packages, he said.

“It’s just part of the sales funnel, as we call it,” said Cox. “Our focus is really on building the number of full-time online subscribers, using micropayments as the way in the door.”

Like many newspapers, the Free Press has seen a dip in digital advertising — in 2017, digital ad revenues were down $500,000 from the previous year. But Cox doesn’t see digital subscription revenue as replacing digital ad revenue. Instead, like many papers, the Free Press is looking at building its long-term business model around paying subscribers.

Over a 30-day period in April and May, there were over 1,500 micropayment-paying readers, who collectively purchase about 600 to 1,000 articles a day, according to data provided by Christian Panson, vice-president of digital and technology at the Free Press. Of those users, Cox projects they are able to convert about 15 percent to full-time digital subscribers.

As of May, the Free Press had over 7,000 digital subscribers — up from about 4,000 two years earlier. “Our goal this year is to actually double the number of people who are actually paying for full-time access to digital,” Cox said. “We’re putting a lot of efforts into that goal because we realize the importance of it to the future.”

To get there, the Free Press has invested significant resources into marketing personnel, including customer service staff. “Oddly, in the online world, the personal sales approach still works,” said Cox.

Free Press staff use a number of methods to track how readers are using the site, including those who frequently buy single articles — which has helped micropayments become an important marketing tool. Frequent users get targeted approaches and offers for full subscriptions. The paper is also making a major push to get print subscribers to also sign up for a digital subscription.

Cox calls this “fairly good” progress — “but it takes a ton of work.”

[Google] is launching “funding choices” where publishers can set a price per page view for consumers using ad blockers to pay — or abandon their blockers and see the ads. Google will track how many pages people view and charge them through a new version of their Google Contributor service.

Smart move by Google to preempt the threat from ad blockers and try to clean up online advertising – on their terms https://t.co/xnb7U7FXAq

— Timo Kissel (@timokissel) June 2, 2017

Google’s own Chrome-native adblocker is expected to be turned on by default on both mobile and desktop, according to The Wall Street Journal, and will filter out “unacceptable ads,” guided in part by guidelines released by the industry group Coalition for Better Ads (of which Google, alongside other advertising companies, is a member).

Google isn't just launching an ad blocker, but will organizing a system to charge people who use rival ad blockers. https://t.co/kaHHZFU9gV

— Matt Stoller (@matthewstoller) June 2, 2017

Google is the dominant player in digital advertising — accounting for 40.7 percent of digital ad revenues in the U.S., according to eMarketer forecasts. It eats up 78 percent of total revenues from search ads in the U.S., and continues to grow adoption of its AMP format.

Ok: ad network #1, using #1 browser, extending control to gatekeep all other ad networks/pubs. #antitrust pls ‍♂️ https://t.co/iEPmXqlsbb

— Gary Fung (@garyfung) June 2, 2017

Re: the new Chrome ad-blocker, how much do you want to bet that all AMP pages will be exempt. I bet 100% https://t.co/4a15wEAkKB

— Christina Warren (@film_girl) June 2, 2017

this is literally a blatant exercise of monopoly power but ok https://t.co/MADtPwgEFy

— research assistant (@supportdrone) June 2, 2017

Google hasn’t announced or confirmed its Chrome adblocker or micropayments-for-adblock-users plan — and considers it a “filter,” not a “blocker” — but it’s been briefing publishers and advertisers, according to the Journal, reportedly giving publishers a six-month heads up to prepare:

To help publishers prepare, Google will provide a self-service tool called “Ad Experience Reports,” which will alert them to offending ads on their sites and explain how to fix the issues. The tool will be provided before the Chrome ad blocker goes live, the people familiar with the plans say.

As described to publishers, Google’s feature will block all ads on sites that have a certain level of unacceptable ads. Publishers have been advised to ensure their sites are compliant if they want their ads to be displayed.

Also defensive against AdBlockPlus' Acceptable Ads Network https://t.co/0nk6aProYQ pic.twitter.com/I39nGPKGYb

— John Ryu (@john_ryu) June 1, 2017

Cosmin Ene has clearly been battling the skepticism for a while, and he has counterarguments at the ready in his pitch for his company LaterPay, with helpful analogies and anecdotes abound. Ene is founder and CEO of the five-year-old Munich-based company, which recently picked up its largest client in weekly news magazine Der Spiegel. Spiegel Online, the print magazine’s digital sibling, implemented for the first time a paid offering on its site, tucking some stories behind a hard paywall. Spiegel Plus stories are visible to all readers, but readers are cut off at 1,000 characters and prompted to pay 39 euro cents for the rest. (Der Spiegel is on the shiny, highly publicized Dutch micropayments startup Blendle as well.)

Sounds like your usual micropayment setup, but LaterPay offers a small twist: Readers only actually pay once they hit a total of 5 euros. LaterPay keeps a bar tab of what you’re reading, and takes a cut if you actually end up paying (around 15-25 percent, depending on volume of transactions). Accept the terms and conditions, and read on without logging in — a LaterPay registration page only pops up after five euros-worth of reading. Not reading enough to hit five euros? Those readers pay nothing — and publishers get nothing.

“We are not a wallet. 99 percent of the models out there are wallets. You need to pay up money first, then spend that money with them, within their universe,” Ene said. “We’re bringing back the IOU to the Internet, which is a principle people know and trust. The way the regular pay-per-use model works, you just click on an article, confirm to pay later, and you can read the article immediately. We defer the time when you have to register and pay to a later stage, letting you convince yourself of the content, of the quality of the content, of the benefits that are offered to you.” (Some of the analogies Ene offered up: Going to a conveyor-belt sushi restaurant — or any restaurant, really — and paying after counting up plates eaten. Or going on Tinder and dating around before committing to a relationship. Hmmm.)

According to Ene, LaterPay currently has around 100 clients, ranging from individual bloggers with a dedicated following to smaller publishers to Spiegel Online. In 2014, after pushing to get big publishers on board with its IOU-for-the-Internet idea, it began expanding its services to other industries: “This is not something only works or should work for publishing. It should work for all kinds of content. People can read now, pay later; they can play now and buy in-game items later; they can watch movies now and pay later. Everything that’s measurable in time or in units could be sold with LaterPay,” Ene said.

LaterPay is a payment infrastructure company at its core. Publishers can integrate it either via its API or using a line of JavaScript. There’s a WordPress plugin option. It offers a standard micropayment option (register, log in, pay for a piece of content). It also offers other methods of payment collection to help publishers scoop up some readers who fall somewhere in between dedicated subscribers and one-time visitors who will never consider paying for content. LaterPay’s (micro) time passes allow readers to access a site in customizable time increments — time allowed per price determined by the publisher (this week, Spiegel Online also rolled out the time pass option). Some sites implement a version of these time passes, prompting readers with adblockers turned on to purchase a pass to continue reading. Its new (micro) subscriptions service will also try to extend the pay-later philosophy to readers who are say, only interested in subscribing to the sports section of a full news site. Readers might then pick and choose a number of these subscriptions, piecing together their own personalized online magazines.

But doesn’t a platform like Blendle serve essentially the same purpose, with some extra editorial curation and promotion thrown in? Why wouldn’t readers accustomed to free content simply stop just before they hit the five-euro threshold, and never come back?

“We’re building the conversion funnel,” Ene said. “For the people starting to use paid content, occasional users can continue with the pay-per-use model, while more loyal users, the ones coming a couple of times a week or a couple of times a day, can jump on the time passes, and once they lose some fear of paying for content, maybe they’ll eventually jump onto subscriptions.”

Of all readers across all LaterPay-activated sites who hit the dialog box, 72 percent agreed to pay later (a.k.a., hit a button to see the rest of the story). Out of those readers, 80 percent ultimately registered and paid, according to Ene.

In the fall, LaterPay plans to expand its services to the U.S., with a few publishers already on board (no names yet, Ene said, because the contracts are still in progress). Currently its clients are mostly in Germany, with a few in Austria. German journalist and media/tech blogger Richard Gutjahr uses the service on his website. Daily tabloid Hamburger Morgenpost charges for some premium content. German tech site Golem, which has a full ad-free membership offering in part to alleviate the side effects of adblocking, offers a version of the LaterPay system to interested readers who might not yet want to be subscribers. Bergedorfer Zeitung is testing LaterPay. And Hamburg-based publisher Gruner + Jahr uses the LaterPay on several of its sites, starting with Geo and expanding to Schöner Wohnen and Living at Home, prompting readers to pay for day or week time passes in order to continue reading with their adblockers (the premise is the same: you pay later when you reach the threshold).

According to Ene, one blogger using LaterPay has made the equivalent of $24,000 in revenue (paid out from users passing the threshold and from users buying time passes). I reached out to several other publishers using a form of LaterPay; none would share numbers on how much they’ve made through LaterPay.

“So far all of our tests have been successful, some with greater effects than others,” Oliver von Wersch, managing director of growth projects and strategic partnerships at G+J, told me in an email. “The LaterPay approach has shown that it has no negative effect on our reach or brand reputation due to giving the user an alternative.” LaterPay is the only payment alternative it’s testing right now, though G+J also pushing anti-adblock tactics around messaging and technical circumventions. “Most of our adblock users deactivate their adblockers instead of buying passes. The test has brought back more than 40 percent of our adblocked traffic.”

Many publishers remain deeply skeptical of any excitement around micropayments, of a belief that readers used to free content might be willing to pay if the cost is low enough and the process easy enough. Ene says he sees LaterPay’s model slightly differently.

“If you ask readers, do they want to access content for free, or do they want to buy a subscription, then, no surprise, a big amount say they want that content for free. There’s even a German word for the ‘no cost’ mentality: Kostenlosmentalität. But I believe there’s no such thing as that. It’s just a lack of adequate models to serve the users the way they want to be served,” he said. “I think the same is true in the U.S. This is a process. It’s not an event. We have invested a lot to create a payment infrastructure to enable content providers to experiment a lot, and find their own way. There is no such thing as a catch-all model that makes everyone happy.”

In Canada, though, the Winnipeg Free Press is trying a different tactic: Last year, it became the first North American paper to introduce a micropayment plan that lets users pay by the article.

Now, about eight months after fully launching the system, about 4,300 readers have bought at least one individual story. On average, readers who pay by the article are spending about $2 per month, Christian Panson, the Free Press’ vice president for digital content and audience revenue told me. In all, the paper expects to earn about $100,000 in digital revenue in 2016.

Each individual story costs 27 cents (currently $0.21 U.S. — weak Canadian dollar these days), and addition to micropayments, the Free Press also offers monthly digital subscriptions that cost $16.99 ($13.28 U.S.) a month and give users unlimited access to its website and apps. About 4,000 people have become digital subscribers, Panson said; the paper says it expects to have 4,400 by year’s end. In addition, about 25,000 print subscribers have activated a digital account.

The Free Press projects that it’ll make an additional $500,000 ($390,786 U.S.) from all its digital payment offerings in 2016, according to its parent company’s Q4 earnings report, which was released in March, with about a fifth of that total coming from micropayments.

“You might say: That’s not life changing, right? And I don’t think it is. The key there though is setting the groundwork for the future,” Panson said. “If you were to take the 29,000 people that we have who are activated and shift them all to digital — we have no intention of stopping print tomorrow, but say we did —how many of those 29,000 people would continue to pays us? Based on what we’re seeing and the activity level, we feel it would be a very high amount. So you [multiply] that by $16.99 and suddenly the numbers start to look a little more interesting.”

The Free Press’ parent company, FP Canadian Newspapers Limited Partnership, has a lot of catching up to do in terms of digital revenue. In 2015, print advertising accounted for 61 percent of the company’s total revenue; total digital revenue made up just 4 percent of the total, or $3.64 million ($2.85 million U.S.), well below even the low standards of American newspaper companies.

FPLP generated $89 million ($69.58 million U.S.) in total revenue in 2015, $10 million ($7.8 million U.S.) less than it made in 2014. Last year, the company said it expected its 2015 digital revenue to grow by 10 to 15 percent, but FP Newspapers reported that its overall digital revenue actually fell by $200,000 ($156,379 U.S.), or 5.3 percent. It said a decrease in online classified ads and reduced advertising in its mobile apps accounted for the drop. “Our 2016 plan is to grow this revenue source back to the 2014 level or beyond by continually improving our digital product offerings and making small investments to promote both our desktop website and our mobile apps,” the company said.

The Free Press anticipated that the paywall would result in a drop in traffic, and Panson said visits are currently down about 20 percent year over year. That’s an improvement from earlier months when traffic had dropped by more than 30 percent. Even before it put its new payment system in place, the Free Press was selling less than half of its available web ad inventory, so the change hasn’t impacted its online advertising, Panson said.

Still, the company saw a 14 percent drop in print advertising revenue last year. “FPLP’s print advertising revenues are expected to continue to face challenges in 2016 as a result of continued shifts in spending by advertisers,” the company said in its latest report. “Print advertising revenues for the first two months of 2016 were approximately 10.0% lower than the previous year.”

Some have long seen micropayments — an “iTunes for news” — as a potential route to digital revenue. Last month, the Dutch platform Blendle launched in the United States with 20 publications — including The New York Times, The Wall Street Journal, and The Economist — posting stories that can be purchased individually to its site and apps.

While most of the stories those outlets publish are available on Blendle, cofounder Alexander Klöpping told me last month that the platform isn’t really meant for breaking news or day-to-day stories.

wait oops I just bought some NYT letters to the editor on @BlendleDE for 19 cents pic.twitter.com/RtxEE4w0nF

— Shan Wang (@shansquared) April 1, 2016

“We know that just plain news stories — something that Donald Trump has said — doesn’t sell well on Blendle,” he said. “Our users have an inclination toward the more longform, the more analytic, the more background pieces.”

It’s those more heavily reported features or investigative stories that do well for the Free Press as well, Panson said, but the paper only publishes one or two of those stories each week. Like any newspaper, most of what the Free Press covers are the more incremental stories about local crime, Manitoba politics, or last night’s Jets game.

The Free Press is still seeing growth on the digital front though even as it hasn’t quite met its expectations. Panson said the paper anticipated having 10,000 users sign up for the micropayment option and that those users would on average spend $1 per month. Though the paper has fewer of those users, they’re spending more than the paper expected.

On average, the paper is adding about 40 or so micropayment subscribers each week. (Though Panson said that number has softened in recent weeks. One hypothesis: Snowbirds are returning to Winnipeg and converting their digital subscriptions into full print subscriptions.)

The Free Press has converted about 500 micropayment users into full digital subscribers by targeting users who are spending more than $9 per month buying individual stories, Panson said.

“We’re still in our ballpark range of projected revenue from it, but we’re seeing this really effective funnel that we can take the highest value people in there and move them up the ladder,” Panson said.

Converting users from buying single articles to monthly subscribers is key to the paper’s future growth. Panson said the paper knows that it will be a slow, tough climb as it figures out whether its tapped out the market for paying news consumers in Winnipeg.

“That’s really one of the lessons we’ve learned: Whatever you do, don’t expect instant results,” he said. “I still don’t think we’ve determined whether or not we’re to a point where new acquisitions are organic at this point or pent up demand from shutting the site down. Certainly I wouldn’t expect that after a year we will still have pent up demand, but maybe there will be. I don’t know.”

The Free Press introduced its digital subscription plan last February, and it encouraged readers to register with the site. It turned on the system in May and gave registered users a free 30-day trial before it began charging them. (It staggered the start of the trials to prevent its system from overloading.) The paper keeps track of how many stories each reader buys, then payments are made monthly.

New signups still get a free 30-day trial, but the Free Press also lets readers access two stories for free, so when it scores a viral hit those readers weren’t required to register or pay for the story. This happened in January when the Free Press received more than 1 million pageviews — its most popular story ever — on a report about a local woman who got ill while on vacation in Cuba and was evacuated to Florida, where she ultimately died.

“It sold a lot, but it doesn’t generate a huge amount when they’re one-and-dones,” Panson said.

Though the Free Press has no imminent plans to tweak its model, Panson said the paper is looking into a few ideas as it tries to attract digital subscribers, especially as it has access to more data about the types of stories that are successful. It’s considering charging more for bigger stories or holding “happy hours” where stories would be cheaper for a set period of time if it wanted to generate more traffic. The paper also has email addresses for 180,000 registered users that it could use to target potential subscribers.

