Wednesday, September 28, 2005

Joe's Commercial Law of Triviality

Last post i was lamenting the decision by the NZ Herald to start paying for 'premium' content (and yes, i'll always being inserting quotes since their concept of premium and mine seem to show significant differences). There seem to be a few workarounds in the system but my objective in this post is to see if i can come up with an alternative to ring-fencing content. My main objection is that the fees are ludicrously high and are non-specific in that i have to buy access to everything even though i never read say, the sports section. Joe's Law of Triviality states that people will pay if the payment is specific and the amount trivial, the business side of the equation is that you have to work harder and capture LOTS more readers. What do i mean by trivial? as a guess, lets say half the amount of a coin that 99% of NZers wouldn't stop to pick up if they saw it on the footpath (rumour has it, this is the criteria the treasury uses for phasing out old coins and i see no reason not to use a good idea when i hear one). I don't see many people darting around trying to pick up 5c pieces so lets propose 2.5c as our first Trivial E-Commerce currency. How much harder do you have to work to get a suitable return? Lets do a Back of the Envelope calculation to get a rough idea. I like Russell Brown's Public Address blog and i foresee more and more blogs taking over as the main entry point for getting a summary of the news. How many readers would PA need to secure in order to earn say, 2x the average yearly salary (I think 2x the average salary is enough to aim for in the first instance) ?.
  • Assume PA is published 2/3 times per week for 50 weeks per year giving about 150 blog entries per year.
  • This gives, at 2.5c per blog entry an income of $3.75 per annum per reader
  • If you are looking to earn about $80,000 per year, this would require about 21,333 unique readers.
The funny thing about BoTE calculations is they quickly put meat on the bones of a fuzzy idea. It's not at all unreasonable that a popular blog or regular commentary can draw 20,000 odd individual readers, willing to part with the price of a coffee per year, or that posting 100/150 times per year is an unreasonable output for a full-time job. I for one would certainly pay 2.5c every time to read a number of the columnists on the herald website as well as a few blogs. In addition, since the amount being paid is so trivial, i have no problems with risking a payment to assess a new blog over a half dozen entries.
If this is a viable business model for blogging/commentary, what stands in its way? As far as i can tell, it is the lack of suitable secure micro-payment methods on the web. There is just no way I am going to start sending my credit card details to random sites on the web hoping that i will only be charged NZD0.025. There is PayPal apparantly but i don't know much about that and i don't think it was designed for micro-payments (comments welcome). It's my prediction that when the web is able to routinely manage large numbers of trivial transactions you will see far more information services spring up and that, to the detriment of the traditional newspaper, will be a very, very cool thing.

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