The Associated Press is reporting this morning that online payment service PayPal "plans to roll out a payment product by the end of the year" that will make micropayments - transactions involving small amounts of money - quicker and more seamless. The company has already dabbled in making micropayments possible with lower transaction fees, but a more seamless integration with other services could really make the micropayment model - which has gained little traction in many realms - potentially viable.

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There are a couple of problems with selling ultra-cheap goods online. First, on the consumer end, the time it takes to fill out an online form credit card details and billing information can be worth more than what you're buying - especially if it's something like a single article or a song. On the merchant end, the transaction fees paid to online payment systems can cut such a large chunk out of the sale that it makes it not worth their while. Services like PayPal have worked to solve these issues, offering quick checkouts and lowered fees for smaller transactions, but a bigger problem still exists - the consumer is often pulled out of what they're doing to complete the transaction.

PayPal vice president Scott Thompson told the Associated Press that this would be the main issue the service hopes to tackle with a new micropayment offering - a more seamless integration.

"The whole intent is to keep you in the experience, don't force you to do anything else ... and keep it economical for all parties," he said.

The micropayment space has been heating up lately, as virtual goods such as online media and in-game items continue to gain popularity and old media look for new ways to make money online. In June, we reported on NewsPass, Google's entry into micropayments for media websites. Another company, Flattr, has made a splash recently, offering a micropayment system that allows users to designate a starting amount and then divide that among any number of content creators - an interesting idea that may take hold in some circles, but certainly not in others. Even Facebook has been getting into the action with its Facebook Credits, which the company has been working to redefine lately.

The big deal here, of course, is that PayPal is a name that has become synonymous with online payments, and if it can succeed in making micropayments more viable, then we could see a lot change in how media outlets and other content creators offer their wares online. Rather than putting content in walled gardens behind paywalls, we may begin to see feature articles and other media offered on an a-la carte basis.

The key to PayPal's plan is to make it so that the consumer doesn't have to leave what they're doing in order to make purchases by "compiling consumers' transactions." That is, the service would allow users to purchase up to a certain amount, $10 for example, before settling up and sending them a bill. Many systems already offer services like this, but when you buy $10 of credits with that company, you're stuck spending it there. With PayPal and other similar services, the benefit would be that consumers could spend the money on any site that accepts PayPal.

Payment platforms are making a consistent effort to reduce the friction of allowing apps to accept micropayment transactions online. From lowing transaction fees to seamless in-app integrations, companies are striving to enable consumers to engage in one-click impulse buys a model Amazon has done well in. The payment giant Paypal, according to the Associated Press, is also on a path to simplify online digital goods purchasing and will be rolling out a new payment product by the end of year to help businesses collect micropayments on the web.

Credit cards can be poisonous to merchants for smaller purchases, eating away at profits because of their transactional costs. Scott Thompson, the online payment service's president, believes that an average consumer wants to be able to buy items one at a time in small increments. To make this work, Paypal will allow someone to buy, say, $10 worth of goods before billing them.

Consumer behavior has evolved since the 1990s when online micropayments first emerged and is now more attuned to idea of purchasing digital goods and virtual items in online games. Digital goods, comprised of music, videos, and software, made up $2 billion of the total $71 billion in Paypal's payment volume last year. Paypal's merchant model for websites charges a fee of 5 percent plus 5 cents for small transactions (those less than $10), hence charging 20 cents in transaction fees for a $3 microtransaction. Under Paypal's normal fee schedule, this same transaction would cost 39 cents. This is good news for virtual worlds and mmo games that have millions of users purchasing items as small as virtual swords for a few dollars.

Paypal last year rolled out their in-flash support that allows a seamless integration of micropayments in flash games for users so they don't have to leave the game area to get currency. Many consumers assess digital goods emotionally and enabling them to impulse buy is key to a healthy virtual economy. EA/Playfish and Zynga were some of the first companies to pioneer in-game purchases on Facebook, paving way for the rest of the industry to see what works and what doesn't. But even know the experience isn't that smooth and players have to leave the game mid-session to make the payment. Paypal's upcoming product should solidify their earlier launched initiative, preserving the act of purchase solely within the game without feeling like interruption.

Oh yeah, that was me. And a lot of others. Well, we were wrong. The mobile app store market (Apple, Android, etc) is brimming with a bonanza of micro-business opportunities for producers and consumers alike. I am consistently amazing by the range of offerings available today, the vast majority of which remain free of charge. But what is more impressive is the growing array of applications and games available for mere pennies. Sure, some are more than a buck but not that much more. I was just looking through the 40+ apps that I've got on my Droid right now (not really sure how many I've downloaded overall since I've deleted a lot) and I would guess that I paid for at least 25% of themmany after being upsold by first trying the free versions and then buying. Yes, I know there continues to be a debate about what counts as a micropayment, but the fact that so many more people are paying just a couple of bucks or less for content in these mobile app stores suggests that its only going to easier for people to pay even smaller sums for content in coming years.

What got me thinking about all this was slide #75 in Mary Meeker's latest slideshow about Internet trends. The Morgan Stanley web guru notes that users are more willing to pay for content on mobile devices than they are on desktop computers for a number of reasons, but the first of which she listed was: Easy-to-Use/Secure Payment Systems embedded systems like carrier billing and iTunes allow real-time payment. The important point here is that the combination of these slick, well-organized online app stores + secure, super-easy billing systems have combined to overcome the so-calledmental transaction cost problem, at least to some extent. We're not nearly as reluctant today to surf away when something says $0.99 on our screen. Increasingly, we're hitting the Buy button.

The really interesting question, of course, is to what extent we can expect this model to grow and become more widely utilized for other types of content. A lot of folks in the news business remain hopeful that a micropayment model can help them monetize their content in an age of business model uncertainty and highly disruptive change. I'm skeptical that micropayments are going to save the news, since funding hard news and broccoli journalism is really expensive, and micropayments alone will never cover the costs. But perhaps they don't have to. Micropayments could become just one part of an array of new business models that media operators could tap in an effort to reinvent themselves and thrive going forward. Subscriptions, advertising support, foundational / philanthropic funding, and more could also be part of the answer. We just don't know what will work going forward. But I've grown at least a tad bit more optimistic that micropayments can at least be considered part of the conversation again.

Film critic Roger Ebert may have lost his voice, but he found it again on the web. In addition to his usual film reviews, Ebert runs a very successful blog, and is an avid Twitter user. Now the critic is looking to monetize his blog which is apparently not profitable with its current advertising setup by starting The Ebert Club.

For an annual fee of $4.99 ($5.00 after April 1), Ebert will offer his fans a variety of content delivered to their email inbox including links to recent postings on his blog, and selected Twitter updates. There will also be a private discussion thread for members, which Ebert says will resemble his comment threads and feature a private URL. Members will also have access to The Web Report (Ebert's collection of unexpected and delightful web discoveries), other special pages, and will get advance notice of Ebertfest tickets going on sale.

Ebert discusses his exploration of web monetization over the years from porn, to penny micropayments, to paywalls in a recent blog post announcing the club. He and former fellow movie-critic Gene Siskel apparently dreamed of the monetization possibilities presented in Nicholas Negroponte's 1995 book, Being Digital. Negroponte argued that the critics could earn significant amounts by charging users two cents to read their reviews. That idealized vision of micropayments never really came to fruition, but we still see hints of it today with the massive success of inexpensive mobile applications on the iTunes App Store.

He brings up Newsday's paywall failure as a prime reason for not going behind a paywall completely, and offers the following reason for not running more movie-related ads:

I'm not part of the usual studio buy for purposes like that. For the better films, I should be. I am the most-read movie critic on the web. I don't think the studios give a shit about critics. Their online budgets gravitate toward sites with celeb photos, downloadable wallpaper, gossip,exclusive trailers, that stuff. My readers actually buy tickets and go to movies at a much higher rate than the national average; just read one of the comment threads here. But for the big tentpole movies, you know what? The marketing people aren't looking for readers. They're looking for buzz.

With the club, Ebert is implementing a solution a bit more realistic than Negroponte's penny micropayments. It's more akin to a Paypal tip jar with benefits. Personally, while I'll probably glance at the special offers made available to club members, the real reason I joined the club is due to my love for Ebert and his work. I want to support him in whatever way I can, and I'm sure there are others who've joined for similar reasons.

After he was diagnosed with thyroid cancer in 2002, Ebert underwent multiple surgeries that left him without a voice and a lower jaw. He used a computerized voice over the past few years, and recently unveiled a computer voice that duplicated his own developed by the text-to-speech company CereProc.

Mobile giving campaigns are already under way for relief efforts in Chile, which experienced a massive 8.8-magnitude earthquake Saturday morning. Americans can text the word CHILE to one of several short codes to donate $10 to the American Red Cross or Salvation Army, among other groups, and can donate any amount by texting the word CHILE and a dollar amount to the short code 27138. Whether or not the carriers will speed up the delivery window between the text and the actual donations as they did for Haiti is another question.