The Free Press, Panson said, is going to continue to market its paid digital offerings as it tries to convince readers in Winnipeg and throughout Manitoba that journalism is worth paying for.

“We are a for-profit business. There’s an ownership group that believes in journalism. That’s why they allowed us to do this kind of stuff, but we still need to fund it,” Panson said. “The ownership group isn’t about philanthropy, even though they believe in the journalistic effort we do here and the integrity it needs to have. At a certain point, we need to find new ways of making money because the old ways will not pay for us to do the kind of work we do anymore.”

Blendle launched in the Netherlands in 2014 and in Germany last year, and a number of English-langauge publications have been using the platform in Europe. The New York Times Co. and German publisher Axel Springer invested €3 million in the company in October 2014.

Blendle also plans to introduce additional options that will let users subscribe to individual publications. Blendle co-founder Alexander Klöpping said the company will introduce the subscription plans in Europe first, but will “bring it to the U.S. very soon.”

In the Netherlands and Germany, 650,000 people have signed up for the service. Blendle gives new users credits to try it out for free, and Klöpping said about 20 percent of users who initially sign up end up connecting a credit card to their account. He wouldn’t say how many articles have been bought, though.

It remains to be seen, of course, how the micropayment service will translate to the American market. Esquire has experimented intermittently with charging readers for single stories online, GQ has experimented with charging readers for stories if they’re using an adblocker, and last year The Winnipeg Free Press in Canada became the first North American newspaper to launch a micropayment system. Through February, the Free Press had 4,000 registered accounts, and it projected that it would generate $100,000 ($76,365 USD) from the program this year, according to its parent company’s most recent earnings report.

The German (80 million people) and Dutch (17 million) markets are smaller than the American market (319 million), and when it launched in those countries, Blendle was able to add virtually every major newspaper and magazine onto its platform. That’s not the case in the United States, where there’s much more English-language content available online for free. (A far greater percentage of publications in Europe use hard paywalls compared to stateside outlets.)

As a result, Blendle is pitching the product to American users as a way to cut through the noise of content published online to reach high-quality stories, Klöpping said. “The messaging is different,” he said. “In the United States, we put way more emphasis on the fact that we help users discover content from publications that they normally wouldn’t read so much from.”

And once users are in Blendle’s app, Klöpping said he’s confident they’d be willing to pay for stories they might be able to get for free elsewhere.

“When publications put some of their articles for free on their site, it doesn’t really impact the way people pay for it,” Klöpping said. “We don’t see a decrease in opens. It’s very logical actually: When you’re in an app and it serves you a couple of articles that are really interesting to you, a lot of people aren’t going to be bothered to Google a headline and figure out where else they can find the stories for free.”

Blendle has editors in its Dutch office curating articles for an English-language newsletter that highlights stories on the platform, and it soon plans to hire more staffers for the English site in the Netherlands and New York. Blendle also has algorithmic recommendations, and users can also follow outlets and others on Blendle to find stories as well.

It runs German and Dutch versions of the newsletter, and it also will put together collections of stories around news events, such as this week’s attacks in Brussels.

Zit je op Blendle? We hebben een kanaal geopend met alleen de beste achtergrond-verhalen. Duiding is belangrijk https://t.co/8bzQAr4oZI

— Alexander Klöpping (@AlexanderNL) March 22, 2016

[Translation: Are you on Blendle? We have opened a channel with only the best background stories. Interpretation is important.]

Beth Diaz, The Washington Post’s vice president of audience development and analytics, said the newsletters have been helpful in directing readers to Post stories on the European versions of Blendle. The Post, along with outlets such as The Economist and The Wall Street Journal have already been posting stories to the European versions of the site.

Diaz wouldn’t say how many Post stories had been bought on Blendle, but she said it’s been “a modest source of traffic and revenue.” In the United States, the Post is charging 19 cents per story and will send everything that’s published in its print edition, along with a few other stories, to Blendle each day.

The Post, she said, is interested in seeing how the micropayment system translates to an American audience. “My expectations are that we’re going to get a lot of great information that should help us figure out if we need to adjust our strategy in terms of our partnership with Blendle, and perhaps overall,” Diaz said.

The Wall Street Journal has also been publishing on Blendle’s European editions. Though she wouldn’t share specific figures, Dow Jones chief customer officer Katie Vanneck-Smith said that because of Blendle’s young audience — more than half of its users are under 35 — technology stories have done well on the platform while U.S. politics coverage hasn’t been as popular, though she noted that those are “starting to pick up with Trump.”

The Journal has charged for full access to its website since the web’s earliest days, and Vanneck-Smith said that Blendle was just another way for the paper to get readers to pay to access its journalism. Journal stories will cost 39 cents each.

“I definitely think that this is the next wave of paid-for propositions,” she said. “Is it the only way? No. Nothing is going to be the only way. But anything that makes it easier for customers to buy and pay for professional journalism is a good thing. Anything that takes the friction out of paying for quality journalism, we have to support as an industry.”

Time Inc. also sees the service as an opportunity to reach new readers. It’s starting by only offering Time magazine stories on the platform, but could eventually add other titles, said Scott McAllister, Time Inc.’s senior vice president of digital marketing and revenue.

It’s still deciding on its pricing structure, but McAllister said it could decide to charge more for larger features or cover stories. Everything Time publishes in print each week will be available on Blendle. Much of its print content is only available online for subscribers or users who purchase full digital replicas of the magazine. Time hopes Blendle will enable it to reach a different, younger, audience that might not purchase the magazine in those ways, McAllister said.

“It’s a different model, it’s a different type of consumer,” McAllister said. “Many of our consumers get the magazine and enjoy flipping through…This is a different model where you’re looking for very specific topics or information. Surely, there’s some sort of concentricity in terms of the two models, but our thoughts are it’s not actually a large overlap.”

The Dutch micropayment platform said Wednesday that it plans to launch a closed beta version of the site in the United States in early 2016, followed by a public launch a few months later. The company debuted in the Netherlands in the spring of 2014 before launching a German version this fall.

Alexander Klöpping, the site’s cofounder, declined to specify when the American beta was launching. He also refused to disclose which U.S. publications joining the platform, citing publisher agreements.

However, a preview of the American site that Blendle included in a press release shows stories from The New York Times, The Washington Post, and The Economist. A number of English-language publications, including the Times, The Economist, The Wall Street Journal, and several Condé Nast magazines are already on the Dutch and German versions of the site.

“In the United States, we’ll first focus on national publications and maybe pilot with a few regional ones, but the focus will be national for now,” Klöpping told me. “Eventually, we want to do more of the regional newspapers…That would mean that your timeline could get filled with a few national newspapers based on your interests and some stories from your local newspaper. That’s part of the vision we have for the product.”

Participating publishers’ stories can be found on Blendle’s site and app, and users can then pay for individual articles, regardless of where they were initially published. Each outlet sets its own prices and receives 70 percent of the revenue, with Blendle taking the other 30 percent. In Germany and the Netherlands, articles are priced between 10 and 90 cents apiece, the company said. Users can also ask for a refund if they don’t like a story.

In October 2014, The New York Times Co. and Axel Springer invested €3 million in the company.

Between the Netherlands and Germany, Blendle says it has about 550,000 registered users. When people first sign up, they get free credits to buy articles and test the service. But only about 20 percent of the users who have signed up have actually submitted credit card information and begun paying for articles, and Blendle won’t disclose how many articles have actually been purchased.

Blendle expects to hire around five people, based in New York, to run the American site.

David Karger hopes to tap people’s more charitable natures with Tipsy, a free browser extension that records how much time you spend on any given site and then divvies up a chunk of change — which you can predetermine and tweak at any time — based on proportional time spent. Participating publishers can then receive these donations from readers via PayPal or Dwolla, an online payment service with no transaction fees. The concept is similar to that of Flattr, where users can set a donation budget, “like” and “favorite” artists’ work, and then divvy up the donations.

“I’m convinced that there’s a large population who’d like to pay for the news they consume, out of some moral or social obligation, but are deterred by the hassle and complexity of having to subscribe when they don’t know if they’ll be returning, by having to enter credit card information, by having to decide ‘was this story really good enough,'” Karger said. “We wanted to see if we could eliminate all of the overhead of making a donation in order to allow people’s natural inclination to give back to actually work.”

(“I’m an optimist about human nature,” he added.)

Readers with the Tipsy extension installed can set their own “contribution goals,” indicating either a rate per minute spent browsing a webpage or a rate per hour, day, week, or even month (I could even set a total donation of one cent per month, if that’s all I was comfortable giving). In the activity log, users can check on how much time they’ve spent on sites that have Tipsy enabled. The log can actually show a breakdown of time spent on every single site a user has visited, though of course only those sites with Tipsy enabled can receive money — and so far, ProPublica is the only publisher using the tool.

Here’s what my complete log looked like two days after I installed the extension:

Users can also set up alerts to remind them to check in on their contributions pages or to notify them when they’ve reached a certain amount donated to a specific site. While Tipsy automatically calculates the proportional donations, users can manually delete a site from receiving payment or alter Tipsy’s recommended amount before finalizing their payments (at the moment there’s no way to, say, permanently block a site from receiving a donation portion). Tipsy only tracks a user’s browsing habits within the browser and doesn’t share that data with the publisher, though interested publishers can install a script that detects when a user with Tipsy enabled visits. Tipsy doesn’t take a cut of anything and isn’t intended to make money for anyone except the publisher.

Karger said he sees Tipsy as a healthier response, if not a very good complement, to the rise of ad blocking. He believes that, in the ad blocking arms race, the blockers will win out, because it’s not “possible to keep forcing content onto users.” He pointed to sites like Slashdot, where the purpose of paid subscriptions is to get rid of the ads (most recently, The Salt Lake Tribune is also trying out this ad-free membership model.)

“The population that uses ad blockers has declared that they do not want to support news sites by looking at the advertising, but we can provide an alternative mechanism that doesn’t mess up their experience and doesn’t slow down the page.”

He acknowledges that the tool’s name may be misleading, as tipping conveys money given for something “extra,” but in the case of Tipsy, it’s “you got something, you might owe something.”

Funding to create and test the beta version of Tipsy came through the Knight Foundation under a prototype grant (disclosure: Knight is also a funder of Nieman Lab). The extension doesn’t require much sustained maintenance, but at the moment Tipsy is available only for Chrome and doesn’t work on mobile. Karger is working on building out a version for Firefox, integrating with news readers like Feedly, and potentially adding other payment formats like Bitcoin. The tool is open source, and Karger hopes those interested will volunteer their time to upkeep or improving and even repurposing the tool.

Now that Tipsy is functional, getting readers and publishers to sign on is the next challenge: “Until there are users using this tool, there’s not much motivation for publishers to install it, and conversely, it’s hard to motivate a user to install this when no publishers are using it,” Karger explained. He did say that he was currently in talks with “a couple of other larger news organizations” about adding the Tipsy payment file to their sites. He’s also in the process of adding a WordPress plugin to simplify the adoption process even further.

Does a site like The New York Times really need my pennies?

“We just need to find any news organizations who’d be willing to put a three-line file on their site,” Karger said. “There’s no downside, there’s no cost, it’s so easy to install, even without the guarantee of income. If no users use it, it doesn’t cost anybody anything. If it works, wonderful.”

“That is true — we are thrifty here in Winnipeg,” Christian Panson, the Free Press’ vice president for digital content and audience revenue, said. “Without exaggeration, everyone who I’ve spoken with and presented this idea to them, and the concept of allowing our readers to refund whatever they wanted, they said it will all be refunded, 99 percent of your articles will be refunded. That hasn’t happened at all.”

In fact, the exact opposite is happening — after about six weeks of the paywall being in effect, the refund rate is less than 1 percent. And for Panson, that’s a sign that the Free Press still needs to educate many of its readers on how exactly the system works. So far, about 1,300 people have taken them up on the pay-as-you-go model. (The paper did not report how many articles those users had paid for or how much revenue they’d generated.)

“It’s going to take time for people to recognize that they can enter into this agreement with us to read now and pay later and willingly refund,” he said. “Like most breaking news sites, or metro newspapers, there’s a lot of stories on our site that might be a paragraph, because the story hasn’t really evolved beyond that. We don’t want people making purchase decisions — we want them to read that one-paragraph story and go ahead and hit the refund button because it’s way too short.”

The Free Press became the first North American newspaper to launch a micropayment system when it debuted the new paywall, along with a redesigned website in May, and the low refund rate underscores the challenges the paper is facing as it tries to introduce its readership to a brand new payment structure.

Digital access to the Free Press is included in a print subscription. Readers can also pay $16.99 ($12.95 U.S.) per month for unlimited online access. And for commitment-phobes, there’s also the option of paying by the story, at 27 cents (21 cents U.S.) a pop. Users can access two articles per month for free before they’re prompted to create an account and enter a payment method. A widget atop the Free Press’ site shows pay-as-you-go users how much they’ve spent reading each article. They’re then charged monthly for the total of how much they’ve consumed.

The paper announced the paywall structure in February, and began encouraging readers to register with the site to ease the transition. After the May launch, the Free Press gave readers a one-month free trial of the site. (It actually staggered when the free trials ended as not to overwhelm its customer service staff, meaning some people got a longer trial than others.) It’s still offering new users a 30-day free trial.

The Free Press now has about 150,000 registered users. Of those, about 1,300 readers are paying on per-article basis, Free Press publisher Bob Cox said on a conference call Monday reporting the paper’s second-quarter earnings.

Ultimately, Panson said the paper’s goal is to have 30 or 40 percent of its subscriber base be micropayment subscribers. But he noted that the paper doesn’t have any other examples to benchmark itself against to know what its expectations should be: “We don’t have any other markets to look at.”

About 2,200 users have signed up for monthly digital subscriptions, Cox said. That’s about halfway to the Free Press’ goal of signing up 5,000 subscribers, according to Panson, estimating that at the current rate it’ll take about another seven or eight months to get there. Another 21,000 print subscribers have signed up for digital access.

“We anticipated an initial bump and then a slow building process. And that’s pretty much in line with what we had anticipated,” Cox said. “Our targets are much more ambitious than 2,200 all-access people. We still hope to link as many of our print subscribers as possible. There is a substantial body of print subscribers who are not yet linked up to receive all-access digital, even though they qualify for it at no extra charge. It’s a lot of detailed work and a lot of following up with individuals who’ve registered with us to get them signed up to pay. So it’s a bit of slogging, but it’s what we expected.”

Despite its push to get readers to sign up for the new system, the Free Press’ web traffic has plummeted since it introduced the paywall. Traffic is down about 30 percent, though Panson said they expected a 45 percent slide. He cautioned, however, that the paper could still see a dip in the number of visitors as readers continue to adapt to the paywall system.

“Right now it’s early, and I expect that we’ll lose more,” he said.

Though the Free Press planned for a reduction in its web traffic, the paper was still concerned about how it would affect its digital advertising. As of now, the impact has been minimal. The Free Press’ online ad inventory is typically only about 50 percent sold, so “we could technically lose 50 percent of our traffic and still serve every ad that we sold last year,” Panson said.

The Free Press’ parent company, FP Newspapers Limited Partnership, reported its second-quarter earnings on Monday. FPLP, which owns the Free Press and a handful of other local newspapers, reported second-quarter print advertising revenue of $14.6 million ($11.1 million U.S.), a 12.7 percent decrease compared to the second quarter of 2014. The company’s digital revenue actually increased by $100,000 from the second quarter of 2014 to $1.03 million, due primarily to an increase of web ads.

Though FPLP’s digital revenue did increase by 5.9 percent percent in the first quarter, the actual amount is still just a fraction of what print advertising brings in, despite recent declines. This is common at papers everywhere, and it’s why newspapers, the Free Press included, are looking toward their readers to make up for the loss in advertising.

The New York Times, for example, announced that it had hit 1 million digital subscribers. The Times introduced its metered paywall in 2011, but only a small percentage of the Times’ online readership is actually paying directly for digital content — less than 2 percent of the Times’ roughly 60 million unique visitors per month. (Some of those digital readers are paying print readers, of course.)

Metro newspapers, like the Free Press, are facing the same situation, though on a much smaller scale. According to a 2013 University of Missouri study, 70 percent of daily newspapers charge for online access. And while the Times has a global readership, the Free Press and similar papers aren’t likely to attract readers from outside of their regions.

Though it has a core readership group still willing to pay for print or digital subscriptions, the Free Press introduced the micropayment system to try and monetize those readers who visit regularly but wouldn’t consider paying for a monthly digital subscription.

