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Ongo: a good start for paid social news but far from perfect

Geoffrey Graybeal’s Analysis of Ongo:

As one who has devoted a significant amount of time researching new business models and news platforms, I  was pleased to see the debut of Ongo.  According to this PaidContent.Org post, Ongo is a social news site that combines aggregation and paywalls.  Ongo has significant backing from some major newspaper companies, including the New York Times Co, Washington Post and Gannett.  This is the first effort I’m aware of that harnesses socialization, but also adds a payment component.

This is an excellent start, but in my opinion this model/product still misses the mark in many ways.  First, this is a destination site.  The product appears to be an aggregator of social news much like Flipboard.  Aggregation in many ways is an old notion because it is predicated on the idea that people are seeking the news, rather than news finding the reader as often occurs on the Social Web environment.

The second problem with Ongo is subscription.  Seeking to charge for online content is good.  A subscription model, however, is just a tired retread of a print business model.  Social news consumption comes from multiple sources.  The ability to pay for a single piece of content is needed.  Micropayments were in high demand just two years ago, but there seems to be a sudden hesistancy on newspaper publishers’ part to experiment with micropayments.  Newspapers have not given micropayments a fair chance in earnest despite the widespread success of micropayments for other types of media content, such as music files and mobile ringtones.

I firmly believe that micropayments can succeed for newspapers.  The Graybeal & Hayes’ “Modified News Micropayment Model” outlines four drivers- socialization, microearning, hyperlocal focus and a centralized banking system- that would allow micropayments to work for newspapers.

I wonder what incentive would-be users of Ongo have to subscribe.  In the Graybeal & Hayes model we suggest using foreign currencies or points rather than real dollars and cents because it helps to remove the anxiety involved in the consumer purchasing decision.  We also suggest that the ability to microearn is a vital factor.  None of that is in the Ongo model that I’m aware of.  I’m basing my evaluation on the press materials because I do not have an Ongo account yet.

In some ways, placing content on a new platform may actually hurt the major newspaper companies investing in it.  In a recent study I did with Amy Sindik* published in the current issue of the Journal of Media Business Studies we found that brand loyalty increases user likelihood to adopt micropayments for online newspapers.  Brands matter.  Brand names like The New York Times or Washington Post carry far more weight than Ongo. The Times fared quite nicely, in fact.  Survey participants indicated a greater willingness to pay for Times content online than any other newspaper.

Ongo has tremendous potential, especially for establishing a mindset for paid social news.  I, for one, will be watching closely its development throughout the year.

Sources:

*Sindik, A., & Graybeal, G. (2011).  Newspaper micropayments and Millennial Generation acceptance: A brand loyalty perspective.  Journal of Media Business Studies, 8(1), 10-20

*An article about the Graybeal & Hayes “Modified News Micropayment Model” is currently in press in the International Journal on Media Management.

 

Gaming, News, and Micropayments

Recently, the Wall Street Journal’s Tech Europe section published a piece entitled “Online Gamers Want… Higher Price Points?” (by Neil Mcintosh) on the topic of preferred payment structure for online gamers and implications for micropayments.  In the piece, social game maker Sebastien de Halleaux stated that social gamers are asking for higher price points and less transactions.

This is not surprising consudering that the gamers de Halleaux is likely referring to are loyal consumers of the games that they are being asked to make multiple tranactions for.  For that user behavior subscriptions or lump sums are more in-line with how they consume.
Consider, however, the casual player who may not play the game with as much involvement as these gamers.  Micropayments are more in-line with their consumption.  Multiple revenue structures are needed to accomodate the various patterns of consumption.  Otherwise, content providers are creating consumer surplus – leaving money on the table.

The same is true for news content.  As Pew Research Center studies have pointed out, we consume news from a variety of sources.  A consumer may read the Wall Street Journal religiously and, therefore, a subscription model makes sense. If that same consumer is referred to an article in the Atlanta Journal Constitution that is particularly relevant that day, it is more reasonable to ask that reader to pay per item for that one time transaction than to pay a subscription when he/she will likely not read the AJC enough to justify it.

The moral of the story is that content providers must present multiple payment options for multiple types of consumers.  Mr. de Halleaux is likely spot on for the consumer type he refers to, but that does not mean micropayments are not user-friendly.

– Jameson Hayes, Lede LLC

 

Lede-ing the Way

Lede is a media research and consulting firm that specializes “lede-ing” traditional media organizations into profitability online.  As scholars and former practitioners, we understand practical and theoretical reasons behind what makes consumers tick and firms viably profitable within the  growing Social Web.  We merge empirical industry and academic research with competitive market structures and tendencies to help build paths to online and mobile success for media organizations.

Latest News

  • Knight News Challenge (December 1, 2010): Lede is applying for a Knight News Challenge grant that would help test our proposed “Modified News Micropayment Model” in a real world setting.  The Knight News Challenge is a contest funded by the Knight Foundation, one of the nation’s largest funders of journalism research, and focuses on funding innovative projects involving news and social media.  Obviously, we feel the proposed newspaper-social media business model is a perfect fit for the Knight News Challenge.  Let;s hope the judges agree!
  • Princeton & The FCC  (November 23, 2010): Lede was asked to contribute to a project that could potentially dramatically alter the media landscape.  A group from Princeton working one a future of the news industry report to be presented to the FCC early next year interviewed Lede regarding the 4M, micropayments, and online and mobile news in general.  This report will make suggestions about necessary policy changes going forward.  Such changes are much needed and Lede was excited to be able to contribute.
  • More International Interest in the 4M (October 3, 2010): Lede has been contacted by a company in the Netherlands proposing a collaboration with Lede.

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