Donating via text has been around for more than two years but attracted national attention after users donated more than $41 million following January's devastating earthquake there. While that figure shattered previous text-giving records, at least some of the Haiti contributions were surely driven by the novelty factor. So it's unclear whether the tremendous success of the Haiti campaigns are indicative of how much we'll continue to use our phones to give. Readers, what do you think? Let us know in the poll.

Related content from GigaOM Pro (sub req'd):

Could Activist-Style Micropayments Be a Real-Time Ad Model?

Image courtesy Flickr user Globovision.

The raging controversy over paid content on the Internet just received a dose of reality from David Moore, the founder of 24/7 Real Media and chairman of the board of directors of IAB (Interactive Advertising Bureau).

In addressing the IAB Annual Leadership Meeting on February 21, Moore proposed an easy pay system that he said would need to be adopted by all premium publishers. The idea would be for publishers to collect 10 cents per session, or one cent per page, from consumers who wanted access to preferred content. A consumer would have to spend at least $10 before being charged by a publisher.

Moore believes the program will only work if publishers cooperate and agree to implement it broadly. Totally free content is dead, said Moore, who pointed out that 10 cents for a user session is equivalent to $100 CPM, an incredibly attractive advertising rate. Basically, Moore said, people will inevitably have to pay for premium content, since advertising alone will not be able to support it.

Moore is essentially lobbying for a micropayment strategy to be institutionalized across web publishers. While his solution makes sense, the micropayment argument isn't universally accepted by any means. In a recent blog, Freakonomics co-author Stephen Dubner asked four industry observers whether they thought micropayments would work.

Alan Mutter, a media/technology consultant who's on the adjunct faculty of the Graduate School of Journalism at the University of California, Berkeley, agreed that a micropayment system was possible, but it wouldn't work for one publisher if a competing publisher decided to provide the same, or nearly identical, content for free. Mutter seems to agree with Moore that widespread adoption is essential, he says it would require a critical mass of publishers to agree to collaborate more earnestly, more broadly, and more smoothly than any group of humans in history. Could it happen? Theoretically. But don't hold your breath.

Marshall W. Van Alstyne, an associate professor at Boston University and a research scholar at MIT, depicts the problem this way: Putting micropayments on news is like putting tollbooths on an open ocean. the interests of a free society are rarely served by building barriers between people and the news. Instead, Alstyne thinks other solutions are needed. He mentions three possibilities: Charge technology vendors a flat fee to put free content on cell phones, e-book readers, and laptops; offer two versions of information, one free and ad-supported, and one that's faster-loading and more graphics-rich for a modest subscription price; or, find a way to match people to content, and in so doing, offer advertisers the ability to micro-target.

William Baker, an executive-in-residence at Columbia University, thinks combining advertising, subscription, philanthropy, and micropayments into a single comprehensive solution could work.

Clay Shirky, an adjunct professor in New York University's graduate Interactive Telecommunications program, thinks micropayments are doomed in part because the competitive loss of hiding them behind a paywall reduces the users' ability to share them with friends, and it is this secondary distribution that creates the most important new opportunities online.

I credit David Moore with putting an easy pay system on the table, but it seems that the micropayments issue is about as complex and controversial as national health care reform and we all know where that stands right now.

eBay CEO John Donahoe told a Goldman Sachs technology conference today that the company's PayPal subsidiary wants to become the de facto payment engine for social media, the Wall Street Journal reports. We want to be the platform on which some of these social-media applications get built, he told the attendees, referring to Twitpay a service that allows users to send payments via Twitter and was recently acquired (after failing to gain much traction) as an example. PayPal has been trying to open itself up to developers in order to allow them to build payment more easily into their services and software, to that end launching a developers conference to talk about its open platform several months ago. And it has had some success attracting social networks, including Facebook, which said last week that it will use PayPal for transactions for virtual goods on the site.

Donahoe effectively pitched his service as the only game in town for large-scale social payments, saying:

The risk and fraud capabilities you need, the anti-money launderingthe ability to do it cross-border are very different things than just providing a virtual currency.

Facebook confirmed when it announced the PayPal deal that it was the complications of multiple currencies and international transactions that led it to choose the eBay unit as a partner, since 70 percent of its users live outside the U.S. It's worth noting, however, that PayPal has had its own difficulties with international payments, as a recent ban on transfers to India illustrates. Donahoe also told the conference that he sees a growing demand for payments involving digital goods, and that PayPal has been talking to companies including Zynga, the leading maker of Facebook-based social games.

I see that trend, particularly in virtual goods, continuing. PayPal is well positioned to be the foundation for many of these digital goods.

The Facebook arrangement makes PayPal the engine behind Facebook Credits, an in-network payment scheme that the social network is pushing game makers and others to use, which gives Facebook 30 percent of the proceeds from each transaction. According to one analyst, such payments could become a $100 million business.

PayPal still has a lot of work to do before it can become the engine behind every social network and social media service, however. As Kevin Kelleher pointed out recently, the service is barely even present on mobile devices, despite the fact that the iPhone and other smartphones have been a dominant market force in social networking for well over a year now. Instead, much of the recent buzz has been around Square, the hot new mobile payment gizmo created by Twitter co-founder Jack Dorsey. As entrepreneur Patricia Handschiegel noted in a blog post about Donahoe's pitch to Goldman Sachs, PayPal has to start doing some innovating of its own, instead of just hoping to hitch its wagon to everyone else's innovations.

Related content from GigaOM Pro (sub req'd):

Could Activist-Style Micropayments Be a Real-time Ad Model?

Post and thumbnail photos courtesy of Flickr user cindy47452

Peter Sunde, whom you may know as one of the guys who created The Pirate Bay, is launching a new micropayment sytsem called Flattr. Above, a video explaining how it works. "Many large streams will form a river."

By Cameron Chapman

We're approaching the end of 2009, and many people are wondering what the future will bring. While no one can predict for sure what the Internet holds in its future, there are indicators and trends that can point us in the right direction.

A ton of technologies are ripe for further development in the coming few years. Social media and related apps are definitely going to be at the forefront of the Web for a long time. But plenty of other technologies are on the verge of becoming mainstream, either because of more social acceptance or because of advancements in hardware and applications. Read on for 15 predictions about the future of the Web.

1. Micro-Payments For Quality Content

Submitted on Twitter by @mikaelgramont and @simplybastow.

Some companies are already making strides in the micro-payment arena. Many current systems accumulate a big number of micro-payments before paying out a single larger payment. But that may change in the future; you'll be able to spend micro-payments as soon as you get them, rather than having to wait for them to add up.

Micro-payments will likely be popular among online magazines and news services, as well as other providers of in-depth content. Micro-payments might also be adopted by artists and content creators to defer costs and make a profit.

The most prevalent current micro-payment systems are within MMORPGs (massively multi-player online role-playing games). These systems use credits that are usually a fraction of a dollar to buy and sell things in the game. There are numerous cases of people actually earning a living through these systems.

PayPal is already offering support for micro-payments at a rate of 5% plus $0.05 per transaction. Amazon is also experimenting with micro-payments through its Flexible Payments Service (FPS). Dedicated micro-payment systems are also starting to crop up.

Micro-payments of the future may be closely-related to mobile payment systems. Payment via cell phone opens up whole new area of economic opportunity, particularly in areas where cell phones are more prevalent than computers. Being able to make and receive very small payments, the equivalent of a dollar or less in many cases, via a mobile device paves the way for many in developing nations to participate in the Internet economy in a way that only a few years ago might not have been deemed possible.

Further Resources

iPhone, MySpace, Facebook Race to Micropayments in 2009
An article from TechCrunch about micro-payment options being worked on by some leaders in social media.

What Would Micropayments Do for Journalism? A Freakonomics Quorum
An article from the New York Times about the potential effects of micro-payments on journalism and news websites.

Can Micropayments Save Newspapers?
An article in the New York Times from The Opinionator about the potential of micro-payments to save newspapers.

The Case Against Micropayments
An article from O'Reilly Media on why micro-payments might not be the best idea.

2. Wider Monitors For More Horizontal-Scrolling Content

Submitted on Twitter by @wakeupstar.

Monitors keep getting bigger. Only a few years ago, the iMac came with a 15-inch monitor. Now the smallest one you can get is 21.5 inches (and the largest is 27). Most new PCs, even at the low-end, come with at least a 17-inch monitor, and in many cases 19 or 20 is standard.

Size aside, virtually every new monitor on the market is widescreen. This means that even average computer users have a lot more screen real estate available. It only makes sense that websites will adapt and make more use of horizontal scrolling in future than vertical, especially websites that have multiple small blocks of content, rather than long stretches of text.