“Our audience has come to us and said: Why are you charging us for content when nobody else in the country does? And we’ve had to say that we’re the last newspaper in Canada to erect a paywall, but that’s because the other newspapers have 10 [free] articles per month and these people don’t realize it,” Panson said. “They never hit 10 articles per month if they’re reading The Globe and Mail or the Calgary Herald, and they never get asked to pay or get asked to login. So their perception was that it was free.”

Still, the paper recognizes that it will take time to change user behavior and increase its traffic. So as part of its redesign, the Free Press has made efforts to boost its reader engagement in an attempt to partially offset the lost traffic.

Logged-in users now see stories tailored for them on the homepage, and the site will hide stories users have already read. The new responsive site also has a continuous scroll to offer up new stories to readers. It seems to have worked, Panson said, noting that stories that are recommended to users were clicked on 46 percent more often than non-recommended stories, and that users reading recommended stories spent 214 percent more time on those pages.

“We’re trying to take our pretty big content pool — it’s not The New York Times or The Guardian sized, but for a metro paper we produce quite a bit of content — and we’re trying to deliver that to the audience, so the audience sees we have this rich amount of content,” he said.

Honolulu Civil Beat, a local news site backed by eBay founder Pierre Omidyar, launched in 2010 with an ad-free business model built on digital subscriptions. About a year later, the Honolulu Star-Advertiser put up a paywall of its own. The move set up a showdown between the two news organizations as they competed for subscribers.

The fight, however, is fizzling. The trajectory of each publication’s paywall appears to be mimicking industry-wide trends of slow paywall growth: It looks as if there’s a limit in the number of people who are willing to pay for news online.

The Star-Advertiser and Civil Beat are privately held companies, so it’s difficult to get a full picture of their finances, but publicly available information indicates that their paywall efforts are stalling.

When Civil Beat launched in 2010, it charged $19.99 per month for a subscription. It offered a launch discount and occasional special deals, then in 2013 lowered the cost of a subscription to $9.99 per month.

Starting today, our regular subscription price has DROPPED to only $9.99 a month http://t.co/VzZmWzzXJa

— Honolulu Civil Beat (@CivilBeat) October 14, 2013

Earlier this year, Civil Beat dropped its price again. A monthly subscription now costs $4.99, and the site is heavily promoting the new price.

New to Civil Beat? Subscribe now for $4.99 a month http://t.co/abWbNLk51q pic.twitter.com/U65aN5mBr8

— Honolulu Civil Beat (@CivilBeat) May 9, 2015

Civil Beat wouldn’t disclose how many subscribers it has, but Heidi Pliszka, the company’s director of business operations, told me in an email that the site continues “to grow [its] readership year over year.”

Meanwhile, at the Star-Advertiser, the number of digital subscribers has fallen slightly after remaining flat for the past couple of years. At the end of 2014, the paper had an average of 20,257 paid weekday, non-replica digital subscribers, according to the Alliance for Audited Media. That’s a slight decrease from 22,714 digital subscribers in 2013 and 22,469 in 2012, according to AAM’s report.

A digital-only subscription to the paper starts at $4.17 per month for readers in the continental United States and abroad. But Star-Advertiser digital subscriptions in the paper’s delivery area are more expensive: $10.42 per month on Oahu and $6.25 in the rest of Hawaii. (If you live in Oahu, you can get unlimited digital access and print delivery for $8.95 — a recognition of the fact that print advertising is still crucial.)

These subscriber trends are being felt on the mainland as well. Just look at The New York Times, which is on pace to reach 1 million digital subscribers this year but is finding that there may be a limit to how many people are willing to pay for digital access. Last year, the Times killed its paid opinion app due to lack of interest, and this spring, it made its NYT Now app free after struggling to attract subscribers for the lower-priced digital product.

That hasn’t stopped others from trying to launch reader-supported news sites. In Tulsa, Oklahoma, Robert E. Lorton III, whose family used to own the Tulsa World, debuted the Tulsa Frontier, a for-profit investigative site that’s charging subscribers $30 per month. The Frontier aims to sign up 1,000 subscribers in its first year, and wants to have 2,500 total by the end of its second year.

The Winnipeg Free Press also introduced a paywall this spring, becoming the first newspaper in North America to offer readers the option of paying by the article instead of buying a monthly subscription.

A 2013 study from the University of Missouri found that 70 percent of daily newspapers in the United States charge for content online. That same Missouri study found that newspapers rarely conducted user research before implementing paywalls. University of Texas professor Talia Stroud, director of the Engaging News Project, wrote about the study for the American Press Institute last fall:

Less than three in 10 dailies conducted focus groups, fielded audience surveys, or tested paywalls with a subset of site visitors prior to moving to paid content. Academics, one possible resource for modeling the financial effects of paywalls, were consulted by 15 percent of publishers. The most common practice employed by publishers was to solicit advice from their peers. According to Jenner and his colleagues, 85 percent consulted with other newspapers.

While large general-interest publications have struggled with paywalls, some niche sites have seen some success with the model. Outlets such as technology site The Information and Atlantic Media’s National Journal membership program seem to be succeeding because professionals in Silicon Valley and Washington, D.C. are willing to put down significant cash (a subscription to the Information costs $399 annually) for information that’s relevant to their work. Similarly, high-end publications such as The Economist have been able to find audiences willing to pay for their content. The Economist’s circulation grew to 1.6 million print and digital subscribers last year, and Economist deputy editor Tom Standage told me in March that a majority of The Economist’s revenue comes from subscriptions:

The proportion of revenue that’s coming from subscriptions is going up, and will probably continue to go up. So I’m very, very happy that that’s our business model, because I think that’s sustainable. People do seem willing to pay for our journalism, and our digital subscriber numbers are going up very nicely.

National Journal has, in fact, doubled down on its paid services. Earlier this month it said it would kill off its print magazine to focus more on its paid strategy. National Journal’s membership program provides members with access to its research arm, which puts together unique reports and presentations for them.

“It’s a more strategic relationship than when a media company is producing lots of content for them to read,” National Journal Group CEO Tim Hartman told the Lab recently.

The metaphor’s always had its problems. An individual song can be listened to dozens of times; a news article is generally only read once. Before you decide whether to buy a song, there’s a good chance you’ve either heard it somewhere else (the radio, YouTube) or that you know the artist; a news story is a classic experience good, where it’s hard to judge its quality until after you’ve already consumed it. And in the years since people started wishing for an “iTunes for news,” iTunes itself hasn’t done so hot, losing major ground to monthly-subscription streaming services like Spotify — an area Apple’s moving toward.

But North America is about to see a version of the micropayments model tested. The Winnipeg Free Press plans to roll out a new paywall model later this month that will charge readers 27 cents ($0.21 U.S.) for every Free Press article they read. Users will also be able to buy a full digital subscription for $16.99 ($13.47 U.S.) per month, and readers who subscribe to the print or e-edition of the newspaper will get unlimited online access. New signups get a 30-day free trial.

A handful of outlets, most notably the Dutch startup Blendle, have implemented a pay-per-article model, but the Free Press says it’s the first North American newspaper to adopt a pay-as-you-go setup.

“We wanted to come up with a system that would avoid some of the problems we’ve seen in other systems — but more accurately, come up with something that works,” Free Press editor Paul Samyn told me.

Led by The New York Times — which finished 2014 with 910,000 paid digital subscribers — many North American newspapers have adopted metered paywalls in recent years. Those generally allow free access to articles until an individual reaches a set cutoff point — say, 10 articles in a month. Then the newspaper pitches a paid digital subscription. But many have argued that the Times and other metered publications are approaching the limit of readers who are willing to pay for access above the threshold of what they get for free each month.

“We obviously have been watching what other newspapers have been doing with some form of paywall, and while they have had some success, I don’t think anyone has really had roaring success,” Samyn said. “What you see is their ability to grow paid digital subscriptions appears to have either stalled or only grown marginally.”

In 2011, the Free Press introduced a metered paywall for readers outside of Canada. In 2014, the Free Press’ parent company, FP Newspapers Limited Partnership, which also owns a few smaller newspapers in Manitoba, had digital revenues of $3.85 million ($3.05 million U.S.), an increase of about $400,000 ($317,000 U.S.) from the year before. With the introduction of its new paywall, the company said it expects overall digital revenue (mostly from advertising) to increase 10 to 15 percent in 2015.

The Free Press says it’s optimistic that its approach will be a more effective way of drawing in less devoted readers who might not normally pay for online news and only consume a handful of articles. “A huge swath of casual” Free Press readers consume 15 articles per month on average, according to an internal Free Press analysis. Under the new system, a reader would pay $4.05 for 15 stories per month, which is “an amount we figure will compare favourably to other options from competing paid websites,” Samyn said in a column announcing the changes.

Think of it in the context of the broader shift of newspapers relying more on readers than advertisers for revenue. 27 cents an article from readers drives as much revenue as a $270 CPM for digital advertising would — and newspapers are earning nothing near that from ads. But you only get that 27 cents if readers are willing to pay it; the psychological hurdle of each click coming with a pricetag is high. Some of those casual readers will be upsold to a full digital subscription; some will pay by the article; and some will refuse to hand over a credit card and simply find their Manitoba news elsewhere. The ratio of those three groups will determine if this model works; it’s hard to imagine a scenario where site traffic doesn’t drop substantially.

Though the paper hasn’t yet started charging for its content, it’s already requiring all users to create an account with the site. (You have to register even to read the article describing the paywall.) Once the wall is live, anyone who wants to read a Free Press story will be required to have a credit card attached to that account; the idea is that by forcing users to create accounts now it will make the transition easier down the road.

Aside from the business case, creating a system that requires all your readers to be logged in to an account opens up editorial possibilities. The Free Press plans increased personalization on its site: If you read a lot about the Winnipeg Blue Bombers, or are only interested in the city’s ongoing fight to control its gopher population, the site should recognize that and promote stories that suit your interests. If you visit the site multiple times a day, it’ll move stories you’ve already read further down on the homepage, replacing them with new stories that you haven’t read. Additionally, if you’ve already paid your 27 cents to read a story, the Free Press won’t charge you again if that story has been updated with new information.

Why 27 cents, anyway? The Free Press had a committee that looked into how much to charge for a story, and it settled on that odd total after surveys (and anecdotal research) found that that price point “doesn’t sound too high or too low,” Samyn said. “We settled on two bits plus two cents as the Goldilocks pricing point we hope will be just right,” he wrote.

Still, he added, that the 27-cent price point is just a starting figure. Once the micropayment system is in place, the paper could introduce dynamic pricing that would charge readers less for things like the weather report and more for an investigative piece that took months to report.

“Initially, we thought it would be too confusing and potentially too problematic — to have something cost 55 cents, something cost 27 cents, and something cost 5 cents,” he said. “We could go to that model at some point, but for the sake of simplicity we thought let’s start with 27 cents. There’s no reason that we can’t adjust that either up or down, depending on what our experience is.”

The Free Press will also offer readers a refund if they’re not satisfied with an article they paid for. Samyn said the Free Press was influenced by Blendle —  the startup from the Netherlands that’s collected content from major Dutch publishers and a growing list of English-language publications — and how it used a money-back guarantee as a way to soothe readers’ fears about paying for news. The Free Press is approaching it the same way.

“We want you to have the confidence to come to the Free Press,” Samyn said.

Whenever newspapers introduce a hard paywall like this one, readership usually dips, and the Free Press is expecting its traffic to drop once it introduces its paywall. But Samyn said the paper is confident it will also gain readers from the competing Winnipeg Sun (whose parent company is in the process of selling its newspaper holdings) and the Canadian Broadcasting Corporation (cutting back on its local news coverage). “We have a great responsibility to serve our city and our province,” he said.

“When my co-founder first proposed the idea, I thought he was crazy,” Alexander Klöpping, Blendle’s co-founder told me. “After a half hour I started to understand and after an hour I thought, Yeah this really might be one of the most important parts of the product.”

Blendle takes content from 15 or so of the Netherlands’ top newspaper and magazine publishers and allows users to buy stories individually, with just a click, no matter where they were originally published. The publishers set the price and take 70 percent of the revenue while Blendle takes the other 30 percent. But Blendle needed a way to convince readers that they weren’t risking too much by, say, clicking on that overwrought trend piece about gezichtshaar. (That’s Dutch for facial hair.)

There will be a limit to how many times a user can get a refund based on a ratio of how many stories they actually pay for — so the more you spend, they more you can return. When a reader asks for a refund, Blendle always asks why they want their money back, a feature that Klöpping said has already shown some worthwhile insights. For instance, many readers thought they were paying too much for short articles. “That tells us maybe we should do something about the pricing,” Klöpping said.

Still, while Blendle thinks the return policy will increase engagement, many publishers remain skeptical. Blendle is still in beta, and Klöpping said it’s too soon to tell if the policy was actually making a difference since it had changed how the refunds worked a number of times during the beta process. (Blendle is scheduled to go fully live a week from today, on April 28.)

“We have some reservations toward that specific feature,” said Han-Menno Depeweg, digital publisher of NRC Media, which publishes NRC Handelsblad, one of the Netherland’s largest daily newspapers. “It’s one thing to give readers’ their money back if there are technical issues or something is wrong with the formatting, but it’s another if they don’t like the content,” Depeweg told me. “As a publisher, we don’t want to give back money.” (Despite its reservations, NRC Media has decided to offer the refunds.)

The publishers are also still figuring out what the proper price point is for an article. TMG Media, which publishes De Telegraaf, the largest newspaper in the Netherlands, is initially selling shorter articles for €0.10 ($0.14) and longer pieces for €0.25 ($0.35), said Bart Brouwers, the company’s head of business development.

“All the publishers are in the same boat, and I have really no clue for what would be a reasonable price for an article,” Brouwers said. “Could you ask more for a column or ask more for a feature story? And something that’s exclusive for you? Does that have more value than other articles? That’s part of the experiment.”

With a population of only 16 million, the Netherlands is a small country, but according to the European Journalism Centre, a paid newspaper is read in about half of all Dutch households, though newspaper readership has declined in recent years. Since the bottom hasn’t fallen out of the print newspaper business, publishers there have been slow to innovate in the digital space, said Klöpping. “In Holland, basically we had a situation where all newspapers were for a long time very comfortable doing their paper subscriptions,” he said.

“We have iPad apps where we can read the PDF per issue or get a subscription, but that’s really it,” Klöpping added, noting that the papers have free sites, but there is less online content and it is completely different than what you’d read in print. “There’s no metered pay walls. There’s nobody like the Guardian, putting it all online for free and making money from the advertising. That’s just not going on in Holland. They now do feel the crunch of getting smaller circulation and they do feel the pressure to be a little bit more innovative.”

The race to make Dutch journalism more digital

As a result, there’s been an explosion of attempts to innovate digitally in the Netherlands. Blendle is one of a handful of Dutch platforms — eLinea, MyJour, and Yournalist are among the others — that are attempting to bill themselves as a central place for users to read news from multiple publications. If Blendle is an iTunes for news, eLinea would be Spotify — users pay €9.99 ($13.80) per month for unlimited access to the the content it offers. Yournalist also follows the Spotify model, but it’s still in development. MyJour, similar to Blendle in that you pay by the article, also recently introduced the ability to also return articles.

Many within the Netherlands say Blendle is one of the most promising of the platforms as it’s “technically, organizationally, and marketing wise the best at this moment,” said Brouwers. He added that Klöpping, who regularly appears on Dutch television, has become the face of media entrepreneurship in the country.

Still, there’s no guarantee that Blendle, or any of the other platforms, will be successful. TMG is participating with all of them as part of a yearlong experiment, Brouwers said. The publishers need to find other forums of revenue, and they’ve decided that it’s worth seeing if any of the third-party news reading apps will take off.

“We need those partners because they’re more flexible than we are at the moment,” Brouwers said. “They’re more entrepreneurial than we are at the moment. What we see happening is that they are taking steps that we’re not capable of at this moment, which is a shame. But still, it’s the case, and that’s why really we want to give it a chance. But still, we’re not really certain if this is going to work either for us or for the resellers themselves.”

But they might not need the partners for long. A number of publishers are in the process of developing a platform called Newz that will act as a central clearinghouse for the news organizations to send their content to the third-party applications. Newz is six to nine months away from being completed, but it ultimately could pursue additional third-party applications to sell the content to or even become a consumer-facing product.

