My monthly Publishing: Free to Fee column publish today over at ClickZ.com is a re-examination of the premature dismissal of the future viability of micro-transactions as a mechanism for paid online content. I specifically focuse on Clay Shirky‘s influential dismissal of it. I think that Shirky is brilliant theorist of the social effects of Internet technologies, but not so good when it comes to the economic effects. In this case, I think his dismissal of future viability of microtransaction is based upon some faulty logic and intellectual constructs.
Bear in mind, however, that the latent purpose of Shirky’s essay wasn’t necessarily to torpedo the concept of microtransactions, but to remark on the truly epochal changes that new-media communications technologies have wrought in information supply and demand. He’s quite right about that.
I intentionally omitted something from my ClickZ essay, something that wasn’t particularly pertinent except to newspaper publishers. In his essay, Shirky wrote:
- Worse, beneath a certain threshold, mental transaction costs actually rise, a phenomenon [that] is especially significant for information goods. It’s easy to think a newspaper is worth a dollar, but is each article worth half a penny? Is each word worth a thousandth of a penny? A newspaper, exposed to the logic of micropayments, becomes impossible to value.
No. Not really, it doesn’t become impossible to value. In that paragraph, Shirky was using the rhetorical equivalent of Zeno’s Paradox. Zeno’s paradox basically states that if I shoot an arrow at you, then the arrow must fly across half the distance between us, then fly across have of whatever distance remains, then fly across half of whatever distance thereafter still remaining, then half of whatever distance still remains after that, etcetera, etc. The paradox states that because the distances between us can itself be infinitely divided and the arrow must cross each of those infinite divisions, then the arrow’s flight will take an infinite time to hit you and thus never actually hit you. Or in Shirky’s usage, if a newspaper is worth a dollar, an article must be worth half a penny, each word half a penny, each letter a tenth of a penny, etc….until it becomes impossible to value. This makes for a great arc of rhetoric, but as anyone in history who has been shot by an arrow would have been able to tell you (if they weren’t then in shock), Zeno’s Paradox is a reducto ad absurdum, a logically constructed but absurd argument.
Shirky states that “a newspaper, exposed to the logic of micropayments, becomes impossible to value.” However, Shirky has no actual experience valuing the online price of newspapers. I’ve had ten years professional experience evaluating the online price of newspapers (and also have won archery awards). I can tell you that, just as an arrow expertly shot at you will hit you, a price can easily be set for the value of newspaper content online. (My only regret is that most publishers have such lousy aim when attempting to hit that price.)