Horizontally-scrolling websites are already becoming popular. Some use JavaScript or Flash to simulate a wide layout, while others use plain old HTML and CSS. In any case, a horizontal layout makes a lot more sense for certain kinds of sites, especially portfolios, media galleries and websites that rely more heavily on multimedia than text.

Further Resources

The Horizontal Way
A showcase of horizontal-scrolling website designs.

Fifteen Web Sites Using Horizontal Scrolling
A round-up of great horizontal designs from Sitepoint.

27 Inspirational Horizontal Scrolling Websites
Another great roundup of horizontal designs from Dzine Blog.

How to Create a Horizontally Scrolling Site
A brief tutorial from CSS-Tricks on creating a website with horizontal scrolling.

3. Magazines In A More Interactive Format (Wiki, Digital Video, Etc.)

Submitted on Twitter by @tomforeman.

There's some question as to whether the majority of print magazines will even be around in five years. Another magazine seems to close every week, often with little or no notice. And how can we be surprised? With mobile devices now fully capable of delivering great content while we're on the go, what niches do magazines serve? A magazine used to be a good cheap read that we could pick up to check out the latest trends in one field or another, or quick portable entertainment while we're on the go. But the mobile Web does all that and more.

Of course, that doesn't mean we won't have magazines in five years, just that the majority of them will be online, and they'll have a lot more than just text content. Magazines will be infinitely more interactive, incorporating wikis, video and audio content, and in many cases their own social networks. Some print magazines are already preparing for the change and have websites that could very easily stand on their own. And a whole new breed of online magazines is appearing in a variety of formats. Some hold on to the page-flipping print format (except digitally rendered), while others have broken free and are more blog-like. Whatever the format, they are providing faster, cheaper and more user-friendly content than their print counterparts. The trend is likely to continue as costs for everything but Web space go up.

Further Resources

Switch from Print to Web: Where to Start?
A guide to making the transition from print format to the Internet.

No Magazines Have to Die
An article that includes strategies for print magazines that are transitioning to digital.

Print and Digital The Future of Magazine Advertising
A great article that covers the future of magazines from an advertising standpoint.

4. More Collaborative And Real-Time Content

Submitted on Twitter by @wakeupstar.

The Web has long been used by people to collaborate on projects with colleagues or clients who are not geographically close enough for a face-to-face meeting. But recently social media has made a whole new level of collaboration possible. Writing projects are particularly popular and seem to do well across a variety of platforms. Twitter novels and stories have been co-written (Neil Gaiman was recently involved in a collaborative story project with BBC Audio Books and hundreds of Twitter users). Novels have been written entirely on Facebook, with input from readers on the work in progress (e.g. The Man Who Painted Agnieszka's Shoes by Dan Holloway). Even textbooks have been written by collaboration (see Wikibooks).

As broadband Internet becomes more widely available worldwide, collaborative projects will only get bigger and more frequent. Real-time updates and interaction make it possible to work on practically anything in a collaborative environment. Some projects will consist of small groups of people who already know each other, while other projects will bring together hundreds or even thousands of participants who were till then strangers. There's really no limit to how many people could participate.

Technology that allows collaboration has been around for years. File sharing has almost always been a part of the Web, though new tools make it easier and more efficient. Services such as Zoho and Google Docs allow writers to collaborate on a single document, tracking changes by each participant and allowing others to revert to earlier versions if necessary. Other services let users communicated in real time through video or audio chats in a collaborative workspace. Improvements to these technologies are likely to continue, and new technologies developed.

Collaborative Apps

The following are some collaborative apps that might indicate where online collaboration is headed.

Wridea is an idea management service that includes collaborative brainstorming tools.

Writeboard, from 37Signals, is a collaborative writing app.

Twiddla is a Web-based collaboration tool that lets users mark up pretty much anything online as well as work on a group whiteboard-like space.

Spicebird is a collaboration platform that includes instant messaging, a group calendar and email functionality.

Stixy is a collaboration space that lets you share photos, notes, documents, to-dos and more.

Edmodo is a collaboration tool for teachers and students.

5. More Semantic Content And Apps That Exploit Them

Theories and suggestions have been made for ages on how to make the Web more semantic: everything from creating artificial-intelligence apps that interpret data much like humans do, to more semantic tagging conventions that make it possible for current online apps and services to make sense of what code means to humans. So far, though, no one has even come up with an authoritative definition of what the semantic Web actually is. But even with the semantic waters as murky as they are, people are developing programs and services that work more intuitively and make it easier for average Internet users to find what they're looking for.

Microsoft's Bing search engine is one of the first truly mainstream apps that aims to help people find what they're looking for, even going so far as to help them make decisions. While there's still plenty of room for additional features and improvement of functionality, Bing has helped to bring semantic search options to the mainstream Internet user.

Semantic tagging and coding conventions are probably the most likely to gain serious traction in the next few years. Many Web designers are already using semantic labels in their code. This makes sense on several levels: it makes it easier for current and future Web apps to figure out what is being displayed on a page, and it makes it easier for designers and programmers to make changes to code without having to leave copious comments explaining what the different parts of the code do.

Further Resources

Semantic Code: What? Why? How?
An excellent article from Boagworld on the importance of semantic coding.

Semantic Web
Wikipedia's entry on the semantic Web.

The Semantic Web
An older article from Scientific American on the future of the semantic Web.

Semantic Web Road Map
The official road map from the W3C.

6. Augmented Reality In Mobile Web Applications

Given that most mobile devices now have built-in digital cameras (some with video capability), people would naturally now want functionality beyond simple photography. Augmented reality applications can have a range of potential benefits, from making it easier to find your way if you get lost to letting you identify the person sitting across from you at a party.

That last example has many security and privacy experts worried. Facial recognition software is improving all the time, and pretty soon using an augmented reality program on your mobile phone to find out who a person is might be possible. You'd just snap a picture of them, and the app would cross-reference it with social networking profiles and photos across the Web, eventually coming across a match. From there, you could see whatever information the person had chosen to make public about him or herself.

While many people still see augmented reality as the stuff of science fiction, the truth is that at least rudimentary apps are already available. Layar, a free augmented reality app, is available for both the iPhone and Android-based phones. It uses layers provided by a variety of content providers such as Flickr, Wikipedia and Twitter to display an overlay of information on your mobile screen. Other apps will likely follow.

Further Resources

Augmented Reality
Wikipedia's entry on augmented reality.

How Augmented Reality Will Work
An overview from HowStuffWorks.

Layar Brings Augmented Reality to the iPhone
Coverage from TechCrunch on Layar's move to the iPhone.

Augmented Reality: A New Way of Seeing
An older article from Scientific American about augmented reality.

7. Better Adoption Of Web Standards

With more and more users accessing the Web from mobile browsers and browsers other than Internet Explorer, Web standards are only going to become more important. Standards-compliant design has already become much more mainstream and been adopted by many (if not most) designers. Great strides are being made across most browser platforms in complying with the standards set by the W3C. Standards-based design will have to be adopted in coming years.

8. Better Web Security Against Phishing, Scams and Spam

Image source

Web security is a constant concern for website providers. From scammers posing as legitimate buyers, to con artists sending out emails posing as legitimate businesses to capture customer information, to spammers sending out unsolicited commercial email, Internet users are bombarded daily by people who want to use their personal information against them.

Individual websites, Web hosts, payment processors and others involved in online transactions are constantly making security improvements. With greater consumer awareness of how to identify phishing schemes and other scams, the majority of these issues will no longer be a concern in the next few years. Of course, that isn't to say that other tactics won't replace them.

Further Resources

The Web Standards Project
A grassroots group that promotes the adoption and development of Web standards.

Confronting the Future of Web Standards
An article covering both the history and future of Web standards.

W3C Standards
The official Web standards section of w3.org.

Web Standards
Wikipedia's Web standards entry.

Web Standards Group
The W3C's Web Standards Group.

9. Even More Social Apps

Social media isn't going anywhere. While some people believe social media has gone about as far as it can go, others believe it's still in its infancy. I think there's still plenty of room for new apps, new platforms and new ideas in the world of social media. One area ripe for improvement and wider adoption is virtual worlds. Today's kids have been using virtual worlds since they were toddlers (think Webkinz and Club Penguin), so they'll likely want to continue using them as teenagers and adults. Plus, with advances in virtual reality on the verge of major breakthroughs, virtual worlds could come to the forefront of social media.

Another area ripe for expansion and improvement is content aggregation. While some services out there will aggregate a user's activity across multiple social networks and websites, most still have a lot of room for improvement. Eventually, services not only will aggregate a user's activity across all of the websites they participate in, but will also present that information usefully to their followers.

Niche social networks will also continue to grow. Social networks exist for practically every niche, and this will not go away. Services such as Ning and platforms like Elgg make it easy for non-programmers to set up their own social networks quickly and easily. Many corporations, organizations and groups are setting up social networks for their customers and members. While some have been great successes, attracting thousands of users, others have quickly died and been replaced either by other niche networks or by groups on mainstream general-purpose websites.