Blendle is generating excitement in the Netherlands, however, and many are anxious to get access, said René van Zanten, director of Stimuleringsfonds voor de Pers, a government-funded body that provided Blendle with €200,000 in seed capital. Blendle has also received funding from private investors, and Blankesteijn and Klöpping “have put in a lot of money ourselves,” Klöpping said.

“Everyone is exchanging passwords to see what’s going on,” van Zanten said. Though his fund has also provided capital to other journalism startups, he said Blendle’s model of paying by the article is more likely to work than a single flat fee because news organizations would rather readers pay for a subscription to their publication.

“For most of them that’s more than 10 euros a month,” van Zanten said. “They think they will lose the subscriptions. It’s a very defensive point of view, but they’re not willing to go along with that, or they’ll only provide a few articles per day, but people will get tired of it and they’ll prefer something like Blendle where they can get anything they want.”

One of the other features that sets Blendle apart, van Zanten noted, is its social focus. In addition to sharing articles on Twitter and Facebook, readers can see what stories their friends and other people they follow are reading.

Klöpping says the group is focusing now on getting the platform off the ground in the Netherlands, but is already looking at other similar countries in Europe where they could expand. “What we’re paying attention to is countries where they have newspapers that don’t have a lot of content online for free,” he said. On a recent trip to the United States, Klöpping also met with a number of news organizations to discuss possibly having their content be available to readers in the Netherlands via Blendle. He would not disclose who he met with, but said “you can guess the big names.”

The academic community is out of the gates this new year with some intriguing findings — from the limits of funding stories through micropayments to the importance of social media for people’s news diets. Many big thoughts, some data-driven takeaways and a whole lot more are below. If you’re just joining us, our “best of” of 2013 is here; and the 2012 year-end review is here. Hope you’ll tweet suggestions this year to @JournoResource if you know of a good study.

“Crowd-Funded Journalism”: From George Washington University and the University of Southern California, published in Journal of Computer-Mediated Communication. By Lian Jian and Nikki Usher.

The researchers examine a database of story projects crowdfunded through Spot.Us, a nonprofit news platform that allows for ideas to be funded by micropayments. Usher and Jian set out to establish patterns of funding preferences and how these affected the stories produced. The data they examined included the 234 pitches approved by editors, 102 stories produced, and 10,227 donations, as well as both reporter data about their qualifications and internal surveys with the donors.

It turns out that “compared to reporters, consumers favor stories that would provide them with practical guidance for daily living (e.g., public health or city infrastructure), as opposed to stories from which they gain a general awareness of the world (e.g., government and politics).” Surprisingly, Usher and Jian found that “reporters with less experience working with traditional news organizations tended to be more successful in raising funds from the crowd.”

The researchers conclude that crowd-funding may have a mixed future. It can be successful, and some public affairs stories do get supported; but this method of funding typically supports one kind of news: “This result seems to justify some scholars’ concern that if consumers, who are well known to prefer non-public affairs news, play an important role in news production, coverage of general public affairs news would decrease.”

“Industries in Turmoil: Driving Transformation During Periods of Disruption”: From Rutgers and the University of Southern California, published in Communication Research. By Matthew S. Weber and Peter R. Monge.

Examining 487 newspapers over the period 1997 to 2007, the study establishes an association between newsroom adoption of hyperlinking and organizational disruption. Essentially, the practice of hyperlinking to outside content, which many news organizations were slow to embrace, serves as a proxy for progress on digital strategy. Weber and Monge crawled the relevant news sites through the Internet Archive and did some interviews for qualitative context. As a measure of disruption, they looked at Editor & Publisher International Yearbook, which showed that, over that period, there were 905 changes in editors, 467 changes in publisher, and 92 changes in ownership. (A sample of these was checked, and it was determined that only 13 percent were due to retirements or planned departures.) The scholars note that they use “changes in management or ownership as an indication of major organizational disruption; this is not directly a failure, but is likely to indicate a change in direction.”

In any case, the researchers conclude that “organizations that adopted the most aggressive hyperlinking strategies significantly reduced their likelihood of failure. Results for less aggressive strategies were not nearly as strong, further emphasizing the results of this finding.”

“The Relative Importance of Social Media for Accessing, Finding and Engaging with News”: From Roskilde University, Denmark, published in Digital Journalism. By Rasmus Kleis Nielsen and Kim Christian Schrøder.

The study analyzes data from the 2013 Reuters Digital News Survey of media consumers in eight countries: Denmark, France, Germany, Italy, Japan, Spain, the United Kingdom, and the United States. (Samples in each country ranged from about 1,000 to 2,000 persons.) Nielsen and Schrøder conclude that “social media at this point still play a relatively limited role as sources of news — less widely used and less important than printed newspapers in all eight countries; that they in some cases play a somewhat larger role as a way of finding news; and that only a minority use them to engage in more participatory forms of news use like sharing, commenting on, or publishing their own stories.”

U.S.-specific data points include: 27 percent of online news users said social media was their most important source of news, though among 18- to 24-year-olds that figure was 45 percent; in terms of finding news online, 20 percent of Americans surveyed said news websites were the most important, while 33 percent said social media and 30 percent cited search engines. Nielsen and Schrøder note that “Germany and Japan have relatively low levels of social media use for news purposes, Italy, Spain, and to some extent the United States have higher levels, and Denmark, France, and the United Kingdom lie somewhere in between.”

The broader takeaway here regarding the importance of social media: “It is simply that sometimes both academic and public discussions of their relative importance for contemporary media users suggest that the glass is full to the brim when in fact the data suggest more of a glass-half-full–half-empty situation.”

“Reciprocal Journalism: A Concept of Mutual Exchange between Journalists and Audiences”: Study from the University of Minnesota, the University of Utah, and the University of Texas at Austin, published in Journalism Practice. By Seth C. Lewis, Avery E. Holton, and Mark Coddington. (Pre-print open version here.)

This study sketches out a new theory that is something like “audience engagement 3.0,” or “participation plus.” The specific coinage here, “reciprocal journalism,” seeks to advance the endless discussion among journalism circles about community engagement and go even a step further.

Despite its more democratic feel, participatory journalism as we know it is still mostly one-way: serving the news organization’s needs more so than the audience’s. Lewis, Holton, and Coddington focus on how Twitter, Facebook, and other social media can facilitate more reciprocal forms of journalism, whether directly (e.g., journalists exchanging tweets with followers one-to-one), indirectly (e.g., journalists returning favors not to particular individuals but to their communities as a whole, by encouraging discussion around certain hashtags), or sustained (e.g., journalists creating Facebook community pages where audiences can expect longer-lasting exchanges of goodwill among journalists and audiences).

This means journalists seeing their role as quasi-organizers of democracy, or “community-builders who can forge connections with and among community members by establishing patterns of reciprocal exchange.” Ultimately, the authors argue, “reciprocal journalism” isn’t describing some entirely new kind of journalism, but rather “points to the unrealized potential for a participatory journalism that has mutual benefit in mind, that is not merely fashioned to suit a news organization’s interests but also takes citizens’ concerns to heart.”

“Syria’s Socially Mediated Civil War”: From George Washington University and American University, published by the United States Institute of Peace. By Marc Lynch, Deen Freelon and Sean Aday.

This paper provides important notes of skepticism for discourse around the issue of social media and its role in conflict zones. It moves past many of the preliminary research findings with respect to the early stages of the Arab Spring. Lynch, Freelon, and Aday analyze patterns of Twitter conversation, looking at how information flows around certain hashtags and key users or “hubs.” They conclude that looking at patterns of English-language tweets is increasingly insufficient, as the Arabic-language Twitterverse grows more complex.

Their findings should prompt everyone to be cautious about definitive claims regarding influence and trends. The researchers state that “social media create a dangerous illusion of unmediated information flows,” as “key curation hubs within networks may now play a gatekeeping role as powerful as that of television producers and newspaper editors.” Other key points in the report include: “We need to study more carefully the extent to which the network insularity we observe allows videos or messages to be ‘narrowcast’ online — that is, jihadist messages in Arabic reach one audience and moderate messages in English reach another.” Further, “Journalists and analysts must think more carefully about how to correct for the systematic over or underrepresentation of particular viewpoints or data and how to check online information against offline developments.”

“The Great Equalizer? Patterns of Social Media Use and Youth Political Engagement in Three Advanced Democracies”: From the University of Wisconsin-Madison, University of Sydney and University of York, published in Information, Communication & Society. By Michael Xenos, Ariadne Vromen and Brian D. Loader.

The study provides some reasons for optimism on two long-standing worries: Both political disengagement among youth and patterns of political inequality. The authors look at dynamics in the United States, Australia, and the United Kingdom. Xenos, Vromen, and Loader oversaw original survey research in the three countries, totaling 3,685 people ages 16 to 29 — 1,241 in the U.S., 1,216 in Australia, and 1,228 in Britain.

Respondents were asked about social media usage as well as acts of civic and political engagement (but not voting). The researchers state that the analysis “offers the most comprehensive study of social media use and political engagement among contemporary youth to date.” Their findings are striking: “[W]e find a strong, significant, and robust positive relationship between social media use and political engagement.” Further, it appears that socioeconomic status (SES) — which scholars have long known is a big predictor of civic/political engagement — appears to be a less powerful factor with this generation: “Stated plainly, our results suggest that if one were seeking an efficient single indicator of political engagement among young people in the countries studied here, social media use would appear to be as good as, or better than, SES.”

The scholars don’t get into the exact “why,” or causal explanations. And they concede that their measurements of social media use and engagement are more “broadly cast than most others used in the [prior scholarly] literature.”

“Discourse architecture, ideology, and democratic norms in online political discussion”: From American University, published in New Media & Society. By Deen Freelon.

The paper looks at how the platform design of Twitter and comment threads of news sites influences how political discussions unfold. Freelon analyzes data around certain hot-button issues — climate change, immigration, gays in the military — during 2010; the Washington Post and Seattle Times sites were used as representative samples.

He finds that people use different political expression styles in different online spaces across issues: For example, Twitter leans toward a more “communitarian” style, with users making more frequent group appeals and calls to action; by contrast, news site comments lean more “liberal individualist,” with less replying to others and more insults, although there were lots of reasons given for arguments and questions asked across ideological lines — in essence, news comments had both reasoned debate and incivility in the same space. Overall, the data provide “robust evidence that the common features in each space are facilitating particular patterns of communication norms.”

Related: Another recent study specifically on comment threads, “Virtuous or Vitriolic: The effect of anonymity on civility in online newspaper reader comment boards,” finds that “there is a dramatic improvement in the level of civility in online conversations when anonymity is removed.” The research, by Arthur D. Santana of the University of Houston, was published in Journalism Practice.

“Multitasking on a Single Device: Arousal and the Frequency, Anticipation, and Prediction of Switching Between Media Content on a Computer”: From Stanford University, published in Journal of Communication. By Leo Yeykelis, James J. Cummings, and Byron Reeves.

The study looks at multitasking from a slightly different angle than many prior studies do — namely, the toggling between content on just one device (as opposed to multiple device usage). The researchers experimented on 12 undergraduates using their personal laptop in a natural setting, generating “396,000 data points equaling 110 hours of moment-by-moment changes in switching and arousal over 10 hours during a normal weekday.” Arousal was measured by “skin conductance levels” determined through wrist censors, which measure activation levels through the sympathetic nervous system.

Yeykelis, Cummings, and Reeves determine that, on average, subjects switched content every 19 seconds — faster than expected based on prior literature. In fact, “One-fifth of all content was viewed for 5 seconds or less, with 75 percent viewed for less than a minute.” Email and Facebook took up a quarter of all subjects’ time online. Further, they “discovered that people have an anticipatory arousal spike 12 seconds before switching to [other] content.” The findings, the authors suggest, give some support both to those who argue the positives of multitasking and those who focus on the negatives.

“The Emergence of a Freedom of Information Movement: Anonymous, WikiLeaks, the Pirate Party, and Iceland”: From the University of Washington, published in Journal of Computer-Mediated Communication. By Jessica L. Beyer.

Global rhetoric around freedom of information is “becoming increasingly similar across sites” worldwide, this paper says. Beyer reviews activist sites and movements over the period 2007-2011 to look for converging patterns. “The idea of ‘freedom of information’ expressed online,” she writes, “appears to be a cross-national online norm of freedom of information that is related to, but also often in conflict with, domestic legal practices.” This is playing out even as intellectual property rights advocates and government security concerns are being asserted and pushing back. Beyer notes that the “ability of groups such as Anonymous to channel the power of like-minded, but not tech savvy, allies is increasing. Whatever the future of this newly forming ‘freedom of information’ movement, its emergence from the online world offers evidence for the power of the Internet and online communities in shaping participants’ political beliefs and actions. Young people online are willing to mobilize on behalf of abstract rights claims, and that willingness spreads quickly across the social spaces online.”

Photo by Anna Creech used under a Creative Commons license.

“We’re used to treating information as ‘free,'” writes Jaron Lanier in his latest book Who Owns the Future?, “but the price we pay for the illusion of ‘free’ is only workable so long as most of the overall economy isn’t about information.”

Lanier argues that a free-culture mindset is dismantling the middle-class economy. In his estimation, the idea “that mankind’s information should be free is idealistic, and understandably popular, but information wouldn’t need to be free it no one were impoverished.”

Who Owns the Future?, like his 2010 book You Are Not a Gadget, is another manifesto attempting to rebuff what he sees as the contemporary ethos of the web. But the followup also refreshingly attempts to pose solutions, one where all participants in this information-based world are paid for what they do and distribute on the web. Throughout, it places particular emphasis on the ways digital technology has unsettled the so-called “creative class” — journalists, musicians, photographers, and the like. As he sees it, the tribulations of those working in such fields may be a premonition for the middle class as a whole. It’s “urgent,” he writes, “to determine if the felling of creative-class careers was an anomaly or an early warning of what is to happen to immeasurably more middle-class jobs later in this century.”

I recently spoke with Lanier and we discussed the ways he sees digital networking disrupting the media, why he thinks advertising can no longer sustain paid journalism, and why he misses the future. Lightly edited and condensed, here’s a transcript of our conversation.

Photo of Jaron Lanier by Dan Farber used under a Creative Commons license.

• Single sign-on capability for users to access content and manage subscriptions

• Ability for publishers to combine subscriptions from different titles together for one price

• Ability for publishers to create multiple payment options and easily include/exclude content behind a paywall

• Multiple tiers of access to search including 1) snippets only with “subscription” label, 2) access to preview pages and 3) “first click free” access

• Advertising systems that offer highly relevant ads for users, such as interest-based advertising

Google’s got plenty of targeted advertising options (#5), and First Click Free is old hat by now (#4). But Google took a big step toward fulfilling the rest of that vision (#1, #2, and #3) today with the announcement of Google One Pass, “a payment system that enables publishers to charge consumers for articles and other content.” And coming on the heels of Apple’s less-than-publisher-friendly subscription announcement yesterday, Google’s alternative may seem like a breath of fresh air.

First, Google is selling flexibility. No requirement to offer the same deal through a Google One Pass payment system as through other means — which means bundling with print subscriptions is a whole lot simpler than with Apple. Print customers can enter a coupon code to get free access to a website. Want to try a metered model, or experiment with putting more, less, or different content behind a paywall? No problem. It’s device-agnostic — so if you want to sell an all-access, all-platform subscription, no problem there either. (It’s also a micropayment platform, for the few still living who believe in per-article micropayments as a viable model.)

Second, as Lee Shirani writes in the announcing blog post: “With Google One Pass, publishers can maintain direct relationships with their customers and give readers access to digital content across websites and mobile apps.” That sentence isn’t detailed any further in the initial announcement or docs online, but it sure sounds like a nice way of saying, “We’ll let you keep all the customer data Apple isn’t letting you have.”

And, most key of all, Google isn’t demanding the 30 percent cut Apple does. The announcement doesn’t share cost details, but the FT is reporting Google will take 10 percent of any subscription revenue. So selling a $15/month subscription via Apple would net $10.50 versus $13.50 via Google.

