by Paul, 01/15/2009, 8:18 AM

My favorite video from the 2008 presidential campaign did not come from a network or cable broadcast or a Web news site. It came from YouTube and was a musical ditty called "Hockey Mama for Obama" — a spoof on Sarah Palin sung to the tune of "Don’t Cry for Me, Argentina." Don’t speak for me, Sarah Palin, the chorus went. "My son plays hockey and I’m his mama/But I am voting Barack Obama."

YouTube displays the number of views of a video. When I first saw Mama for Obama, views were in the tens of thousands. The next time I clicked, they were in the high six figures. Within a few days the views had exceeded 1 million. The count slowed after the Nov. 4 election, but as of this writing it’s at almost 1.5 million.

The video was an amateur production — two people in their living room. But as it turned out, the piano accompanist and the singer were professional musicians. They were a cut above, in other words. The more I clicked (I probably watched the thing 30 times) and linked (to family, friends and email lists), the more it occurred to me how unfortunate it was that I couldn’t pay them for giving me and my circle so much enjoyment. As a content professional myself, I like to pay for the good stuff, partly in hope that pay-to-play karma will somehow infiltrate written material on the Web.

The first issue, of course, was the right sum. I may want to go beyond free, but at a buck a pop like iTunes, I’d run out of money pretty fast.

Then it hit me: A penny a click.

At first it sounds absurd. Who’s going to make money off pennies? Well, do the math. A million clicks is $10,000 — not a bad payday for one video taking a few hours’ work (in the case of Mama for Obama). Granted, not much content generates that much traffic, even on a newspaper or broadcast site. But even if you drop down to 100,000 clicks, you’re at a grand, and 10,000 clicks, a perfectly attainable number for a lot of YouTubers and bloggers (to say nothing of a Seattle Times article), is $100. It may not get you to Vegas, but would you turn it down?

Running the notion of micro-payments by friends and associates over the years has produced the universal eyeball-roll. The primary objection is: Yer dreamin’ if you think anyone will pay anything just to click. This was of course the argument against charging for music. It took a heroic effort by Steve Jobs and Apple to break the logjam and determine the "sweet spot" of a dollar a song. (Just recently pricing became more flexible , and it will continue to do so. But $1 a song was the perfect entry point.)

In its favor, a penny a click competes pretty well with free. If you blind-click on a link and it’s a turkey, well, you’re only out a centavo. You could do that 100 times a day and not really feel it. But it’s doubtful you would do it 100 times a day. With an actual price tag attached (even a tiny one), dog meat will not get forwarded to you. It will not get widely linked. It won’t make any money and will remain in obscurity as the market dictates. A penny a click would, in fact, help mitigate the info glut by strengthening referrals and discouraging spammers.

Granted, Hockey Mama for Obama was entertainment, not newspaper coverage. Would anyone pay to read actual journalism? Well, yeah. They do now in print, after all. In many cases the line between journalism and entertainment is pretty thin (witness many youth getting their news from Jon Stewart and Stephen Colbert), as maybe it ought to be. Second, the Web’s powerful referral system trumps any psychological barrier to a mere penny. Think of the links a Paul Krugman or Frank Rich column generate. Or any really good newspaper story. The run-of-the-mill stuff might go unlinked, but may not be worth paying for anyway.

(One argument that often pops up is that public-service journalism would go begging in a pay-to-play environment. I don’t think that’s true. Good public-service journalism, as Bill Moyers has shown, does just fine in the news cloud.)

In any case, a lot of stuff would remain free. No one is saying all content would have to charge. Free could play a loss-leader role as well: Mama for Obama could start off free, then begin charging once the locust storm hit.

A penny a click is not enough to pay the bills of a typical print newspaper operation. But a site like Huffington Post, done locally and aggregating as well as originating content, could be viable with a typical (small) Web staff and operation. A popular local blog can generate 10,000 views a day. That’s $3,000 a month — again, not high-roller money, but something to work with.