Further Resources

Elgg
An open-source social networking engine.

BuddyPress
A set of plug-ins that turns WordPress MU into a social network.

Lovd By Less
An open-source social networking platform.

Ning
Offers free hosted social networks.

OpenSocial
Google's OpenSocial social network applications platform.

The Social Future for Web 2.0/Web 3.0
A series of predictions on social technologies.

10. More High-Quality Online TV Programs

Dr. Horrible's Sing-Along Blog can be credited with bringing quality online programming to the mainstream. While plenty of great Internet programs existed prior to that, Dr. Horrible quickly gained a cult following and made the transition to mainstream media. The fact that Joss Whedon, Neil Patrick Harris and Nathan Fillion were involved played no small part in the show's success, but it paved the way for lesser-known directors, actors, writers and producers to gain large online viewerships.

Since Dr. Horrible, a number of other online series and programs have gained wide viewership. Webisodes (which are usually mini-episodes of popular TV shows that are aired exclusively online) have also grown in popularity. While online fictional video is still in its infancy, several informative video blogs have been in production for a while, like TreeHugger TV and CNET TV. One of the more popular amateur fictional programs is Star Trek New Voyages, based on the original Star Trek series.

With video technology becoming increasingly cheaper and easier to use, and broadband Internet access becoming more widespread, high-quality Internet-only programs will become only more prevalent in the future.

Further Resources

Jeff's Guide to TV Shows Online Available on the Internet
This website gives an alphabetical listing of online programming.

Hulu
Offers regular and online-only programming. Hulu is where Dr. Horrible was first aired.

13 Places to Watch TV Online for Free
A list of websites that offer free TV shows.

How to Create a Webisode
A tutorial from eHow.

Webisodes The Future of Entertainment
A great overview of webisodes and how they got started.

11. Web Apps Play A Bigger Role In Daily Life

Submitted on Twitter by @dougoftheabaci.

Web applications already play a big role in the daily lives of many people. But as more apps become available online and traditional software moves to online-enhanced or online-only models (as some programs are already starting to do), more users will turn to Web applications almost exclusively.

One major factor driving this trend is broad mobile Web access. Being able to access important documents or perform tasks on business applications from anywhere is a huge advantage to many users. A lot of opportunities are opening up for mobile workers, who will no longer be tied to a single location, or even a single computer.

Of course, there are potential drawbacks to using Web apps exclusively. There have already been cases of Web apps or services crashing and losing customer data. Website downtime is another critical factor that can have a huge impact on productivity if offline backups aren't available. Until these hurdles are overcome, Web-based applications will continue to face resistance for critical functions.

Further Resources

Envisioning the Future of Web Apps
A video from CNET on the future of Web applications built on HTML 5 and micro-payments.

The Future of Web Apps: 7 Things Companies Must Do to Succeed
A post from Mashable on the steps that companies need to take to create useful Web applications.

Future Of Web Apps
The official page of the Future Of Web Apps (FOWA) conference from Carsonified.

12. Search Engine Optimization Will Be Less Important

Submitted on Twitter by @seokai.

Search engine optimization may become less important in the future as Internet users rely more on recommendations and social media to find information. Already, people are asking questions on Twitter and Facebook instead of Google. This means that high-quality content and usability will become ever more important, because users are more likely to recommend a website if they have found it easy to use and useful. Also, search engines themselves will be smarter, meaning they'll be able to better discern a Web page's usefulness to a particular user.

13. Your OS Will Be Online

Submitted on Twitter by @dahquium.

While your computer will still store some files, the future of the operating system will increasingly rely on Web-based files. In other words, without an Internet connection, your computer's functionality will be severely limited.

Google's Chrome OS seems to be the first serious contender in this arena. Jolicloud is another Web-based OS, developed specifically for netbooks. Both operating systems seem to be aiming specifically at netbooks, where their benefits would be most obvious. For regular laptops and desktop computers, expect the Web-based OS to take a bit longer, mainly because users tend to run more robust apps on them, like Photoshop and Dreamweaver, which will take a bit longer to make fully Web-based.

Further Resources

Web operating system
Wikipedia's page covering Web-based operating systems.

7 Interesting Web Operating System Applications
An overview of seven Web OS options.

eyeos
A cloud computing operating system.

Cloudo
Another Web-based operating system.

14. Customized User Interfaces

Submitted on Twitter by @verseijden.

As Web apps become more integrated in our daily lives, customized user interfaces will surely follow. Being able to tailor the user experience to one's preferences is a huge plus for many Internet users. And some websites already let you make customizations to the information you see, how you see it and even how you interact with it.

Plug-ins are already being used by programmers to customize the interface of many websites they use regularly. Greasemonkey for Firefox (and some other browsers) is one such plug-in that lets you customize the functionality and appearance of many Web apps and sites.

15. The Web Will Be The Center Of Information And Content Distribution

Submitted on Twitter by @cmachanic.

This, to a large extent, is already coming true. The Web has almost always been a major distribution point for information. But this will only grow in future. Publishers, media producers and other content creators are already turning to the Web to get their products out to a bigger audience. Within the next few years, the Web may fully replace more established methods of content delivery.

Newspapers and magazines will likely be the first media replaced by the Web. Not far behind will be TV and movies. The movie theater probably won't be entirely replaced by the Web for a very long time, but more people will certainly be renting and buying movies online rather than on DVDs and other physical media.

Books are a different story; they have sentimental value. From a practical standpoint, e-paper (like that used in the Kindle and other e-readers) is not really much different than real paper. But from a psychological standpoint, the difference is too much for many book-lovers to overcome. Of course, that won't prevent the Internet from playing an ever-larger role in book distribution. The e-book market will continue to grow for the next few years, as younger readers opt for them over paper books. Paper versions of favorite titles might be purchased as collector's editions, with e-books purchased for daily reading material.

This migration to the Internet will profoundly affect how media is produced and consumed. Media will become more interactive and collaborative, and because of the lower barrier to entry, new players will participate in virtually every method of content production and distribution. The shake-up will affect much more than just the way information is disseminated.

Further Resources

Who Killed the Newspaper?
A slightly older article from The Economist on the decline of the newspaper industry.

Do Newspapers Have a Future?
Another older article on the decline of the newspaper industry, this one from Time magazine.

Are Magazines Doomed, Too?
A post from BuzzMachine about the future of magazine publishing.

The Future of Magazines, Possibly
Gawker's look at the future of the magazine industry.

The Future of Television
An article from Forbes on the future of TV.

Is the Future of TV on the Web?
An article from CNN about the future of television.

How Netflix is Changing the Future of Movies
A great post about how Netflix and similar Internet-based on-demand movie services are changing the way movies are being distributed.

Movies Online: The Future is (Almost) Here
A Salon.com article about the future of the movie industry in relation to online distribution.

Google & the Future of Books
An article about Google's foray into book publishing, from The New York Review of Books.

Crystal Kindles: What Does 2010 Hold in Store for the Literary World?
A more near-sighted look at what the future holds for the publishing world.

(al)

Back in 2001, I posted an amateurish essay on micropayments, written from my perspective as a willing-to-pay consumer that hoped to continue to enjoy quality content while the online advertising market collapsed.

Embarrassingly it got picked up by Slashdot and was put up as the awkward counterpoint to an earlier article by Clay Shirkey, in which the author competently, with research and everything, argued against the concept.

Arguments were had and forgotten, and we all moved on. Lots of great content disappeared from the web, advertisers got more and more desperate, often malicious, and a long and horrible content drought ensued.

Eventually Google came onto the scene, bringing advertising to the little guy, and the content market was reborn on the back of Adsense.

Clay was held up as the victor, or more correctly was considered the only contender, and has been used for citations countless times since, unquestionably proving the non-viability of any small-transaction system. I came across just such an article moments ago, as I do several times a month.

Was Clay right? Are people really psychologically unable to handle small payments? Is the idea of small-cost subscription packages for websites an unworkable model, or do people just say that because they like imagining that they're having a free lunch?

Lots of people seem to think so.

Then again, lots of people thought the Earth was flat, terrible things would happen when we passed the speed of sound, it would be impossible to full-text index the internet or to search it economically, and so on.

Take a moment to consider that there have been 2 billion iPhone apps sold, with a current average price hovering around a dollar. There are predictions that the average price will rise in the coming years, to a magnificent $2.37 by 2013.