The announcement’s a lot to digest, but three quick thoughts:

— With the timing, it’s easy to see One Pass primarily as a competitor to Apple’s subscription plans. But note that the focus is primarily on web access, not app access. (Note that the word “Android” — Google’s mobile platform — is mentioned nowhere.) While mobile apps get a shoutout in the announcement, Google notes that it’ll work only “in instances where the mobile OS terms permit transactions to take place outside of the app market,” which likely means it’ll only work in Android apps, which are still a secondary priority for most news orgs, for better or worse, and where getting users to pay anything for apps has been a challenge. At least for the moment, One Pass is more of a direct competitor to Journalism Online’s Press+ than it is to Apple. It’s an infrastructure play.

— Frankly, I’m a little surprised Google’s even taking 10 percent. The transaction costs themselves shouldn’t be any higher than what Google Checkout regularly charges, which is 2.9 percent plus 30 cents a transaction (plus volume discounts). Sure, building and maintaining the record-keeping system for subscribers and the tools for distinguishing free/paid content will cost something. But Google’s consistent model has been to undercut paid competitors by making good free offerings, and I’d have thought just keeping the Checkout fees would have been the play, to soak up as much of the market as possible.

— What Apple is selling publishers is not just an easy payment system — they’re selling the 160 million user accounts with active credit cards attached. That’s about 70 million more than PayPal. How many of you have a credit card on file with Google Checkout, which has struggled to gain relevance and market share?

In the spirit of accountability, we think it’s important to check back and see how those predictions fared. We did it last year, checking in on his 2009 predictions. And now we’ll check in on 2010.

Check in next year around this time as we look back at all the predictions for 2011 and how they turned out.

PREDICTION: At least technically, the recession is over, with GDP growth measured at 2.8 percent in Q3 of 2009 and widely forecast in Q4 to exceed that rate. But newspaper revenue has not followed suit, dropping 28 percent in Q3. McClatchy and the New York Times Company (which both came in at about that level in Q3) hinted last week that Q4 would be better, in the negative low-to-mid 20 percent range. This is not unexpected — in the last few recessions with actual GDP contraction (1990-91 and 2001), newspaper revenue remained in negative territory for at least two quarters after the GDP returned to growth. But the newspaper dip has been bigger each time, and the current slide started (without precedent) a year and a half before the recession did, with a cumulative revenue loss of nearly 50 percent. Newspaper revenue has never grown by much more than 10 percent (year over year) in any one quarter, so no real recovery is likely. This is a permanently downsized industry. My call for revenue by quarter (including online revenue) during 2010 is: -11%, -10%, -6%, -2%.

REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: -9.70%, -5.55%, – 5.39%. And Q4, while not a winner, will probably be “better” than Q3 (that is, another quarter of “moderating declines” in news chain boardroom-speak). So, a win on the trendline, and pretty close on the numbers.

PREDICTION: Newspaper online revenue will be the only bright spot, breaking even in Q1 and ramping up to 15% growth by Q4.

REALITY: CLOSE, ONE CIGAR. Actuals for Q1, 2, and 3: +4.90%, +13.90%, and +10.7%. Since Q1 beat my prediction and was the first positive result in eight quarters, I’d say that’s a win, and pretty close on the ramp-up, so far. Q4 might hit that 15%.

PREDICTION: Newspaper circulation revenue will grow, because publishers are realizing that print is now a niche they can and should charge for, rather than trying to keep marginal subscribers with non-stop discounting. But this means circulation will continue to drop. In 2009, we saw a drop of 7.1% in the 6-month period ending March 31, and a drop of 10.6 percent for the period ending Sept. 30. In 2010, we’ll see a losses of at lest 7.5% in each period.

REALITY: HALF A CIGAR. Actual drop in the March 31 period was 8.7%; actual drop in the Sept. 30 period was 5.0%. So, half a win here.

PREDICTION: I don’t think we’re out of the woods, or off the courthouse steps, although the newspaper bankruptcy flurry in 2009 was in the first half of the year. The trouble is the above-mentioned revenue decline. If it continues at double-digit rates, several companies will hit the wall, where they have no capital or credit resources left and where a “restructuring” is preferable and probably more strategic than continuing to slash expenses to match revenue losses. So I will predict at least one bankruptcy of a major newspaper company. In fact, let’s make that at least two.

REALITY: CORRECT — TWO CIGARS. Well, MediaNews Group filed its strategic bankruptcy in January, as did Morris Publishing. So this was a quick win. Canwest Ltd. Partnership, publisher of 12 Canadian papers, filed in January as well.

PREDICTION: Yup, there will be closings and frequency reductions. Those revenue and circulation declines will hit harder in some places than others, forcing more extinction than we saw in 2009.

REALITY: WRONG. Nope, everybody managed to hang on, nobody of any size closed.

PREDICTION: It’s interesting that we saw very little M&A activity in 2009 — none of the players saw much opportunity to gain by consolidation. They all just hunkered down waiting for the recession to end. It has ended, but if my prediction is right and revenue doesn’t turn up or at least flatten by Q2, the urge to merge or otherwise restructure will set in. Expect to see at least a few fairly big newspaper firms merge or be acquired by other media outfits. (But, as in 2009, don’t expect Google to buy the New York Times or any other print media.)

REALITY: WRONG. Google didn’t buy the Times or any other newspaper, but by the same token, there were no significant mergers or acquisitions all year. So much for Dean Singleton’s promise of “consolidation” in the industry after MediaNews emerged from its quick bankruptcy.

PREDICTION: Given the fact that newspaper stocks generally outperformed the market (see my previous post), it’s not surprising that there were few changes in the executive suites. But if the industry continues to contract, those stock prices will head back down. Don’t be surprised to see some boards turn to new talent. If they do, they’ll bring in specialists from outside the industry good at creative downsizing and reinvention of business models. Sooner would be better than later, in some cases.

REALITY: NOT FLAT WRONG, BUT NOT CLOSE. Perhaps the closest any company came to truly shaking things up was Journal Register Company, which in January appointed as its CEO John Paton, an executive with experience in Hispanic media. He’s not an outsider, but he’s preaching a very different gospel that includes a clear vision for a web-based future for news. Elsewhere, Tribune, still dealing with bankruptcy, tossed CEO Randy Michaels, not for strategic reasons but because accusations of sexism and other dumb behavior were “tarnishing” the company’s name.

PREDICTION: There will be more and more launches of online and online/print combos focused on covering towns, neighborhoods, cities and regions, with both for-profit and nonprofit bizmods. Startups and major media firms looking to enter this “space” with standardized and mechanized approaches won’t do nearly as well as one-off ventures where real people take a risk, start a site, cover their market like a blanket, create a brand and sell themselves to local advertisers.

REALITY: CORRECT. This is happening in spades. AOL’s Patch launched hundreds of sites. It may be a “standardized” approach, but it’s not “mechanized,” and hired more journalists than any company has in decades. At the same time, one-off ventures continue to sprout in towns and cities everywhere.

PREDICTION: At the end of 2008, this wasn’t yet much of a discussion topic. It became the obsession of 2009, but the year is ending with few actual moves toward full paywalls or more nuanced models. Steve Brill’s Journalism Online promises a beta rollout soon and claims a client list numbering well over 1000 publications. Those are not commitments to use JO’s system — rather, they’re signatories to a non-binding letter of intent that gives them access to some of the findings from JO’s beta test. Many publishers, including many who have signed that letter, remain firmly on the sidelines, realizing that they have little content that’s unique or valuable enough to readers to charge for. JO itself has not speculated what kind of content might garner reader revenue, although its founders have been clear that they’re not recommending across-the-board paywalls. So where are we heading in 2010? My predictions are that by the end of the year, most daily papers will still be publishing the vast majority of their content free on the Web; that most of those experimenting with pay systems will be disappointed; and that the few broad paywalls in place now at local and regional dailies will prove of no value in stemming print circulation declines.

REALITY: CORRECT. Most papers are still publishing the vast majority of their content free on the web. ALSO CORRECT: Broad paywalls have done little to stem the decline in print. JURY STILL OUT: But it’s too soon to tell whether those experimenting with paywalls are disappointed. All eyes are on the impending paywall start at the New York Times.

PREDICTION: The recently announced consortium led by Time Inc. to publish magazine and (eventually) newspaper content on tablets and other platforms will see the first fruits of its efforts late in the year as Apple and several others unveil tablet devices — essentially oversized iPhones that don’t make phone calls but have 10-inch screens and make great color readers. Expect pricing in the $500 ballpark plus a data plan, which could include a selection of magazine subscriptions (sort of like channels in cable packages, but with more a la carte choice). If newspapers are on the ball, they can join Time’s consortium and be part of the plan. Tablet sales will put a pretty good dent in Kindle sales. One wish/hope for the (as yet un-named) publisher consortium: atomize the content and let me pick individual articles — don’t force me to subscribe to a magazine or buy a whole copy. In other words, don’t attempt to replicate the print model on a tablet.

REALITY: CORRECT, MORE CIGARS. My iPad description and data plan price point were right on the mark. It’s hard to say for sure whether iPad sales have put much of a dent in Kindle sales, since Amazon doesn’t release numbers, but Kindle sales are way up after a price cut. The magazine consortium, now called Next Issue Media, still has no retail product, but it does look like it intends to “replicate the print model on a tablet” rather than recognizing atomization. Meanwhile, the Associated Press is recognizing atomization with its plan for a rights clearinghouse for news content.

PREDICTION: Twitter usage will continue to be flat (it has lost traffic slowly but steadily since summer). Facebook will continue to grow internationally but is probably close to maxing out in the U.S. With Facebook now cash-flow positive, and Twitter still essentially revenue-less, could Zuckerberg and Evan Williams be holding deal talks sometime during the year? It wouldn’t surprise me.

REALITY: WRONG, MOSTLY. Twitter is still fairly flat in web traffic, but it’s growing via mobile and Twitter clients, so its real traffic is hard to gauge. No talks between Twitter and Facebook, though.

PREDICTION: The Federal Trade Commission will recommend to Congress a new set of online privacy initiatives requiring clearer “opt-in” provisions governing how personal information of Web users may be used for things like targeting ads and content. Anticipating this, Facebook, Google and others will continue to maneuver to lock consumers into opt-in settings that allow broad use of personal data without having to ask consumers to reset their preferences in response to the legislation. In the end, Congress will dither but not pass a major overhaul of privacy regs.

REALITY: CORRECT. Indeed, we don’t have any major overhaul by Congress, but we’re actually seeing more responsible behavior from all of the big players with regard to privacy, including better user controls on privacy just announced by Microsoft.

PREDICTION (with thanks to Art Howe of Verve Wireless): By the end of 2010 a huge shift toward mobile consumption of news will be evident. In 2009, mobile news was just getting on the radar screen, but during the year several million people downloaded the AP’s mobile app to their iPhones, and several million more adopted apps from individual publishers. By the end of 2010, with many more smartphone users, news apps will find tens of millions of new users (Art might project 100 million), and that’s with tablets just appearing on the playing field. During 2009, Web readership of news (though not of newspaper content) overtook news in printed newspapers. Looking out to sometime in 2011 or 2012, more people will get their news from a mobile device than from a desktop or laptop, and news in print will be left completely in the dust.

REALITY: JURY STILL OUT, BUT LOOKING CORRECT. To my knowledge, nobody has a handle on how many news apps have been sold or downloaded, but certainly it’s in the tens of millions, counting both smartphone and tablet apps. One the other hand, a lot of people with apps on their phones don’t use them. As to where mobile ranks among news delivery media, the surveys haven’t picked up the trends yet, but wait till next year.

PREDICTION: I accurately predicted the Dow’s rise during 2009 and that newspaper stocks would beat the market (see previous post), but neglected to place a bet on the market for 2010, so here goes: The Dow will rise by 8% (from its Dec. 31 close), but newspaper stocks will sink as revenue fails to rebound quarter after quarter.

REALITY: ON THE MONEY. As of mid-afternoon December 15, the Dow is up 10.19% for the year, so I claim a win on that score. The S&P 500 is up 11.11%, and the NASDAQ is up 15.63%. Among newspaper groups, McClatchy (up 33%), Journal Communications (up 26%) and E.W. Scripps (up 44%) handily beat the market, but all the other players indeed sank or underperformed the market: New York Times Company is down 23%, News Corp. is up 5%, Lee Enterprises is down 30 percent, Media General is down 30% and Gannett is up 4%.

Name-your-own-price schemes like this aren’t new; often, they don’t work. (“If you use a PWYW scheme too liberally, you are courting financial disaster,” the economist Stephen Dubner points out. “Just imagine if Tiffany & Co. held a PWYW day on all diamond jewelry.”) But sometimes — under the right circumstances — the approach can be quite effective. At One World Everybody Eats, a community kitchen in Salt Lake City, Denise Cerreta runs an analog service to the Panera experiment: Instead of pricing the meals One World serves, she asks customers to pay what they can — and, she told me, “to pay it forward when they can.” She’s doing something right, it seems: One World’s been in business for seven years.

Which brings me to the question you’ve seen coming, but one I’ll come out and ask anyway, as a thought experiment if nothing more: Could the Panera payment model work for news?

First of all, there’s plenty of evidence to suggest that it couldn’t. Carta, the German public-affairs publication, is currently the highest-grossing participant on the donation-facilitator site Kachingle. Carta’s current yield from Kachingler donations is $198.27 — from a total of 65 people. Oof. Membership drives both journalistic and otherwise tend to suggest specific notation amounts for a reason: We like prices. Or, more specifically, we’re conditioned to expect them.

But what if our expectations changed? What if news outlets built into their online interfaces a more structured, and systematic, request for content compensation? Take, again, One World. One of the reasons Cerreta’s effort works is that, at the cafe, consumer behavior is monitored: The kitchen has built into its physical layout what Cerreta calls a “point of accountability” — a point at which, moving through the consumption-to-satisfaction continuum, consumers know that this is the moment they’re expected to compensate the kitchen for what they’ve (literally) consumed. In One World’s case, the accountability point is a simple donation box. One that is situated — explicitly, purposely, unavoidably — in public.

And that makes a big — and perhaps all the — difference. (Recall the “Big Brother Eyes” experiment from a few years ago.) Which means that, when the accountability is negotiated in private — when there is only, as in the case of online news, the glare of the computer screen to cast light on our shoulders’ angels and devils — our willingness to drop dollars in the donation box certainly becomes a more open question. But, then, what if we took a looser approach to publicness — what if we translated Cerreta’s physical accountability point to the ephemeral interactions of the web? Even if we citizens need a little push to behave in private with as much civic sensibility as we would in public, there’s nothing to say that news outlets can’t provide — or, at least, experiment with providing — that push. It would simply be a matter of building the push into the structure, and patterns, of consumption. Of creating, to modify Cass Sunstein’s phrase, an architecture of accountability.

Step one would be re-framing the terms of the transaction when it comes to compensating news providers for the content they provide: from fee (obligatory, and therefore purely economic) to donation (optional, and therefore suggestive of social good). It’s a semantic shift, certainly; but it could be a psychological one, as well.

Take the work of Edward Deci. In a series of experiments in the 1970s, the social psychologist examined the behavior of two groups of subjects: One was asked to solve a puzzle; the other was told it would be paid for solving the same puzzle. Those who worked for what Deci called the “intrinsic” reward of solving the puzzle — the simple satisfaction of a job well done — were, he found, more successful in finding solutions than those who were paid. Payment functioned, ironically, as a disincentive.

Deci was studying the motivation to work, rather than the motivation to pay; still, his overall finding (officially, that “contingent monetary rewards actually reduced intrinsic task motivation”) is illustrative. Introducing the concreteness of payment into an otherwise more ephemeral exchange can sometimes discourage action, rather than encouraging it; assigning monetary value to goods and experiences has a way of confining — and even negating — their broader value. Pricing is practical, of course, and, for the most part, entirely necessary. Still, we prefer to think of ourselves as motivated by something other than — something more than — rote obligation. And price tags, general necessity notwithstanding, tend to rob us of our altruism.

What Deci’s findings suggest for news is that, paradoxically, “It’d be nice if you paid” could actually be more incentivizing for consumers than the more blunt, and more transactional, “You have to pay.” Paywalls are one thing; pay doors, if you will — come on in! have a bite! pay what you think is fair! — are another. Permeability suggests trust; expectations of good behavior have a way of encouraging good behavior. Broken windows, in reverse.