Moreover, a penny a click is just the ice-breaker. It’s hopefully a way of justifying an infrastructure to support Web commerce. Eventually some stuff could charge more and some less. But we have to get the ball rolling. Online advertising, as is becoming starkly apparent, is not going to carry the day.

When you look at what you pay for print, a penny a click is competitive if  not cheaper. My Times subscriptions (Seattle and New York ), added to my magazine subs, could get me through a couple hundred clicks a day no problem. That’s not even counting the absurd amount I pay for cable news (I don’t watch much else on TV), which I TiVo to avoid the commercials. As it is, I’m watching more video (Olbermann, Jon Stewart, Netflix "instant play" movies) online than on television.

Admittedly, where all this gets sticky (or stickier) is in the mechanics. How can micro-commerce be tracked? How can payment be built into the sprawling, disjointed and chaotic infrastructure of the Web? Who will collect and disburse? How many ways can a penny be sliced and still be rewarding financially?

The point of first departure has to be the banking industry. I admit to being puzzled by its reluctance to do anything to promote Web micro-commerce, given the billions of dollars at stake (I know of startups who have tried to persuade banks re micro-payments, without success). Used to taking a sliver of every credit card transaction, banks should understand the dynamic of critical mass on the Web.

To help get banks off the dime, the folks at Google should be promoting micro-commerce. By dint of their search monopoly, they know more about online content that any other company. They’ve made billions from Web advertising by charging tiny amounts to millions of customers. Why not do the same by distributing tiny amounts (after taking a minuscule cut)? If Google took even a hundredth of a percent from a micro-transaction, it could still pull in sizable revenue. Eric Schmidt could be the Steve Jobs of the digital word.

(I’m aware of Schmidt’s poor-mouthing. Maybe he’s not the guy, but someone over at the Googleplex could be. Besides, Schmidt is too smart not to see this opportunity, and I don’t believe his public disavowals reflect his own thinking, or what’s really going on at Google.)

Apple obviously knows this business through iTunes and the iPhone. I don’t see its leverage point (like Google has), but the iPhone or a notebook iTouch ; could be key. Cell service providers do nothing but micro-commerce (just check your bill). Amazon with its Kindle has huge incentives when you throw in its synergy with the print business. The links at the end of this piece contain some other creative thinking along these lines.

Perhaps no one has stepped forward because there’s been no crying need. Newspapers and other content providers just haven’t been hurting enough. But with a new Depression staring us in the face, with newspapers and other print media doomed to bankruptcy or extinction, and with an obvious demand for content monetization on the Web, it’s time for some visionary to step forward and take a chance. What, given the current meltdown, have they got to lose? And if they succeed, it will be like Pennies from Heaven.

Some relevant links:

Boston Phoenix: "Count several papers going online only in ’09."

TechCrunch: Apple, others moving on micropayments

New York Times: iTunes for News

Why Carr Doesn’t Get It

Eric Schmidt, Google : "The good news is we could purchase them. We have the cash. But I don’t think our purchasing a newspaper would solve the business problems."

Dan Froomkin: What Google Can Do

Saving The New York Times online: “I just hope there’s a business model when we get there.”

Half a cent?

Slate: How Newspapers Tried to Invent the Web

16 Responses to “A penny a click”

1. YLB spews:

Nice piece Paul. Do you cross-post anywhere? HuffPo maybe?

2. Troll spews:

I’m sure if you emailed them and asked where you could send money, they’d give you their P.O. box address.

But something tells me you’re not interested in actually paying them, that you just want write a post on payment methods to assuage your guilt.

3. Tame Geek spews:

Good luck with that. See if you can get the financial companies to lower their fees (and overhead) so they can bill and make a profit on fractions of a cent. Alternatively, create some kind of net-wide infrastructure to aggregate all those pennies until there are enough of them for said financial services to bill — without introducing a major privacy leak.