This is for generally small, disposable apps that often do little, but because the cost is small and the transaction surprisingly well lubricated by the iTunes process, a lot of people just click "buy" and enjoy the experience. Look at Atwood himself using him as an example given that he comes into play in the article I referenced earlier who said:

My total bill for 3 screens worth of great iPhone software applications? About fifty bucks. I've paid more than that for Xbox 360 games I ended up playing for a total of maybe three hours! About half of the apps were free, and the rest were a few bucks. I think the most I paid was $9.99, and that was for an entire library. What's revolutionary here isn't just the development ecosystem, but the economics that support it, too. At these crazy low prices, why not fill your phone with cool and useful apps? You might wonder if developers can really make a living selling apps that only cost 99 cents. Sure you can, if you sell hundreds of thousands of copies:

That's impossible! Clay Shirkey says so! Or at least that's what people often interpret him as saying.

iTunes doesn't just service the iPhone app market. Aside from its start selling music (usually sold by the track), countless people are avoiding advertisers and buying network television content via the services. Marginally small amounts, but low transaction costs, technology, and the ease of purchase makes it a viable market.

iTunes doesn't own this nickle-and-dime market, though.

I enjoy the occasional bout of gaming on the xbox 360, and it takes every opportunity it can to try to get me to partake of tiny little purchases, some as low as $0.40. Want a game-specific theme? Want some bling for your avatar? Want that car before you've "earned" it? Want this amateur community game? Come on, it's just a couple of points from some nebulous points pool that you can spend simply by pressing A a couple of times, and when it empties you just add a bunch more.

Of course, all of this naturally leads to the semantics of what a "micropayment" is, and inevitably people will argue that a micropayment must be paying sub-pennies by the page, or the KB, or the image, or whatever. That isn't the spirit of it at all, however, and instead the origins of micropayments were easy to accommodate payments of amounts that were traditionally uneconomical to gather. In my mind iTunes absolutely supports micropayments the theory, because prior to that service it simply wasn't possible to sell applications for $1 or less. There was a fairly lofty minimum threshold below which it wasn't worth your time.

That is no longer the case within certain spaces.

Which again brings us to the possibility of micropayments for websites that hold actual value: People need to quit pretending that micropayments are some disproven, unworkable theory. There are a lot of us who simply abhor advertisement or economic coersion in all its forms (as you saw in the prior entry, the moment someone adds commission links to what is purportedly a subjective review, my opinion of their credibility drops precipitously, and I'm suddenly wondering if they actually liked the product, or if they just fumbled around for something and pushed the first thing they found, using it to effectively tax the readership indirectly and terribly inefficiently), and who aren't cheap bastards. If you have a site of value, and if there were a trustworthy, credible and lubricated system like iTunes for Websites, the idea could have legs.

On most levels, news and the internet are a match made in heaven. Instant publishing, access to a global audience, hyperlinks, multimedia, etc. Nonetheless, many publishers are struggling to create a profitable business based on advertising alone, and are considering moving at least part of their content from free to fee.

Aiming to make it simpler for publishers to charge for their content, newly-launched bitcents offers an easy to integrate micropayment system. Instead of each publisher having its own subscription and payment method, readers will be able pay once to access paid contentarchived articles, in-depth stories and other types of (premium) materialfrom all publishers working with bitcents. The company adds an interesting twist: it's inviting developers to create subscriber networks. Each network will recruit its own readers, who will have access to content from all of bitcents' publishers. The idea is that subscriber networks will create their own tools and/or methods of content curation to differentiate themselves from other networks and to attract their own audiences. In return, they'll receive a cut of the revenues created by sending readers to publishers' paid content. (A sample subscriber network can be found here: tppnce.)

Of course, for bitcents to work, it will need to attract enough publishers who produce content that readers are willing to pay for. Meanwhile, other ventureslike the soon-to-be-launched Journalism Onlineare also working to create a new economic model for the news industry. Keep a close eye on this spacechange is in the air, and business opportunities won't be far behind.

Website: www.bitcents.com
Contact: info@bitcents.com

Spotted by: Anne Hansen

I am a lover of roundtable discussions and debates, and have turned a long-running series of "virtual email roundtables" into the 5Across video roundtable here on MediaShift. Now I want to start a new series called "New Mediation" in which I take two people on opposing sides of a topic, and try to bring them to some kind of agreement or middle ground. If you have ideas for other folks and topics that need New Mediation, let me know.

Newspapers need to start charging for online content to survive. If newspapers charge for content, it will hasten their extinction. These are the opposing views in the very heated debate going on among newspaper publishers, editors, journalists and new media mavens. While pay walls for newspaper content have had mixed success -- with the Wall Street Journal Online being the major shining example -- the idea of micropayments for news stories is once again gaining supporters.

One such supporter is David Carr, the Media Equation columnist for the business section of the New York Times. He wrote a column last January titled, Let's Invent an iTunes for News, blogs as part of the team at Media Decoder and tweets as @Carr2n on Twitter. According to Carr: "The opinions he expresses are his own and he has no specific insights into the New York Times business strategy, including, but not limited to, whether consumers should pay for content."

On the other side is Mike Masnick, who runs the tech insight community Techdirt, and who has savaged the idea of micropayments for newspapers. Masnick launched Techdirt in 1997 and is CEO of Floor64. He has worked in business development and marketing at Release Software, an e-commerce startup, and in marketing at Intel.

The following is an edited email exchange that took place over the past few days.

Micropayments or Paid Apps?

Mediator: David, you wrote about micropayments as a possible option for newspapers online. How do you think a system like that would work, and are there parallels in other systems that have worked?

David Carr: Micropayments sound so ancient and debunked. Can we look upon them as payments for news applications instead? Facile, I know, but I think part of what the publishing industry confronts is a problem not only of precedent -- news not only wanted to be free, it has been -- but of nomenclature. If we look at payments for content as a way of accessing applications that animate the devices we stare at all day, they make more sense.

A while ago, I talked about an iTunes for news and I got clobbered because I missed the point that "21 Guns" by Green Day will have much more enduring value than say, the media column I wrote for Monday. But that doesn't mean my column is worth nothing. If it were bundled with an array of other content from the same vertical, along with alerts for same, it might begin to have some nominal value. And if it were attached to archives, relevant videos and aggregation of other similarly themed content, would it have monetary value? OK, maybe my column is a bad example.

I think that innovation in presentation and delivery of news customized to specific devices with features that serve not only to inform the user, but convenience them as well have value. Not all news content is worth money -- much of it is commoditized and should live outside pay walls and be free for the scraping, or to serve as context for all kinds of cheap network ads. But as we move into verticals, there are precedents, including the Wall Street Journal. I could lever my way to almost any story on that site through specific search approaches, but I choose to pay because I want archival access, alerts, and the ability to move freely in serendipitous ways across the entire site.

I pay for Consumer Reports, I have contemplated paying for access to the database of recipes at Cook's Illustrated. I'm not much of a sports guy, but I know people who pay for sports information, either to make them killers in their fantasy league or because they can't get enough about their offline heroes. Are there other publications or kinds of content I would pay for in their digital versions? Dunno, most of them haven't tested my level of interest. Most of the web is and should remain free, but professionally assembled content curated by editors who share either my sensibility or interests might pull some, not a lot, of money out of me.

And while I don't want to make a need-based argument, the ad-only model will clearly leave newsgathering in a very diminished state, regardless of economic recovery. If nobody is paid to make phone calls and report, the data stream will attenuate to the point where consumers might be willing to pay for something besides thin, generic gruel.

And lastly, if charging for content is such a non-starter, why was Google one of the organizations that submitted proposals to the Newspaper Association of America to enable micropayments? Yeah, it was off-the-shelf technology so far, but those guys aren't dumb and they must see that the consumer will eventually pay for some specific kinds of content.

Mike Masnick: First off, thanks to Mark for putting this together, and to David for taking part. I'm a big fan of your work, which I do find valuable, though it doesn't mean I'd pay for it.

And that leads me to my first point of response. You talk about value and price as if they are one and the same, but they are not. In economic terms, price is the intersection of supply and demand in a competitive market. Value, from the buyer's perspective, is simply a piece of the demand curve. But in a market, the buyer has choices, and different things have value to the buyer -- but it doesn't mean he or she will pay for all of it. Instead, they make decisions, and if there are reasonable alternatives -- even if not quite as "valuable" -- they'll drift towards those alternatives.

It doesn't mean that your writing isn't valuable. It just might mean no one will pay for it. That's how economics works.

So, what will people pay for? They pay for true scarce value. The problem is, as much as you or I wish to believe that our own writing is so perceptive and brilliant that it's scarce, it's not. We need to learn to live with that. You talk about what you do pay for, and what struck me was that it was never really the content that you were paying for. It was always some other sort of value: with the WSJ it was the real-time alerts (you're paying for timeliness and convenience), with Consumer Reports you don't say why exactly, but as a fan of CR's work, I would guess it's the fact that it saves you time and money (two scarcities).

Most news content doesn't provide anything scarce like that.

And that brings me to my big problem with micropayments. They're based on this false belief that people will be willing to pony up a small amount for content when there's so much competition out there that will be free. You suggest it's paying for the "news application," but that's not true. An application worth paying for is something that adds real value. My complaint all along about claims about charging for news is they all seem to think that if they put up a pay wall people will pay. None of them -- that I've seen anyway -- talk about adding additional scarce value to make it worthwhile. The micropayment idea is a punt. It's putting up a tollbooth on a 50-lane highway where the other 49 lanes have no tollbooth, and there's no specific benefit for paying the toll.