Again, though, publicness (read: public accountability) is key; roughly the same number of people who want to be good citizens want to be recognized for being good citizens. Every year, I receive a series of emails from my college (usually featuring a slick little slideshow: “Campus in the Fall,” “Campus in the Spring,” “Campus in the Summer, with Children and Puppies and Rainbows”) asking for contributions to its Annual Giving drive. And it usually takes several of those emails before I actually make my donation. It’s not that I don’t want, or for that matter intend, to give back; it’s just that the give-back ask lacks urgency. The payment isn’t a demand; it’s a request. It doesn’t have to be paid now; it can be paid whenever. And that decelerates the dynamic of the transaction.

One of the most recent emails I received, though, tapped into something other than nostalgia: It featured a long list of donors from my class — ostensibly, as a way of thanking them for their contributions by way of public acknowledgment…but also, of course, as a way of highlighting those who hadn’t yet contributed. The loud, empty space between ‘Ganson’ and ‘Geannette,’ I have to say, made for an excellent disincentive against future dallying. Suddenly, the urgency was implicit.

The Alumni Giving staff, in other words, built into their donation request a point of accountability. Not a virtual cash register, a “pay now, or you won’t get the goods you want” approach — an impossibility for donation-seekers who sell not goods but potential good — but a more subtle (and, yet, just as impactful) message: “pay now, or everyone will know you haven’t paid.” Social capital is an economic good as much as a civic one; the AG donation-seekers wove that fact into their email so implicitly that their request suddenly bore the semblance of demand. By highlighting the social, rather than the monetary, aspect of their appeal, they conveyed the fact that they meant business. Literally.

When it comes to the problem of monetization, we sometimes to fall into the trap of equating “pay model” with “pay wall.” We assume that news is a straight commodity, and that the cash register model is therefore the only viable option for monetizing it. (“We’re not NPR, after all.”) But the commodity-focused approach ignores the social aspects of media economics. Particularly online, with the web’s built-in mechanisms of mutuality, news is a social good as much as (and perhaps even more than) a product to be bought and sold. It is also an experience good — something that needs to be consumed before its value can be accurately determined. A tip-based model — which combines reward for a job well done with the social prestige of being generous enough to leave a tip in the first place — actually makes more sense than a paywall, which is necessarily predictive in nature.

Cerreta’s name-your-own-price experiment, and my Alumni Giving’s public-accountability approach — not to mention the experience of, yes, many a public media membership drive — suggest the raw potential of a request-oriented, rather than a demand-oriented, approach to the pay-for-news problem. They hint at what might happen when we bring a little humanity to paid content’s practical, yet wholly impersonal, business proposition. Most of us, after all, are much happier to make donations than to pay bills. Even if the checks we write are for the same amount.

That’s not to say that reframing the terms of transaction is a broad answer to the seeping problem of content monetization; “no silver bullets” has become a common refrain for a good reason. (Plus, as Laura Walker, president and CEO of WNYC, told me in a conversation about PWYW’s scalability, “I think there is a much stronger pull toward supporting an organization that is not supported by advertising — that is not there to deliver an audience to advertisers — but is there because of a mission. I think that’s why people value us.”) It is to say, though, that it may be worth widening the scope of consideration when it comes to how we think about payment structures in the first place. The many experiments we’re seeing with social media right now — HuffPo’s implementation of recognition for committed community members, Gawker’s star commenter system, Spot.us‘s and Kickstarter‘s public donor lists, Foursquare‘s merit-badge framework — leverage users’ cultural connection to the news — and their desire to be recognized for, essentially, good citizenship within the cultures news systems create.

What would happen if those same motivations were employed in the service of monetizing online news? What would happen if we shift our focus from transactions to exchanges? Kachingle may not have revolutionized online payment structures; then again, its digital tip jar is a rare presence on websites. But what if The New York Times — or The Washington Post, or The Huffington Post — had its own kind of Kachingle? What if it also had a badge-like way of praising, publicly, the people who had financially supported its services? What if, instead of erecting a paywall, it built its site on an architecture of altruism?

It’d be an experiment, certainly. An experiment that well might fail. Still, though: I’d love to see what would happen if we broaden our notion of what a viable pay model could be.

A gaggle of Google news items: Unlike the past several weeks with their paywall and iPad revelations, this week wasn’t dominated by one giant future-of-media story. But there were quite a few incremental happenings that proved to be interesting, and several of them involved Google. We’ll start with those.

— The Google story that could prove to be the biggest over the long term actually happened last week, in the midst of our iPad euphoria: Google unveiled a beta form of Social Search, which allows you to search your “social circle” in addition to the standard results served up for you by Google’s magic algorithm. (CNN has some more details.) I’m a bit surprised at how little chatter this rollout is getting (then again, given the timing, probably not), but tech pioneer Dave Winer loves the idea — not so much for its sociality but because it “puts all social services on the same open playing field”; you decide how important your contacts from Twitter or Facebook are, not Google’s algorithm.

— Also late last week, several media folks got some extended time with Google execs at Davos. Guardian editor Alan Rusbridger posted his summary, focusing largely on Google’s faceoff with China. “What Would Google Do?” author Jeff Jarvis posted his summary, with lots of Google minutiae. (Jeff Sonderman also further summarized Jarvis’ summary.) Among the notable points from Jarvis: Google is “working on making news as compelling as possible” and CEO Eric Schmidt gets in a slam on the iPad in passing.

— Another Google feature was launched this week: Starring on Google News stories. The stars let you highlight stories (that’s story clusters, not individual articles) to save and return to them later. Two major tech blogs, ReadWriteWeb and TechCrunch, gave the feature their seal of approval, with ReadWriteWeb pointing to this development as the first of many ways Google can personalize its algorithm when it comes to news. It’s an intriguing concept, though woefully lacking in functionality at this point, as TechCrunch notes: I can’t even star individual stories to highlight or organize coverage of a particular issue. I sure hope at least that feature is coming.

Also in the Google-and-news department: Google economist Hal Varian expressed skepticism about news paywalls, arguing that reading news for many is a worktime distraction. And two Google folks, including Google News creator Krishna Bharat, give bunches of interesting details about Google News in a MediaShift interview, including some conciliatory words for publishers.

— Meanwhile billionaire tech entrepreneur Mark Cuban officially jumped on the Google-News-is-evil train, calling Google a “vampire” and urging news organizations not to index their content there. Not surprisingly, this wasn’t well-received in media-futurist circles: GigaOM’s Mathew Ingram, a former newspaperman himself, said Cuban and his anti-Google comrade, Rupert Murdoch, ignore the growing search traffic at news sites. Several other bloggers noted that Cuban has expressed a desire in the past to invest in other news aggregators and currently invests in Mahalo, which does some Google News-esque “sucking” of its own.

— Finally, after not carrying AP stories since December, Google struck some sort of quasi-deal that allows it to host AP content — but it’s still choosing not to do so. Search engine guru Danny Sullivan wonders what it might mean, given the AP and Google’s icy relations. Oh yeah, and Google demoed some ideas of what a Chrome OS tablet — read: iPad competitor — might look like.

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What the iPad will do (and what to do with it): Commentary continued to trickle out this week about Apple’s newly announced iPad, with much of talk shifting from the device’s particulars to its implications on technology and how news organizations should develop for it.

Three most essential pieces all make similar points: Former McClatchy exec Howard Weaver likens the iPad to the newspaper in its physical simplicity and thinks it “will enrich human beings by removing technological barriers.” In incredibly thoughtful posts, software developers Steven Frank and Fraser Speirs take a programming-oriented tack, arguing that the iPad simplifies computing, bringing it home for normal (non-geek) people.

Frank compares it to an automatic transmission vs. the traditional manual one, and Speirs says it frees people from tedious tasks like “formatting the margins, installing the printer driver, uploading the document, finishing the PowerPoint slides, running the software update or reinstalling the OS” to do the real work of living life. In another interesting debate, interaction designer Sarah G. Mitchell argues that without multitasking or a camera (maybe?), the iPad is an antisocial device, and developer Edd Dumbill counters that it’s “real-life social” — made for passing around with friends and family.

Plenty of folks have ideas about what news organizations should do with the iPad: Poynter’s Bill Mitchell and news designer Joe Zeff both propose that newspapers and magazines could partially or totally subsidize iPads with subscriptions. Fortune’s Philip Elmer-DeWitt says that wouldn’t work, and Zeff gives a rebuttal. Publish2’s Ryan Sholin has an idea for a newsstand app for the iPad, and Frederic Filloux at The Monday Note has a great picture of what the iPad experience could look like by next year if news orgs act quickly.

And of course, Robert Niles of The Online Journalism Review and BusinessWeek’s Rich Jaroslovsky remind us what several others said (rightly, I think) last week: The iPad is what content producers make of it.

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Facebook as a news reader: Last Friday, Facebook encouraged its users to make their own personalized news channel by creating a list of all the news outlets of which they’ve become a fan. The tech blog ReadWriteWeb — which has been remarkably perceptive on the implications of Facebook’s statements lately — noted that while a Facebook news feed couldn’t hold up to a news junkie’s RSS feed, it has the potential to become a “world-changing subscription platform” for mainstream users because of its ubiquity, sociality and accessibility. (He makes a pretty compelling case.)

Then came the numbers from Hitwise to back ReadWriteWeb up: Facebook was the No. 4 source of visits to news sites last week, behind only Google, Yahoo and MSN. It also accounts for more than double the amount of news media traffic as Google News and more than 300 times that of the web’s largest RSS program, Google Reader. ReadWriteWeb’s Marshall Kirkpatrick responded with a note that most news-site traffic still comes through search, and offered a challenge to Facebook to “encourage its giant nation of users to add subscriptions to diverse news sources to their news feeds of updates from friends and family.”

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This week in (somewhat) depressing journalism statistics: Starting with the most cringe-inducing: Rick Edmonds of Poynter calculates that newspaper classified revenue is down 70 percent in the last decade. He does see one bright spot, though: Revenue from paid obituaries remains strong. Yup, people are still dying, and their families are still using the newspaper to tell people about it. In the magazine world, Advertising Age found that publishers are still reporting further declines in newsstand sales, though not as steep as last year.

In the world of web statistics, a Pew study found that blogging is steady among adults and significantly down among teens. In other words, “Blogging is for old people.” Of course, social media use was way up for both teens and adults.

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A paywall step, and some suggestions: Steven Brill’s new Journalism Online paid-content service has its first newspaper, The Intelligencer Journal-Lancaster New Era in Pennsylvania. In reporting the news, The New York Times noted that the folks behind both groups were trying to lower expectations for the service. The news business expert Alan Mutter didn’t interpret the news well, concluding that “newspapers lost their last chance to hang together when it became clear yesterday that the wheels seemingly have come off Journalism Online.”

In a comically profane post, Silicon Valley veteran Dave McClure makes the strangely persuasive argument that the fundamental business model of the web is about to switch from cost-per-click ads to subscriptions and transactions, and that because people have trouble remembering passwords, they’ll login and pay through Gmail, iTunes or Facebook. (Mathew Ingram says McClure’s got a point.) Crowdfunding advocate David Cohn proposes a crowdfunded twist on micropayments at news sites.

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Reading roundup: Two interesting discussions, and then three quick thought-provoking pieces. First, here at the Lab, future Minnesota j-prof Seth Lewis asks for input about what the journalism school of the future should look like, adding that he believes its core value should be adaptability. Citizen journalism pioneer Dan Gillmor gave a remarkably thorough, well-thought-out picture of his ideal j-school. His piece and Steve Buttry’s proposal in November are must-reads if you’re thinking about media education or involved in j-school.

Second, the discussion about objectivity in journalism continues to smolder several weeks after it was triggered by journalists’ behavior in Haiti. This week, two broadsides against objectivity — one by Publish2’s Paul Korr calling it pathological, and another by former foreign correspondent Chris Hedges saying it “killed the news.” Both arguments are certainly strident ones, but thoughtful and worth considering.

Finally, two interesting concepts: At the Huffington Post, MTV’s Maya Baratz calls for newspapers to think of themselves as apps, commanding them to “Be fruitful and multiply. Elsewhere.” And at the National Sports Journalism Center, former Wall Street Journal journalist Jason Fry has a sharp piece on long-form journalism, including a dirty little secret (“most of it doesn’t work in any medium”) and giving some tips to make it work anyway.

It’s not just newspapers struggling to find their way in the digital era. Many content companies — broadcasting, film, music, publishing, and gaming — are grappling with the same business model uncertainty.

In a recent survey (pdf), the consulting firm Accenture asked 102 content-industry leaders to pick the biggest hurdle they face. Overwhelmingly, executives pointed to the hunt for a viable business model. And since they’ve asked the same question (sort of — see below) for three years, we can look at how execs’ thoughts have shifted over time.

First, the data shows a clear decline in what Accenture calls the “pay-for-play” concept — something like what we in the news context would term micropayments or “the iTunes model.” In 2007, 23 percent of respondents were banking on micropayments as the next top business model. In 2008, that number dropped to 11 percent. In 2009, it fell to just 8 percent.

But beyond that, the changing nature of the options Accenture gave respondents muddies the waters a bit. In 2009, the survey included two new options: “freemium” (some content remains free, users can pay for extra content) and “hybrid” (a combination of different models, like ads plus a subscription). One could easily argue that freemium is a type of hybrid, and for the chart above, Accenture chose to combine the hybrid responses with advertising ones. (The 60 percent you see above is actually 39 percent advertising, 21 percent hybrid.)

I spoke with David Wolf from Accenture’s media division about what we should take away from the findings. He said that the clear takeaway here is that “hybrid” models are the next big thing. “The only thing we can discern as we get through our research and look at it is there is no business model clearly emerging as ‘the one,'” Wolf explained.

Going hand-in-hand with a hybrid business model is an aggressive transition to a multi-platform delivery strategy. “What we conclude [from the survey] is that the platforms and the growth need to be viewed as integrated,” Wolf explained. “How do we create offerings that span the screens?” About 65 percent of respondents said new platforms or method of delivery is where they’ll find business growth next year, compared to 25 percent by creating new content, and 10 percent by expanding to new geographic areas. Those are all roughly similar to previous years.

Another trend to watch is the media industry moving toward a more personalized use of data. Rather than thinking about audience in broad terms, Wolf predicts media companies will get better at tailoring to individuals the way a hotel chain attracts customers with loyalty programs. Where companies once went after a demographic group like tweens, Wolf mentioned, “we’re changing that mindset” to something much more individualized.

Newspaper ad revenue: At least technically, the recession is over, with GDP growth measured at 2.2 percent in Q3 of 2009 and widely forecast in Q4 to exceed that rate. But newspaper revenue has not followed suit, dropping 28 percent in Q3. McClatchy and the New York Times Company (which both came in at about that level in Q3) hinted recently that Q4 would be better, in the negative low-to-mid 20 percent range. This is not unexpected — in the last few recessions with actual GDP contraction (1990-91 and 2001), newspaper revenue remained in negative territory for at least two quarters after the GDP returned to growth. But the newspaper dip has been bigger each time, and the current slide started (without precedent) a year and a half before the recession did, with a cumulative revenue loss of nearly 50 percent. Newspaper revenue has never grown by much more than 10 percent (year over year) in any one quarter, so no real recovery is likely; this is a permanently downsized industry. My call for revenue by quarter during 2010 is: -11%, -10%, -6%, -2%.

Newspaper online revenue (included in the overall prediction above) will be the only bright spot, breaking even in Q1 and ramping up to 15% growth by Q4.

Newspaper circulation revenue will grow, because publishers are realizing that print is now a niche they can and should charge for, rather than trying to keep marginal subscribers with non-stop discounting. But this means circulation will continue to drop. In 2009, we saw drops of 7.1 percent in the six-month period ending March 31 and 10.6 percent for the period ending Sept. 30. In 2010, we’ll see a losses of at least 7.5% in each period.

Newspaper bankruptcies: I don’t think we’re out of the woods, or off the courthouse steps, although the newspaper bankruptcy flurry in 2009 was in the first half of the year. The trouble is the above-mentioned revenue decline. If it continues at double-digit rates, several companies will hit the wall, where they have no capital or credit resources left and where a “restructuring” is preferable and probably more strategic than continuing to slash expenses to match revenue losses. So I will predict at least one bankruptcy of a major newspaper company. In fact, let’s make that at least two.

Newspaper closings and publishing-frequency reductions: Yup, there will be closing and frequency reductions. Those revenue and circulation declines will hit harder in some places than others, forcing more extinction than we saw in 2009.