I’ve been watching the micropayments area for years. It’s a great idea to try to harness the scale of the net so that individuals can pay little and creators be paid well. But it requires a complete rewiring of the financial systems (to drop transaction costs at least an order of magnitude), the Internet, and of users’ expectations. In my opinion that’s as likely as somebody inventing a DRM scheme that adds value to the product and doesn’t piss people off by stopping them from doing what they want. (Let’s see how well Microsoft’s pay-as-you-go Office-in-the-Cloud goes.)

ps: “Troll”, your supernatural ability to read minds is second only to George Bush’s when he said he looked into Putin’s soul. And here you are, wasting it by hiding under a bridge.

4. Troll spews:

@3

I can’t read minds, but I am an expert at analyzing people. Like Darcy Burner and her economics degree, I took Psych 101, so I basically have a degree in it.

5. Michael spews:

Something like this might work:
Penny a click payments start when a user gets 50,000 clicks, are retroactive covering that original 50K (I’ve been on Flickr for about forever and have 16,000 views) and payment is made for every additional 50,000 clicks.

The idea being that once you hit some number of clicks 20,000, 50,000, whatever, you are now a professional content provider and need to be paid for your work.

6. Tame Geek spews:

@4

Well, I caught the Green River Killer, but I had to throw him back for eighteen years because he was too small. Guess I must be Dave Reichert.

Still, your ability to analyze people you don’t know from their Internet spoor seems quite spooky, like remote viewing. Why aren’t you working for our government? I’m sure they could use your help finding Saddam’s WMDs. Or Bush’s ass, which he can’t find even using both hands.

7. Poster Child spews:

One problem that needs to be thought through is the who pays. Somebody surfing from work does not want his or her employer getting the micro-bill (Yes, I know we shouldn’t be stealing time from our employers while we read the NY Times or Failblog, but those are the realities)

having said that, the P-I and all the other imperiled old business model media outlets might stay alive if they could get their pennies-per-click as well.

8. correctnotright spews:

@6: Pretty good stuff there. I would pay a penny a click for more of that Troll bashing.

And Troll – making up stuff about what other people are writing does not count as a Psychology course. But if you ever do really take psychology, start with abnormal psych. You may find some real revelations in that course about your own behaviors – especially the part about grandiose ideation (you will find it under schizophrenia).

So troll, how long have you thought that you run this blog and were somehow important?

9. Roger Rabbit spews:

I see Palin is demagoguing with her hate-the-media theme again.

Conservatives don’t believe you have a right to know how they run your government. They want to do things in secret. They want to lie to you and steal from you. And they hate the idea of someone blowing the whistle on their activities.

But in this country, the government belongs to the people, and holding public office is service and comes with obligations to the citizens. It’s a public trust.

And that’s why no conservative, anywhere, should ever be elected to anything.

10. Roger Rabbit spews:

@4 “I am an expert at analyzing people”

Sure, sure, and I’m a 40-foot-tall Easter Bunny that lays colored eggs. And yes, Darcy does have a degree in economics from Harvard. You, on the other hand, couldn’t graduate from a special school for idiots.

11. Blue John spews:

Micropayments have been fought with back and forth for years now.
I think the only way it’s going to catch on, is for a group to start using the best possible version available and be the ground breaker. They won’t probably ever make any money, but they will pave the way for everyone else.
It would be an interesting exercise in capitolism. of cost and demand.
Would Troll pay 5 cents a day to post on HA for 24 hours?
How about a penny for each time he posted something?
Would he change his postings, if we could vote to up his rate to 50 cents a post, if he posted something stupid?

12. Blue John spews:

Once we started charging it will completely change the dynamics.

Would a penny a click be too expensive?
Would a dime a day be the right price point?
How about a dime a post?
Would Troll and Roger Rabbit get a volume discount?

13. Michael spews:

For sites like Youtube and Flickr the payments should come from them and not from RR or I. They are using other peoples stuff to make a profit. They need to pay for it.