Your argument that an ad-based model won't work is also a bit of a red herring, as it assumes that there really are only two options out there: pay wall or ads. I'd argue that's not true -- that there are many other models, including hybrids. Also, it ignores the flipside of the equation, which is that some of the new models have very different cost structures.

Finally, you point to Google's pitch to newspapers. I wouldn't read too much into it. My (admittedly cynical) take on it is that (a) with all the newspaper guys complaining so much about Google, the company felt it needed to offer something to show that it was "helping"; (b) that [this] "help" is really designed to just get newspapers to try a micropayment solution as soon as possible to learn how it's a monumentally bad idea. It's helping newspapers out of their misery, rather than helping them adapt.

And Google has gone down this road before. I don't know why everyone forgets, but Google bet BIG on people paying for video content when it launched Google Video. It was mainly a pay site. And it failed miserably and YouTube took over the online video world, eventually leading to Google shelling out almost $2 billion. Google makes a lot of mistakes when it comes to paid content.

David Carr: Why so serious, Batman? We're only talking about the future of content and (gulp) how I buy groceries for my posse. And I am saddened to learn that my work can have value, but it may not be the kind that people might pay for.

Mike, I think you're right in that easy often trumps something with more perceived value. As Clay Shirky has told me enough times so I am finally beginning to understand, good enough is frequently good enough. MP3s won not based on their audio quality, but for other properties, like being, um, mostly free and eminently shareable. But there is a business under file sharing in CDs and increasingly, vinyl. It's a niche business, but I think that reading high quality news is increasingly a niche business, albeit mass niche.

I say that because people already pay the New York Times hundreds of dollars for daily access to the print product and the Times Reader. It is a matter of public record that more than 800,000 people have subscribed to the newspaper for more than two years. Isn't there some kind of digital business on the margins of that based on a much lower cost delivery structure? Quality papers like the Times could leave generic news out front free for the scraping, and [build] a leaky wall like the Wall Street Journal to allow the rest of the content to remain visible and, after a fashion, findable. I don't know what the price point is, but I bet a bunch of people would pay some kind of access convenience charge for the whole magilla. And even if people will only pay for "scarcities," as you call them, those can be created; and by the way, the market seems to be creating some informational scarcities on its own.

Putting up a big dumb wall is doomed, so I'm all for the kind of hybrids you flick at in your post and think those models are just beginning to be worked out. Providers of professionally produced content can have a hierarchy of readers and an array of services, from free to highly customized and pricey.

And your point about Google is well taken. They've succeeded, wildly, in one business -- paid search -- and have wandered around like the rest of us in other content models. But with the introduction of Fast Flip on Monday, I think you are beginning to see the outlines of a non-media company really working on the issue of presenting content and making it pay.

The Prospect of Collusion

Mediator: With so many newspaper publishers looking at pay walls, micropayments, etc., the usual argument is that if they all decided to start
charging at once, there would be less cheap alternatives. The 50-lane toll-booth you mentioned might have 45 people taking tolls and just 5 not taking tolls. At that point, people will be enticed to start paying something. What say you, Mike, to that argument that a possible antitrust exemption would allow the publishers to work together even closer?

Mike Masnick: The collusion argument is a fun one, because it sort of highlights the actual problem. The second a bunch of newspapers collude (legally or not) to put up a pay wall/micropyament system at the same time, the happier every competitor in the world just became. Collusion like that only works if those colluding control the market. In this case, as much as they want to believe they do, they don't. That 50-lane highway turns into a 500 or 5,000 or 500,000 lane highway overnight, and those 49 tollbooths get ignored. The thing is, everyone has their own steamroller/paver machine right now. And, no, I'm not just talking about "participatory journalism" or "citizen journalism," though that may be a part of it and may represent quite a few lanes.

I'm talking about other professional news organizations with professional journalists who can see ahead a few steps and recognize that many of their biggest competitors just took themselves out of the market. If I'm running a major newspaper the night that everyone starts to charge, I'm dancing for joy because my competitors just stepped out of a huge market and left it to me. And don't think there aren't news execs who get this.

So, sure, go ahead and charge. Collude away. It just hastens their irrelevance.

And, David, that kind of suggests the problem with your last statement: sure some people will pay. But, how many and for how long? You say it's a niche business, and it's very, very niche -- and unlikely to grow that much. [Steven] Brill [of Journalism Online] talks about getting 10 percent to 15 percent of the current readership to pay. Newspapers should be thrilled if they get half that. I'd be amazed if many of them got 1/10 of that.

In the meantime, it may be true that other business models have been slower to develop, but newspapers have always been about building a community and selling that community to those who want to reach them (usually advertisers). Putting up pay schemes turns away that community and makes it that much harder for newspapers to build out their own core business ... They've never figured out how to be sustainable as a consumer-pays entity, what makes you think it'll suddenly work now?

The problem remains: putting up a pay wall/micropayment solution is economically inefficient (you are limiting a resource, rather than increasing value). That only works when you have a monopoly. Even with collusion, the newspapers don't have a monopoly.

David Carr: Mike, let's talk about "economically inefficient." Take the Washington Post, a pretty well-run, well-led outfit. They lost $143 million in the first six months of the year. Pay-for-content critics always talk about the folly of the turn toward the consumer; but I say, as opposed to what? Sticking with the current paradigm will have a tendentious end for those who fail to innovate significant new lines of revenue.

A broad swath of newspapers are not looking into pay content as a matter of collusion, but survival. You talk about being the lucky newspaper that bystands a move to paid and then jumps in on all the free ad dollars. Who might that be? With each passing month, there are few and fewer players and I think it behooves publishers who are acting in the interest of their shareholders and readers to experiment with different hybrid models.

Most newspapers have re-engineered the cost side to the point of damaging the asset and have to look at revenue. Should they look to Web display ads for salvation? Please. Inventory more or less doubles every year, which means they've no ability to create scarcity, no leverage on price. And Web ad buys and prices are down across the board. That "huge market" that has your theoretical publisher hugging himself hasn't been so huge lately. And when they step into that market with the legacy costs and relatively high costs for professionally produced content, they are competing in a market where hits are hits and the victory goes to the one who is selling ads the cheapest.

Yes, newspapers should have invested money in new technologies and approaches back when their margins were in the 20 to 30 percent range, but they didn't and now their backs are against the wall. The turn toward readers makes sense at this point. Newspapers can find out their true value in the marketplace and come up with a business to fit that going forward. In a sense, it is an old story. Newspapers have always used two pedals to lever their way through difficult times. When advertising dipped, they have always turned toward readers. This is different in that they are taking something that has always been free and are trying to charge for it, which is daunting, but it is not without precedent. Water and MP3s come to mind.

Just a word about community. The newspaper that manages to come up with a hybrid of free and paid will end up selling many eyeballs that have paid for the privilege of being there. And that "wantedness," a hoary old magazine concept, will once again allow publishers to start selling premium audiences for premium prices as opposed commoditized eyeballs.

*****

Thus ends Part 1 of the great debate. I'll be posting Part 2 tomorrow, in which the Mediator gets the two parties to find some common ground.

Photo of Mike Masnick by Dennis Yang via Flickr. Photo of tollbooth by Foggie Gee via Flickr. Photo of Washington Post newspaper by Mike Avery via Flickr.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

This is a summary. Visit our site for the full post .

I am a lover of roundtable discussions and debates, and have turned a long-running series of "virtual email roundtables" into the 5Across video roundtable here on MediaShift. Now I want to start a new series called "New Mediation" in which I take two people on opposing sides of a topic, and try to bring them to some kind of agreement or middle ground. If you have ideas for other folks and topics that need New Mediation, let me know.

Newspapers need to start charging for online content to survive. If newspapers charge for content, it will hasten their extinction. These are the opposing views in the very heated debate going on among newspaper publishers, editors, journalists and new media mavens. While pay walls for newspaper content have had mixed success -- with the Wall Street Journal Online being the major shining example -- the idea of micropayments for news stories is once again gaining supporters.

One such supporter is David Carr, the Media Equation columnist for the business section of the New York Times. He wrote a column last January titled, Let's Invent an iTunes for News, blogs as part of the team at Media Decoder and tweets as @Carr2n on Twitter. According to Carr: "The opinions he expresses are his own and he has no specific insights into the New York Times business strategy, including, but not limited to, whether consumers should pay for content."

On the other side is Mike Masnick, who runs the tech insight community Techdirt, and who has savaged the idea of micropayments for newspapers. Masnick launched Techdirt in 1997 and is CEO of Floor64. He has worked in business development and marketing at Release Software, an e-commerce startup, and in marketing at Intel.