Mergers: It’s interesting that we saw very little M&A activity in 2009 — none of the players saw much opportunity to gain by consolidation. They all just hunkered down waiting for the recession to end. It has ended, but if my prediction is right and revenue doesn’t turn up or at least flatten by Q2, the urge to merge or otherwise restructure will set in. Expect to see at least a few fairly big newspaper firms merge or be acquired by other media outfits. (But, as in 2009, don’t expect Google to buy the New York Times or any other print media.)

Shakeups: Given the fact that newspaper stocks generally outperformed the market, it’s not surprising that there were few changes in the executive suites. But if the industry continues to contract, those stock prices will head back down. Don’t be surprised to see some boards turn to new talent. If they do, they’ll bring in specialists from outside the industry good at creative downsizing and reinvention of business models. Sooner would be better than later, in some cases.

Hyperlocal: There will be more and more launches of online and online/print combos focused on covering towns, neighborhoods, cities and regions, with both for-profit and nonprofit business models. Startups and major media firms looking to enter this space with standardized and mechanized approaches won’t do nearly as well as one-off ventures where real people take a risk, start a site, cover their market like a blanket, create a brand and sell themselves to local advertisers.

Paid content: At the end of 2008, this wasn’t yet much of a discussion topic. It became the obsession of 2009, but the year is ending with few actual moves toward full paywalls or more nuanced models. Steve Brill’s Journalism Online promises a beta rollout soon and claims a client list numbering well over 1,000 publications. Those are not commitments to use JO’s system — rather, they’re signatories to a non-binding letter of intent that gives them access to some of the findings from JO’s beta test. Many publishers, including many who have signed that letter, remain firmly on the sidelines, realizing that they have little content that’s unique or valuable enough to readers to charge for. JO itself has not speculated what kind of content might garner reader revenue, although its founders have been clear that they’re not recommending across-the-board paywalls.

So where are we heading in 2010? My predictions are that by the end of the year, most daily papers will still be publishing the vast majority of their content free on the web; that most of those experimenting with pay systems will be disappointed; and that the few broad paywalls in place now at local and regional dailies will prove of no value in stemming print circulation declines.

Gadgets: The recently announced consortium led by Time Inc. to publish magazine and (eventually) newspaper content on tablets and other platforms will see the first fruits of its efforts late in the year as Apple and several others unveil tablet devices — essentially oversized iPhones that don’t make phone calls but have 10-inch screens and make great color readers. Expect pricing in the $500 ballpark plus a data plan, which could include a selection of magazine subscriptions (sort of like channels in cable packages, but with more à la carte choice). If newspapers are on the ball, they can join Time’s consortium and be part of the plan. Tablet sales will put a pretty good dent in Kindle sales. One wish/hope for the (as yet unnamed) publisher consortium: Atomize the content and let me pick individual articles — don’t force me to subscribe to a magazine or buy a whole copy. In other words, don’t attempt to replicate the print model on a tablet.

Social networks: Twitter’s own site usage will continue to be flat (it has actually lost traffic slowly but steadily since summer), but that probably means more people are accessing Twitter through various apps on computers and smartphones, so actual engagement is hard to gauge.  Facebook will continue to grow internationally but is probably close to maxing out in the U.S. With Facebook now cash-flow positive, and Twitter still essentially revenue-less except for lucrative search deals with Google and Bing, could Mark Zuckerberg and Evan Williams be holding deal talks sometime during the year? It wouldn’t surprise me.

Privacy: The Federal Trade Commission will recommend to Congress a new set of online privacy initiatives requiring clearer “opt-in” provisions governing how personal information of web users may be used for things like targeting ads and content. Anticipating this, Facebook, Google and others will continue to maneuver to lock consumers into opt-in settings that allow broad use of personal data without having to ask consumers to reset their preferences in response to the legislation. In the end, Congress will dither but not pass a major overhaul of privacy regs.

Mobile (with thanks to Art Howe of Verve Wireless): By the end of 2010 a huge shift toward mobile consumption of news will be evident. In 2009, mobile news was just getting on the radar screen, but during the year several million people downloaded the AP’s mobile app to their iPhones, and several million more adopted apps from individual publishers. By the end of 2010, with many more smartphone users, news apps will find tens of millions of new users (Art might project 100 million), and that’s with tablets just appearing on the playing field. During 2009, web readership of news (though not of newspaper content) overtook news in printed newspapers. Looking out to sometime in 2011 or 2012, more people will get their news from a mobile device than from a desktop or laptop, and news in print will be left completely in the dust.

Stocks: I accurately predicted the Dow’s rise during 2009 and that newspaper stocks would beat the market. The Dow will rise by 8% (from its Dec. 31 close), but newspaper stocks will sink as revenue fails to rebound quarter after quarter.

Because it’s my job, I’ve followed pretty much everything Steve Brill has said in public about Journalism Online, the pay-for-news firm he launched in April with Gordon Crovitz and Leo Hindrey. From the start, they’ve been offering infrastructure and consulting for news organizations that want to charge for access to their websites. But as you’d expect with any new venture, the pitch has changed over time. Here are some tweaks I’ve noticed:

Ditching the term “paywall”

Brill has always been clear that he isn’t advocating a subscription-only approach for news sites. Some content will be free, some will be available only to those who pay. But whereas Brill used to use the term “wall” to describe subscription content, he’s now abandoned that language. “We’re not putting up any kind of a paywall,” he’s been saying, most recently in a heated interview on WBUR. “It’s not a paywall,” he said at a Yale conference last week.

That’s a semantic distinction but one that naturally raises the question: What type of stuff will be subscription-only? I posed that question to Brill at Yale, seeking specific examples, but he wouldn’t say much beyond “unique” and “premium” content. (Steve Outing recently prompted an interesting thread on what, exactly, premium content is.) I didn’t come away with a clearer idea of what his clients intend to charge for, just that I shouldn’t call it a paywall.

Embracing the metered model

Journalism Online will power any type of payment system that publishers choose, but Brill’s thinking has shifted on which strategy is best. Last year, he drafted a memo for The New York Times that championed micropayments and subscriptions for the newspaper’s entire website. In June, he told me, “We don’t think micropayments are going to be a huge part of this deal.” These days, he’s been talking up the metered model employed by The Financial Times, which offers 10 free articles a month before users are required to pay.

Brill’s firm claims trademarks on the names of six models — he calls them “dials” — that news publishers could employ:

— High Activity Pay Points (metered model)
— Selected Content Pay Points (partial paywall)
— Time-Based Pay Points (charge for new content)
— Enhanced Service Pay Points (charge for special features)
— Market Access Pay Points (charge based on user’s location)
— Preview Activity Pay Points (allow previewing of paid content)

Broadening the target audience

In the spring, Brill told me the goal was “to get the 5 or 10 percent of your most committed readers to pay.” This summer, he expanded that target in an interview with CNN: “The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion.”

At Yale last week, he said “10 or 15 or 20 percent” of a news site’s unique monthly visitors might be willing to pay. I don’t presume to know what a realistic goal is, though that’s obviously crucial to the success or failure of paid-content plans. I do know that one study found “core loyalists,” who visit 2 to 3 times a day for 20 days a month, represent 25% of visitors to newspaper sites. So if you’re probing Brill’s estimates, there’s your starting point.

Exaggerating his firm’s success

“We now have over 1,200 affiliates,” Brill said on the radio yesterday, making it sound like 1,200 publications are ready to charge their readers for digital content. Asked to clarify, he said, “Companies representing or owning over 1,200 publications have all signed letters of intent.” We know that includes Guardian News and Media, which doesn’t appear likely to charge readers. Most of the other companies that have signed non-binding letters of intent remain a mystery, which makes the whole thing increasingly mysterious.

Brill is certainly under no obligation to disclose his clients, but the more he touts a dubious figure, the more skeptical I grow. Here’s a harder statistic, reported by Poynter: Between 5 and 15 publishers will start testing Journalism Online’s infrastructure “in the next month or so.” The firm’s own business model is dependent on at least some of its 1,200 affiliates pulling the trigger: Journalism Online is taking a 20% cut of subscription revenue.

He took questions from reporters this afternoon at Google’s offices in Cambridge, and I asked him, among other things, why Google News had recently begun attaching a “(blog)” label to some news sources — a move I criticized last month. Schmidt resorted to bringing up bloggers’ moms:

Me: A very small question. Google News very recently added a label for blogs, to differentiate from non-blogs. It seemed weird in 2009 to make that distinction. I wondered, did you have any input on that or —?

Eric Schmidt: I was not directly involved in that. There seems to be a difference between blogs and traditional news. It’s sometimes hard to distinguish because many people in the traditional news are also bloggers.

Me: Or they use a blog platform.

Schmidt: Or they use a blog platform. So we’re trying to find that line. And it’s hard to articulate what that difference is.

Me: How would describe that line if it’s not based on the tech behind the publishing platform?

Schmidt: No, it’s not the technology. My guess is — again, I’m speculating, which is always a mistake — it has a lot to do with the infrastructure around the writer. So a blog that’s associated with a major, legitimate organization — of which, I think, the majority, if not everyone, in the room is associated with — would be, I think, treated differently than an individual blogger who’s using his or her right of free expression to say whatever he thinks. So the presence of an editor, as an example. You know, an editor that’s not your mom.

That is, for what it’s worth, not the distinction Google News is making: The “(blog)” label is supposed to be attached to any news published with blogging software. At the time, I thought Google might be throwing a bone to newspaper companies that don’t like being lumped with amateur news sources. And while I’m sure the new label was not important enough to reach Schmidt’s desk, his framing of that distinction — “the infrastructure around the writer” — is an interesting one.

I also asked Schmidt about the concept of a “hyperpersonalized news stream,” coined by Google VP Marissa Mayer to describe a customized flow of information from a broad range of news sources. Does Google have aspirations to build on that concept?

Schmidt: We have about ten news stream ideas, of which hyperpersonalization is one. And, again, I’d rather not talk about specific products or even prioritize them, but I would make the following observation: In five or ten years, what will the primary news reader look like?

Well, that person will be probably on a tablet or a mobile phone, probably the majority of the reading will presumably be online not offline, just because of the scale of it. It’ll be highly personalized, right? So you’ll know who the person is. There’ll be a lot of integration of media — so video, voice, what have you. It’ll be advertising-supported and subscription-supported, so you’ll probably have a mixture. Think of the Kindle as an example. The Kindle is a proto of what this thing could look like. People will carry these things around.

So if you start thinking about that, it becomes pretty obvious what the products need to be: more personalized, much deeper, capable of deeper navigation into a subject. Also, show me the differential. Since you know what you told me yesterday, just tell me what changed today. Don’t repeat everything.

As some news organizations begin charging for digital content, I wondered, how is Google positioned to aid or take advantage of those moves? I mentioned the company’s proposal to power micropayments for news sites with Google Checkout.

Schmidt: The first question: What percentage of news organizations will charge for content? And it’s entirely their decision. If they do so, then we want to make sure that we have products that they can use to help them charge. Right? Because we’re in the infrastructure business. We respond. But, to me, that’s a relatively straightforward infrastructure decision. Could we get them to use Google Checkout, other payment systems, and so forth? But I think it’s early to talk about that.

We also, for newspapers that are trying to solve the revenue gap problem, we’re working hard on stronger advertising products for newspapers. And we’ll see how well they do, but it remains an unsolved problem. That’s probably all I — everything else is tied up in discussions with specific —

David Beard, editor of Boston.com, asked about a remark Schmidt made last month regarding Google’s “moral responsibility” to aid the news industry. Schmidt’s reply:

Schmidt: We have a responsibility. We have not yet figured out how to exercise that responsibility…We’re looking for new ideas. It’s a hard problem because, as everybody knows, printed circulation has declined, and the online use of newspapers has exploded positively. So you’ve got a bridge problem between one and the other, and we want to help. We really do.

A few other tidbits outside our purview:

— Schmidt said invite-only Google Wave is “getting ready for a much broader distribution…very soon,” which he clarified to mean within weeks.

— Surveying the laptops of reporters in the room, he said, “We’ve got a couple Macs — always my favorite.”

— And asked about something Microsoft CEO Steve Ballmer said, Schmidt replied, “I’ve learned not to respond to quotes by Steve Ballmer.”

“The Reconstruction of American Journalism” (download PDF here) sets its sights wholly on local news. It’s built on the thesis that the accountability journalism found in local newspapers offers the most value to communities, and the most risk if it disappears. 

Beyond the focus on local newspaper coverage, the report is also notable for what it largely ignores: co-authors Leonard Downie, Jr., former Washington Post executive editor, and Michael Schudson, Columbia University professor and MacArthur fellow, offer little significant discussion on advertising, subscriptions, or for-profit models. Paywalls and micropayments get only passing mentions. The report’s six closing recommendations are instead built around private donations, foundation grants, and the repositioning of academic and government systems. Seeing as most journalism is still funded by market-driven models, this is an interesting comment-by-omission.

C.W. Anderson, research assistant on the report and a contributor to this site, told me the report’s intent is to find solutions that can maintain the previous model and its accompanying accountability journalism.

“There is no market solution obvious right now that will provide the same level of subsidy to journalism that existed under the monopoly paper model,” Anderson said. “So on some level, all the back and forth about new business models is fighting over table scraps. And so that allowed us to quickly return to the question of what we should do given actually existing cases of market failure.”

I spent a couple hours parsing the report’s high points and jotting down observations (see below). As is always the case with this kind of thing, a cursory overview is no substitute for your own in-depth read.

Reconstruction No. 1: Make the nonprofit designation easier and clearer

The considerable discussion around the nonprofit route clearly signals traction for this model. Unfortunately, passionate discourse cannot overcome outdated qualifications and slow government adaptation. The report’s authors say news operations “substantially devoted to reporting on public affairs” should get the thumbs-up for nonprofit status. (There are different opinions on whether this requires new legislation.) In addition, confusion around the low-profit limited liability company (L3C) designation needs to be cleared up so funding organizations are comfortable making qualified donations.

Reconstruction No. 2: Support ongoing coverage over one-off projects

J-Lab recently estimated that since 2005, foundations have pledged $128 million in grants for journalism and information projects. That’s nothing to sneeze at, but the authors of the report argue that foundation funding should be repositioned toward continuous reporting rather than one-off projects. The day-to-day stuff ultimately has more public value than shiny limited-term initiatives. Of course, an open-ended effort requires a semblance of sustainability, and that’s a concept most applicable in the for-profit realm. It’ll be interesting to see if the semi-commercial mindset bubbling up at the Knight Foundation eventually dovetails with funds for ongoing reporting. 

Reconstruction No. 3: The CPB needs to step it up

We’ve recently noted the shifting relationship between for-profit national organizations and local affiliates. Some companies see an upside to centralizing control in the corporate offices and then using the efficiencies of digital delivery to serve targeted communities. Whether that works or not is to be determined, but the report notes that a similar centralized/localized model could be enacted on the nonprofit side by the Corporation for Public Broadcasting (CPB). 

The authors pull no punches when it comes to the CPB. They recommend a portion of the CPB’s budget be allocated toward local news coverage (actual reporting, not just debate and analysis). Dipping a toe into the Draconian realm, they also suggest duplicative stations and signals should be consolidated and station management incapable of “reorienting their missions” needs to be pushed out. Heck, they even want to change the name to The Corporation for Public Media.

Reconstruction No. 4: Universities already run teaching hospitals, why not news orgs?

Partnerships between news outlets and universities aren’t new, and they appear to be going through a metamorphosis of sorts, with investors, public/private organizations, and schools pooling resources for hybrid newsgathering. The report recommends bold and compelling steps beyond current efforts: the authors want to see full-fledged, year-round news operations run by faculty and students. Similar organizations already exist to some degree, but the picture painted by the report’s authors looks more like a teaching hospital than a college-based newsroom. 

Reconstruction No. 5: Use FCC fees to create a Fund for Local News

This point won’t go over well with companies under the Federal Communication Commission’s purview. The report says money from telephone surcharges, FCC license fees and spectrum auctions should be pooled into a Fund for Local News — sort of a National Endowment for the Arts for the journalism set. The authors acknowledge political pressures and the potential for controversy, but they note a history of organizations that have “weathered those storms.” If the intricacies of this type of fund can be worked out, it could blaze a path toward the type of ongoing coverage the authors call for in point No. 2.

