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“An Epochal Debate over the Value of Content”

26th May 09

Posted by Adam Glickman

Posted in data, economics

That’s how Rupert Murdoch recently summed up the current relationship between online publishers and aggregators during a call with his shareholders.

He ended with a shot across the bow: “The current days of the Internet will soon be over.”

It’s about to get interesting.

Back when we were floating high inside the web 1.0 bubble, it became indisputably accepted that online content was going to be free and advertising was going to pay for it. And until recently this worked since there was still enough media money in circulation to fuel experimentation and allow digital to continue as a loss leader with an eye toward the future.

But things have changed. Quickly.

Long tail economics are working swimmingly for the aggregates – the blog networks, ad networks, search engines, etc – prosper through triangulation while those that actually create the content that gives these engines their value die a little more each day. Watch in the coming months as the providers, who are now quite literally in a fight for survival, begin to circle the wagons and shoot back.

But within this climate there is also real promise. Necessity being the mother of invention, we may now (finally) begin to see the growth of micropayments in our near future.

Numerous companies have already tried and failed to introduce these systems, but please keep in mind that only a few years ago, it was predicted that consumers wouldn’t trust online security in large enough numbers to sustain retail on a mass level. Consumers are increasingly willing to pay for great online content, it is the high, one time price tag and the hassle of inputting credit card info that is the barrier keeping publishers from our money.

When the barriers are removed, we are generally more than willing to pay 25 cents for a text, 99 cents for a song, so why not 1 cent for an article?

With the introduction of internet ez-pass type payments, users will be able to pass through web pages fractions of a cent at a time. From video games to recipes, from pornography to journalism, this will allow the actual creators to be properly compensated for their work.

Individuals like former Time editor Walter Isaacson and start-ups like Kachingle are pushing just such sytems. But leading this charge will likely require new habit-changing products like the Kindle, which is already beginning to do for print what iPhone did for music. Or more immediately, the new iPhone itself which will change the whole game again this summer by allowing for third party micropayments within its upcoming software update.

In our new data-driven world, micropayments might begin to apply to how creative agencies are compensated as well. Creative and media will likely increasingly begin merging services, molding to a more performance-based system. This doesn’t need to adversely effect creativity though, since appealing to more sophisticated eyeballs might pay better than the blunderbuss approach.

Watch for Labs to be dabbling in exactly these kinds of methods in the months ahead. We welcome further conversation by potentially interested partners and clients here.

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