The following is an edited email exchange that took place over the past few days.

Micropayments or Paid Apps?

Mediator: David, you wrote about micropayments as a possible option for newspapers online. How do you think a system like that would work, and are there parallels in other systems that have worked?

David Carr: Micropayments sound so ancient and debunked. Can we look upon them as payments for news applications instead? Facile, I know, but I think part of what the publishing industry confronts is a problem not only of precedent -- news not only wanted to be free, it has been -- but of nomenclature. If we look at payments for content as a way of accessing applications that animate the devices we stare at all day, they make more sense.

A while ago, I talked about an iTunes for news and I got clobbered because I missed the point that "21 Guns" by Green Day will have much more enduring value than say, the media column I wrote for Monday. But that doesn't mean my column is worth nothing. If it were bundled with an array of other content from the same vertical, along with alerts for same, it might begin to have some nominal value. And if it were attached to archives, relevant videos and aggregation of other similarly themed content, would it have monetary value? OK, maybe my column is a bad example.

I think that innovation in presentation and delivery of news customized to specific devices with features that serve not only to inform the user, but convenience them as well have value. Not all news content is worth money -- much of it is commoditized and should live outside pay walls and be free for the scraping, or to serve as context for all kinds of cheap network ads. But as we move into verticals, there are precedents, including the Wall Street Journal. I could lever my way to almost any story on that site through specific search approaches, but I choose to pay because I want archival access, alerts, and the ability to move freely in serendipitous ways across the entire site.

I pay for Consumer Reports, I have contemplated paying for access to the database of recipes at Cook's Illustrated. I'm not much of a sports guy, but I know people who pay for sports information, either to make them killers in their fantasy league or because they can't get enough about their offline heroes. Are there other publications or kinds of content I would pay for in their digital versions? Dunno, most of them haven't tested my level of interest. Most of the web is and should remain free, but professionally assembled content curated by editors who share either my sensibility or interests might pull some, not a lot, of money out of me.

And while I don't want to make a need-based argument, the ad-only model will clearly leave newsgathering in a very diminished state, regardless of economic recovery. If nobody is paid to make phone calls and report, the data stream will attenuate to the point where consumers might be willing to pay for something besides thin, generic gruel.

And lastly, if charging for content is such a non-starter, why was Google one of the organizations that submitted proposals to the Newspaper Association of America to enable micropayments? Yeah, it was off-the-shelf technology so far, but those guys aren't dumb and they must see that the consumer will eventually pay for some specific kinds of content.

Mike Masnick: First off, thanks to Mark for putting this together, and to David for taking part. I'm a big fan of your work, which I do find valuable, though it doesn't mean I'd pay for it.

And that leads me to my first point of response. You talk about value and price as if they are one and the same, but they are not. In economic terms, price is the intersection of supply and demand in a competitive market. Value, from the buyer's perspective, is simply a piece of the demand curve. But in a market, the buyer has choices, and different things have value to the buyer -- but it doesn't mean he or she will pay for all of it. Instead, they make decisions, and if there are reasonable alternatives -- even if not quite as "valuable" -- they'll drift towards those alternatives.

It doesn't mean that your writing isn't valuable. It just might mean no one will pay for it. That's how economics works.

So, what will people pay for? They pay for true scarce value. The problem is, as much as you or I wish to believe that our own writing is so perceptive and brilliant that it's scarce, it's not. We need to learn to live with that. You talk about what you do pay for, and what struck me was that it was never really the content that you were paying for. It was always some other sort of value: with the WSJ it was the real-time alerts (you're paying for timeliness and convenience), with Consumer Reports you don't say why exactly, but as a fan of CR's work, I would guess it's the fact that it saves you time and money (two scarcities).

Most news content doesn't provide anything scarce like that.

And that brings me to my big problem with micropayments. They're based on this false belief that people will be willing to pony up a small amount for content when there's so much competition out there that will be free. You suggest it's paying for the "news application," but that's not true. An application worth paying for is something that adds real value. My complaint all along about claims about charging for news is they all seem to think that if they put up a pay wall people will pay. None of them -- that I've seen anyway -- talk about adding additional scarce value to make it worthwhile. The micropayment idea is a punt. It's putting up a tollbooth on a 50-lane highway where the other 49 lanes have no tollbooth, and there's no specific benefit for paying the toll.

Your argument that an ad-based model won't work is also a bit of a red herring, as it assumes that there really are only two options out there: pay wall or ads. I'd argue that's not true -- that there are many other models, including hybrids. Also, it ignores the flipside of the equation, which is that some of the new models have very different cost structures.

Finally, you point to Google's pitch to newspapers. I wouldn't read too much into it. My (admittedly cynical) take on it is that (a) with all the newspaper guys complaining so much about Google, the company felt it needed to offer something to show that it was "helping"; (b) that [this] "help" is really designed to just get newspapers to try a micropayment solution as soon as possible to learn how it's a monumentally bad idea. It's helping newspapers out of their misery, rather than helping them adapt.

And Google has gone down this road before. I don't know why everyone forgets, but Google bet BIG on people paying for video content when it launched Google Video. It was mainly a pay site. And it failed miserably and YouTube took over the online video world, eventually leading to Google shelling out almost $2 billion. Google makes a lot of mistakes when it comes to paid content.

David Carr: Why so serious, Batman? We're only talking about the future of content and (gulp) how I buy groceries for my posse. And I am saddened to learn that my work can have value, but it may not be the kind that people might pay for.

Mike, I think you're right in that easy often trumps something with more perceived value. As Clay Shirky has told me enough times so I am finally beginning to understand, good enough is frequently good enough. MP3s won not based on their audio quality, but for other properties, like being, um, mostly free and eminently shareable. But there is a business under file sharing in CDs and increasingly, vinyl. It's a niche business, but I think that reading high quality news is increasingly a niche business, albeit mass niche.

I say that because people already pay the New York Times hundreds of dollars for daily access to the print product and the Times Reader. It is a matter of public record that more than 800,000 people have subscribed to the newspaper for more than two years. Isn't there some kind of digital business on the margins of that based on a much lower cost delivery structure? Quality papers like the Times could leave generic news out front free for the scraping, and [build] a leaky wall like the Wall Street Journal to allow the rest of the content to remain visible and, after a fashion, findable. I don't know what the price point is, but I bet a bunch of people would pay some kind of access convenience charge for the whole magilla. And even if people will only pay for "scarcities," as you call them, those can be created; and by the way, the market seems to be creating some informational scarcities on its own.

Putting up a big dumb wall is doomed, so I'm all for the kind of hybrids you flick at in your post and think those models are just beginning to be worked out. Providers of professionally produced content can have a hierarchy of readers and an array of services, from free to highly customized and pricey.

And your point about Google is well taken. They've succeeded, wildly, in one business -- paid search -- and have wandered around like the rest of us in other content models. But with the introduction of Fast Flip on Monday, I think you are beginning to see the outlines of a non-media company really working on the issue of presenting content and making it pay.

The Prospect of Collusion

Mediator: With so many newspaper publishers looking at pay walls, micropayments, etc., the usual argument is that if they all decided to start
charging at once, there would be less cheap alternatives. The 50-lane toll-booth you mentioned might have 45 people taking tolls and just 5 not taking tolls. At that point, people will be enticed to start paying something. What say you, Mike, to that argument that a possible antitrust exemption would allow the publishers to work together even closer?

Mike Masnick: The collusion argument is a fun one, because it sort of highlights the actual problem. The second a bunch of newspapers collude (legally or not) to put up a pay wall/micropyament system at the same time, the happier every competitor in the world just became. Collusion like that only works if those colluding control the market. In this case, as much as they want to believe they do, they don't. That 50-lane highway turns into a 500 or 5,000 or 500,000 lane highway overnight, and those 49 tollbooths get ignored. The thing is, everyone has their own steamroller/paver machine right now. And, no, I'm not just talking about "participatory journalism" or "citizen journalism," though that may be a part of it and may represent quite a few lanes.

I'm talking about other professional news organizations with professional journalists who can see ahead a few steps and recognize that many of their biggest competitors just took themselves out of the market. If I'm running a major newspaper the night that everyone starts to charge, I'm dancing for joy because my competitors just stepped out of a huge market and left it to me. And don't think there aren't news execs who get this.

So, sure, go ahead and charge. Collude away. It just hastens their irrelevance.

And, David, that kind of suggests the problem with your last statement: sure some people will pay. But, how many and for how long? You say it's a niche business, and it's very, very niche -- and unlikely to grow that much. [Steven] Brill [of Journalism Online] talks about getting 10 percent to 15 percent of the current readership to pay. Newspapers should be thrilled if they get half that. I'd be amazed if many of them got 1/10 of that.