I post pictures on flickr so friends and acquaintances can see what I’ve been up to. I’m not driving much if any traffic to their site and I can’t see paying someone like me. However, there are some extremely talented photographers on Flickr who get north of 500 hits per photo. They ought to be getting paid for the service they’re providing to Flickr.

14. rhp6033 spews:

The “penny a click” problem is a pretty old idea. And Google solved the problem close to a decade ago by creating an advertising-based model whereby the advertisers would pay for clicks to their content (Google Adwords). Where they really exploded in terms of multiplying their radio was to open the doors to millions of people with blogs, websites, whatever to put Google content-oriented ads on their sites (Google AdSense). Now most web sites carry some version of them, so that the web site owner gets a few pennies each time somebody clicks on an AdSense link, paid for by the advertisor which pays a few more sense for each click. Hopefully for the advertiser, those clicks eventually result in a few sales which make a profit, and Google sits in the middle, like a bookie making money on both sides of the transaction.

In other words the technology is already there, payment systems are well in place to charge for the clicks.

Now, let’s apply this same analogy to newspapers. The newspaper in this analogy is Google. The advertisers provide the revenue. The subscribers provide a portion of the revenue, but not much of the total – it’s basically a way of keeping track of how many people are reading the rag, for the purpose of setting advertising rates. So who provides the content? Well in fact, we all do, and we don’t get paid for it. Corporations and government officials issue press releases and have press conferences where they receive no payment for the content they provide, they only hope someone views it. In a “news event”, the content is provided by the photographers, the witnesses, the emergency response vehicles, etc., although it is edited by someone who packages it all together fore the readers/viewers. So although the editors of that content groan and complain that they are the providers of “content”, in fact they are merely packagers of that content – they are the middle-men.

So in the example in the original post, the whole system works if we can simply find a way to get advertisers to piggy-back on the content, hoping to make money along the way. The pay-per-click system is already in place. Right now the primary beneficiary of the current system is You-Tube. People upload their video to their site, and they sell the advertising, benefiting form the content and selling advertising connected with that content. (Yes, they did create the platform which makes it possible – just as Guttenburg invented the printing press).

So, what we need is simply a better way to market the individual product. There’s lots of software out there whereby people can post their videos to their own web pages, thereby controlling the advertising themselves. They could do multiple videos, and then post one to You-Tube or MySpace for the purpose of advertising the principle site, and sending viewers to the base site for more content.

15. Michael spews:

So in the example in the original post, the whole system works if we can simply find a way to get advertisers to piggy-back on the content, hoping to make money along the way.

Anyway to do this sans advertising? What happens if the the economy tanks from people buying all sorts of crap they don’t need with money they don’t have?

16. rhp6033 spews:

Michael @ 15: Well, the technology is certainly there – I have a small website where I sell information in a book form for about $20.00 a shot, I make a few hundred bucks a month off that site. As long as you offer credit card processing or PayPal, you can transfer the money – although the transaction fees imposed by PayPal or the merchant credit card banks and electronic commerce portals make the tranfer of payments of under a couple of dollars problematic.

So the real question is: will anybody actually pay directly for the content?

The fact is, that free radio and TV (supported by advertising) has conditioned our society to get most of it’s information for free. And even the subscription price of a newspaper is fairly nominal, being heavily subsidized by advertisers. We find that people are willing to pay about $30.00 ~ $60.00 per month for entertainment content from a source such as cable TV, but that includes packages with lots of content which changes frequently, some of which is subsized by advertising, also. You also see former web portals such as AOL and Yahoo struggling to switch to a free-viewer and advertiser-supported vehicles.

So I don’t see the advertising model being replaced right away. If direct payments would work, YouTube would be making a bundle by charging visitors to it’s site a buck for each video they want to see. The fact that they aren’t doing that indicates that they perceive the real value is to capture the audience with free content, and then sell the “pageviews” to advertisers.