Reconstruction No. 6: There’s no such thing as too much public information

Calls for openness, transparency and access to copious databases is what you’d expect to hear at a Gov 2.0 keynote. This report notes, however, that those same qualities can benefit news organizations. Under the banners of crowdsourcing, pro-am collaborations, and “adjunct journalism,” the report advocates for deeper connectivity between the audience and journalists. There’s nothing particularly new here — plenty of projects already utilize variations on these same themes — but a renewed call to arms is never a bad thing.

No matter how many times people like Clay Shirky or Mike Masnick try to pop the bubble of faith around micropayments as a cure for what ails the newspaper industry (or even the media industry as a whole), another believer emerges to argue that a secure and extensible micropayment system is a big part of the answer. The latest to make an impassioned plea is Jeff Reifman, the co-founder of NewsCloud, a “community-driven news aggregator” funded by the Knight Foundation.

In a recent blog post, Reifman outlines why he believes that micropayments can solve the newspaper industry’s problems. His post is a response to one by Steve Outing at Editor & Publisher, which carried the somewhat argumentative title “Your News Content Is Worth Zero To Digital Consumers,” and argued that charging people for news isn’t going to work unless that news is highly targeted to a specific niche. (Google CEO Eric Schmidt made a similar point recently about why The Wall Street Journal has been able to charge, and Paul Graham echoes that point as well.)

If you want to go back through some of the reams of text that have been written about micropayments for news, Clay’s essay from 2003 is a good place to start — especially since it lists the half-dozen or so attempts to create such a system that failed miserably. (Are you listening, Steve Brill?) There’s also a good roundup at the Freakonomics blog from awhile back that is well worth reading.

Reifman defends his approach by pointing to several successful models of payment for services, including iTunes, text messaging, TiVo, and broadband Internet. The first thing that leaped out at me is that three of those four things — iTunes, text messaging and broadband Internet — are a result of something approaching a monopoly (or an oligopoly or cartel, in the case of text messaging and broadband Internet). Apple can charge for music because it controls access to the songs from all the major record labels. Phone companies and cable companies can charge usurious rates for text messaging and Internet because they have little or no real competition. How does any of that apply to newspapers?

In his comments at the Freakonomics blog, Clay Shirky says the “fantasy that small payments will save publishers…is really a fantasy that monopoly pricing power can be re-established over users.” I think there’s a lot of truth to that. Newspapers have spent the past 100 years or so with a stranglehold on both the tools of mass publishing and the means of distribution, and much of what has happened to them over the past decade is a result of them losing both of those things. The unfortunate reality is that even the best micropayment system is not going to recreate that system of artificial scarcity and control — and some have argued that micropayments could even be bad for journalism as a whole, putting pressure on individual stories to be revenue generators.

Does that mean newspapers can’t make any money? Not at all. I think Mike Masnick has done a great job of pointing out how a media business can make money even if it gives content away for free — his company Techdirt does it, plenty of musicians and artists do it. And they do it by using the free content to promote the aspects of their business that have *real* scarcity rather than artificial scarcity. For music, that includes things like personal access, convenience, higher quality and so on. What does it mean for journalism? It could mean charging for different platforms, for early alerts, for special “members-only” access to certain premium or value-added content. But I’m pretty sure of one thing: It doesn’t mean charging people fractions of a cent to read a news story, no matter how sophisticated the process.

Photo by Kevin Eddy used under a Creative Commons license.

If you’ve been following our coverage of Journalism Online, the pay-for-news venture founded by Steve Brill, Gordon Crovitz, and Leo Hindery, you know how they plan to generate revenue for news sites. What hasn’t been clear is how the firm itself will make money.

But in a document submitted to the Newspaper Association of America, which was just made public, Journalism Online reveals its business model: They’re asking for a 20-percent cut of subscription revenue (after credit card fees).

I checked with Cindy Rosenthal, the firm’s spokeswoman, who confirmed the information and said they weren’t charging clients anything beyond the commission. Journalism Online says it has signed letters of intent with media companies representing 176 dailies but won’t disclose their names. Guardian News and Media and The Milwaukee Journal-Sentinel are the only known clients, and most major newspaper companies have said they aren’t on board.

[UPDATE: 10:36 a.m.: In a brief chat with Brill as I waited for the bus this morning, he said, “What we tell publishers is, we only do well if you do well.”]

Journalism Online had been the highest-profile of several firms known to be shopping paid-content solutions to news sites. But yesterday we revealed that Google is also making a play in that area, and much of the ensuing coverage suggested a new, if wildly imbalanced, rivalry between Google and Journalism Online. That will depend on how serious Google’s intentions are.

The basic pitch from Journalism Online involves news sites signing up 10 percent of their monthly visitors for some kind of subscription plan. (That figure has been floating between 5 and 15 percent.) But lots of content would remain free so news sites could continue to reap advertising revenue from non-paying visitors. Net profit, in Journalism Online’s models, emerges from subscription revenue, a slight increase in print circulation, and cost savings.

We’ve been through those models before, but the new document that Brill and his colleagues submitted to the NAA includes, for the first time, a model with all of their math in one place, including their commission and an abbreviated balance sheet. So for those following this really closely, here you go:

Below is an excerpt from the business models we have presented to five different-sized newspapers in five different markets based on assumption related to the options outlined above.

Print circulation of 1,000,000.
Total home delivery paper subscribers of 800,000.
Monthly online unique visitors of 20 million.
Annual online subscription price of $75.00 and month-to-month price of $7.50.
Micropayments per article of $0.25 with a total of 6 per subscriber per month.
Online advertising revenue of $175 million per year.
Print circulation revenue of $600 million per year.
Print subscriber retention and acquisition cost of $75 million per year.

Bottom Line Benefit:
$33.6 million in Year One; $86.0 million in Year Two

Assumptions:

• Assumes a significant amount of continued free access, but with selected content offered to the most engaged online users on a paid basis. This approach optimizes advertising inventory alongside high-margin subscription revenues.
• 10% of monthly uniques subscribe within two years.
• Subscriber conversion breakdown assumes 47.5% annual, 47.5% month-to-month and 5.0% micro payment.
• Total online subscribers of 2.2 million subscribers in year 2, counting people who buy annual or monthly subscriptions or a single article through micropayment.
• Assumes a 90% subscription renewal rate.
• Overall page views decrease by 12% at the end of year 2.
• A 15% decrease in non-subscriber page views is offset by paying subscribers having 25% more page views per user than non-paying users.
• A 30% higher CPM for pages viewed by subscribers produces overall online advertising decline of 9%.
• Cost of sales for advertising is 20%.
• Journalism Online commission of 20% of subscription revenues net of credit card fees of 3%.
• Adding a paid strategy for selected online access, then bundling online and print subscriptions (offering a “discount” for those who buy both) yields a 3% increase over two years in print subscription circulation revenue.

You can download the 12-page document that Journalism Online submitted to the NAA or view it below (click in the top-right corner for full screen).

The revelation comes in an eight-page response to the NAA’s request for paid-content proposals, which it extended to several major technology companies and startups. It’s surprising, given the newspaper industry’s tenuous relationship with Google, that the company was involved at all.

In the document, which you can download here, Google outlines its “vision of a premium content ecosystem” that includes subscriptions across multiple news sites, syndication on third-party sites, accessibility to search, and various payment options, including small fees for access to individual pieces of content (known as micropayments). The company says:

Google believes that an open web benefits all users and publishers. However, “open” need not mean free. We believe that content on the Internet can thrive supported by multiple business models — including content available only via subscription.

Google describes its new e-commerce plans as “in production” and “currently in the early planning stages.” The company says that Google Checkout is currently equipped to handle subscription payments for news sites but describes the process for merchants as “fairly rudimentary” and says the system “could be improved to be more relevant for news and media companies.” The description of Google’s micropayment system is more intriguing:

While currently in the early planning stages, micropayments will be a payment vehicle available to both Google and non-Google properties within the next year. The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time. Google will mitigate the risk of non-payment by assigning credit limits based on past purchasing behavior and having credit card instruments on file for those with higher credit limits and using our proprietary risk engines to track abuse or fraud. Merchant integration will be extremely simple. [emphasis theirs]

Transaction costs, including credit card fees, are a major hindrance to micropayment plans under consideration by the news industry, which is why Google’s proposal could be appealing. Of course, newspaper companies that have frequently accused Google of leaching off their revenue might be loathe to participate in a joint venture.

In a brief paragraph entitled “business model,” Google suggests that it would share revenue in a similar fashion to the iTunes App Store and its own Android Market, both of which take a 30% cut of revenue. But while these plans are emerging from Google’s communication with the NAA, the micropayment system is likely to have bigger implications outside of the news industry. In the same document, Google douses some cold water on micropayments for news: “We do not believe it will be the norm for accessing content.”

Google Checkout has longed been discussed as a potential micropayment platform and competitor to eBay’s far more successful PayPal. Google applied for a patent on a micropayment system in 2004; on page 7 of the application, Google mentions that “a seller of web-based electronic content, such as newspaper stories, typically has a purchasing system that is valid for only the website providing the content.” A crudely drawn diagram describes Google’s proposed alternative:

Google’s document for the NAA also discusses publishers syndicating their content on third-party sites and sharing ad revenue, which sounds like what the Fair Syndication Consortium is proposing. There are also a few paid-content scenarios that are worth checking out, including:

We envision the typical scenario to be where a user pays a monthly fee for access to a wide-ranging package of premium content. One example of a “package” might be full access to the WSJ [Wall Street Journal]; another “package” might include the top 10 business publications. Google believes that there is real power and benefit to publishers in providing these sorts of broad, multi-publication access passes.

I’m waiting on comment from Google. UPDATE, 5:21 p.m.: Here it is:

The Newspaper Association of America asked Google to submit some ideas for how they could use technology to generate more revenue from their digital content, and we shared some of those ideas in this proposal. It’s consistent with Google’s effort to help publishers reach bigger audiences, better engage their readers and make more money. We have always said that publishers have full control over their content. If they decide to charge for it, we’ll work with them to ensure that their content can be easily discovered if they want it to be. As for Checkout, we don’t have any specific new services to announce but we’re always looking for ways to make payments online more efficient and user-friendly.

There’s much more to explore in the NAA’s report, which was produced by a task force of newspaper executives charged to explore “platforms for monetizing digital content.” (The committee was formed after the NAA’s secretive meeting in Chicago last spring.) I’ll update with more as I get to it, but if you see anything good, feel free to drop it in the comments or contact me by email.

Here’s the document that Google submitted to the NAA:

But that sale was actually part of an experiment Jesse’s been running with WriteRoom’s price, and he’s now publishing the data he’s collected. And it raises some interesting perspectives on the ongoing debates around micropayments.

WriteRoom used to cost $4.99. And last Thursday, at that price, it sold nine copies.

Then Jesse decided to make WriteRoom free for three days. In that long weekend, his application was downloaded a whopping 16,347 times.

Then, starting Monday, he brought back a price — this time, only 99 cents. In the first two days at that price, he averaged 72 sales a day.

Now, selling iPhone apps isn’t precisely analogous to selling individual news stories, for a variety of reasons. And any number of external factors could have influenced Jesse’s numbers. But it’s also another bit of evidence of how enormously price-sensitive people are in a digital environment. As Chris Anderson will tell you, free is an entirely different animal from any price — even one as insignificant as 99 cents. If you can afford an iPhone, you can afford 99 cents for an app. But even for this relatively upmarket crowd, that tiny sum was a huge barrier. Journalists who think their audiences will happily start paying a nickel/quarter/dollar for every story they click on should take note.

(This is also why I always counter arguments for micropayments with a push for macropayments. There are in fact people willing to pay for news content. But they’re a smaller share of your audience than you might think, and they’re also willing to pay more than a nickel or a quarter. If you’re going to try a paid-content model, to me it makes a lot more sense to make sure you’re getting all the revenue you can out of those bigger fish than to waste energy chasing after the folks who will never pay anything.)

Then, of course, there’s the actual content of the book, which has been received by journalists and business-minded folks in decidedly polarizing ways. Malcolm Gladwell unleashed a scathing review of Free in last week’s New Yorker, scolding Anderson for adhering to the freeconomy as an “iron law” and writing, “The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws.” (Plenty of responses followed.)

But for Anderson, Free is indeed the ultimate destiny of our economy. “Sooner or later every company is going to have to figure out how to use Free or compete with Free, one way or another,” he writes in the beginning of the book. This assertion will probably look depressingly familiar to journalists who’ve watched their traditional business models fall apart in the wild west of the web, where “free” is the gold standard.

Mental transaction costs

Some continue to push for a system of micropayments to support news sites, but Anderson argues having to pay anything — even a penny — for online content radically drives down readership. “It’s as if our brains were wired to raise a flag every time we’re confronted with a price,” he writes. “This is the ‘is it worth it?’ flag. If you charge a price, any price, we are forced to ask ourselves if we really want to open our wallets. But if the price is zero, that flag never goes up and the decision just got easier.”

Anderson borrows a term from George Washington economist Nick Szabo, labeling this flag the “mental transaction cost.” Laziness has made us all want to avoid making any decision, no matter how inconsequential. Even if something is financially affordable, once we begin to question if it’s “worth it,” we’ve already spent cognitive energy considering the decision, and will most likely choose not to spend the money, even if it’s just a penny. Anderson says micropayments “are destined to fail, Szabo concluded, because although they minimize the economic costs of choices, they still have all the cognitive costs…many potential customers would be put off by the payment and decision process.” While TimesSelect wasn’t exactly a system for micropayments, perhaps this principle helps explain the failure of The New York Times’ experiment with premium content. News fiends or not, once we’re forced to create an account and enter our credit card numbers — even to be charged a reasonable, affordable amount — we shy away and seek out similar content elsewhere for free.

Anderson also touches on advertising in Free, segueing from his disdain for micropayments to a section titled “The End of Paid Content.” He gives six reasons (borrowed from entertainment lawyer Jonathan Handel) for the evolution to a free economy:

— Supply and demand: The Internet has made the available amount of content functionally infinite, while the demand for content has remained the same.

— Loss of physical form: It feels much less like stealing when what you’re stealing isn’t a tangible object.

— Ease of access: Downloading makes nabbing content more seamless than having to go to a store and buying it.

— The shift to ad-supported content: Now that we’re used to everything being free online, what else should be free in our real lives?

— The tech industry wants content to be free: Free content means you have to buy more products to host that content (think free music to put on your not-free iPod).

— Generation Free: Growing up post-Napster, younger generations find copyright irrelevant.

Newspapers’ most common solution to the giving-it-away-online problem has been making up for it with advertising. But Anderson addresses that by quoting Scott Karp, the founder of Publish2. “Advertising in traditional media, whether newspapers, magazines, or TV, is all about selling a scarce resource — space,” he says. “The problem is that on the web, there’s a nearly infinite amount of space. So when traditional media companies try to sell space online the same way they sell space offline, they find they only have a fraction of the pricing power.” While online advertising has expanded beyond selling raw CPM, newspapers will be hard pressed to support themselves through online ads alone.

The impact on journalism

So if micropayments are futile and ad-supported models are limited, what does Anderson see as the future of newspapers? Since Free has shrunk the gap between professional and amateur journalists, he believes that “as more people create content for nonmonetary reasons, the competition to those doing it for money grows…all this means is that publishing is no longer the sole privilege of the paid. It doesn’t mean you can’t get paid for publishing.” J-school students already buried in competition can be forgiven for finding Anderson’s stance a little bleak. He blames the loss of journalism jobs on news organizations’ inability to adapt to a technologically shifting landscape: “The professional journalists who are seeing their jobs evaporate are typically those whose employers failed to find a new role in a world of abundant information…the top tier (The New York Times, Wall Street Journal, etc.) will probably shrink a bit, and the tier below that may be decimated.” Such is the world of the freeconomy, where the future isn’t an economic leveler, but a place where a few leaders win and the broad middle loses out.

Anderson closes his chapter entitled “You Get What You Pay For” with an outlook on the future of journalism that some may find hard to swallow. “Journalism as a profession will share the stage with journalism as an avocation,” he writes. “Meanwhile, others may use their skills to teach and organize amateurs to do a better job covering their own communities, becoming more editor/coach than writer. If so, leveraging the Free — paying people to get other people to write for nonmonetary rewards — may not be the enemy of professional journalists. Instead, it may be their salvation.”

[Anderson has released the electronic copy of his book for — you guessed it — free. Read the whole thing below, or at Google Books here.]

Photo of Chris Anderson by James Duncan Davidson used under Creative Commons.