In the meantime, it may be true that other business models have been slower to develop, but newspapers have always been about building a community and selling that community to those who want to reach them (usually advertisers). Putting up pay schemes turns away that community and makes it that much harder for newspapers to build out their own core business ... They've never figured out how to be sustainable as a consumer-pays entity, what makes you think it'll suddenly work now?

The problem remains: putting up a pay wall/micropayment solution is economically inefficient (you are limiting a resource, rather than increasing value). That only works when you have a monopoly. Even with collusion, the newspapers don't have a monopoly.

David Carr: Mike, let's talk about "economically inefficient." Take the Washington Post, a pretty well-run, well-led outfit. They lost $143 million in the first six months of the year. Pay-for-content critics always talk about the folly of the turn toward the consumer; but I say, as opposed to what? Sticking with the current paradigm will have a tendentious end for those who fail to innovate significant new lines of revenue.

A broad swath of newspapers are not looking into pay content as a matter of collusion, but survival. You talk about being the lucky newspaper that bystands a move to paid and then jumps in on all the free ad dollars. Who might that be? With each passing month, there are few and fewer players and I think it behooves publishers who are acting in the interest of their shareholders and readers to experiment with different hybrid models.

Most newspapers have re-engineered the cost side to the point of damaging the asset and have to look at revenue. Should they look to Web display ads for salvation? Please. Inventory more or less doubles every year, which means they've no ability to create scarcity, no leverage on price. And Web ad buys and prices are down across the board. That "huge market" that has your theoretical publisher hugging himself hasn't been so huge lately. And when they step into that market with the legacy costs and relatively high costs for professionally produced content, they are competing in a market where hits are hits and the victory goes to the one who is selling ads the cheapest.

Yes, newspapers should have invested money in new technologies and approaches back when their margins were in the 20 to 30 percent range, but they didn't and now their backs are against the wall. The turn toward readers makes sense at this point. Newspapers can find out their true value in the marketplace and come up with a business to fit that going forward. In a sense, it is an old story. Newspapers have always used two pedals to lever their way through difficult times. When advertising dipped, they have always turned toward readers. This is different in that they are taking something that has always been free and are trying to charge for it, which is daunting, but it is not without precedent. Water and MP3s come to mind.

Just a word about community. The newspaper that manages to come up with a hybrid of free and paid will end up selling many eyeballs that have paid for the privilege of being there. And that "wantedness," a hoary old magazine concept, will once again allow publishers to start selling premium audiences for premium prices as opposed commoditized eyeballs.

*****

Thus ends Part 1 of the great debate. I'll be posting Part 2 tomorrow, in which the Mediator gets the two parties to find some common ground.

Photo of Mike Masnick by Dennis Yang via Flickr. Photo of tollbooth by Foggie Gee via Flickr. Photo of Washington Post newspaper by Mike Avery via Flickr.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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If the Newspaper Association of America and Google were to display their relationship on Facebook, the description would read It's complicated. As newspaper revenues continue to tank, the NAA has stepped up its sort of passive-aggressive lashing out at the search giant for, well, essentially being more effective at monetizing the distribution of its content than they are.

In a twist that's probably a surprise to almost no one, the potential suitor for saving the newspapers from the bugaboo of Google might well be Google. The company submitted a document indicating it is in the process of building a sophisticated micropayments system based on Google Checkout that would allow publishers to charge for individual pieces or bundles of content.

It's clear that the system is still only in the very early planning stages at this point, but Google says in the document it expects the new payment structure to be available to both Google and non-Google properties within the next year. That sounds like the micropayment system will be fast-tracked to deliver reportedly extremely simple merchant integration and a solution to the major problem of transaction costs that currently inhibits micropayment plans from being implemented widely on the web.

Google Micropayments: An iTunes-like Model?

We'll give you one guess whose playbook Google plans to borrow from on the business model side of things: Apple's App Store (1.8 billion downloads can't be wrong, it seems). In a brief paragraph Google discusses a similar revenue share to the iTunes model as well as its own Android Market, which both take a 30% cut of the total revenue and pay out 70% to the developer (or in this case, publisher).

Still, they make sure to include a cautionary warning about the pipe dream notion that suddenly charging for content on the web is the solution to newspapers' woes: We do not believe it will be the norm for accessing content.

Check out the full document Google submitted to the NAA below. Let us know in the comments: what would it take for you to spend money for online content? What kind of payment packages might make sense in a brave new world of micropayments? Or will ducking back inside the paywall only hasten print news's demise?

Image courtesy of Flickr user DRB62

Tags: Google, micropayments, newspapers, publishing

Micropayments have worked for companies like iTunes and even Amazon.com for songs and television episodes. But could they be the solution to the newspaper industry's pending demise?

The Financial Times is ready to find out. They currently use a hybrid paid-free model, where users can access up to 20 stories a month for free, but they're looking to a pay-per-story or possibly subject or time period model.

The New York Times has long used a micropayments systemfor much of their archive, full stories are available as PDF scans at about $4 for one story, or a package of 10 for $16. However, two years ago the NYT outlined just why micropayments don't work.

Consumers expect to pay for music and movies, but not so much for the printed word, said [Mercator Advisory Group analyst] George Peabody. . .

For sellers of the lowest-priced content anything under 75 cents micropayments have been made irrelevant by the easy availability of online advertising, Mr. Peabody said. Programs like AdSense from Google, which allows even the smallest Web publishers to have relevant ads placed on their sites, make micropayments unnecessary. The program pays Web publishers what are often very small amounts each time a reader clicks on an ad. . . .

However, two years of experience and a downturn in the economy have shown that advertising doesn't always work. paidContent says Financial Times execs firmly believe that micropayments can work for editorial content:

There are a lot of questions around pricing. We would look to test it around different price points. [MD Rob] Grimshaw admits there are differences between music and editorial content but he's convinced that people will pay, so long as they don't have to fill out three pages of forms every time they want to know what what's happening in petrochemicals.

. . . FT CEO John Riddingcurrently on a PR offensive to boost the case for charging for newsadds his weight to idea in an interview with the Indie: Our view is that there's significant potential for pricing per piece and per time period. The whole point about the internet is flexible consumption and reader choice.

Like the WSJ, a competitor, FT specializes in niche news, so it's possible that more people would be willing to pay for their specialized reporting.

What do you think? Would you pay per story on FTor any other news sites?

While advertising revenues have been disappointingly low for most applications on Facebook and other social networks, another option app developers are increasingly turning towards is micropayments for virtual goods or premium features. Both Facebook and MySpace have admitted that they are working on their own payment systems, and Apple could play a role as well since it already has a payment system in place for iPhone apps (although even Apple is running into some bumps).

While the bigger players are fiddling with their payment system plans, nimbler startups are moving in to fill the gap. One of these is Spare Change Payments, which is trying to become the Paypal of micropayments. A year after launch, more than 700 apps across Facebook, MySpace, and Bebo use Spare Change for micropayments. Spare Change is processing $2.5 million a month in micropayments, which is a $30 million annual run-rate. The apps that are having the most success with micropayments are games and ones that sell virtual goods.

Over a million people have already signed up for Spare Change. Hundreds of thousands of those use it actively on a monthly basis. And it is not all nickels and dimes. Last year, 250 people spent more than $1,000 apiece on digital goods through Spare Change.

Now, the company is making it easier for consumers to pay through Spare Change with a new payment widget that pops up in each app instead of sending people off to a separate payments page. You can choose between several payment methods including a credit card, Paypal, Spare Change credits, or through your mobile phone bill. Once you buy a minimum of $2 worth of Spare Change credits, you can use them as currency for apps that charge as little as $0.10 at a time. It is also introducing a PIN ID for users who choose to tie their accounts to a credit card so that they can use the same PIN across any app that uses Spare Change. The experience is designed to be familiar to anyone who has ever downloaded an app from the iTunes store. You enter your PIN, and then go back to the app. The company accepts payments from 190 different countries.

The first app to launch with the new widget is Mind Games on Facebook. It requires developers to add only three lines of code. Spare Change will roll it out to MySpace and Bebo soon. Spare Change is designed specifically for social networks. Customer support is done via the direct messaging systems inside each network, and the company analyzes the social graph to sniff out fraud. For instance, it looks at how many friends someone has and other factors to assign risk scores to individual consumers. Spare Change has been bootsrapped with only about $500,000 in seed funding, and two of the co-founders (Mark Rose and Simon Ru) previously worked at Paypal.

For micropyaments, Spare Change is much cheaper than Paypal, which offers its own micropayment option. Paypal charges 5 percent plus $0.05 for transactions less than $12, but only for premium accounts that qualify (otherwise, for most small accounts, it is the normal rate of 2.9 percent plus $0.30) . In contrast, Spare Change takes a processing fee of 8 percent for each transaction. CEO Lex Bayer points out that while Paypal has a micropayments offering, it does not seem to be a huge priority. PayPal is not well designed for micropayments or digital goods, he says. The logic driving Paypal is to encourage larger transactions because that is where Paypal makes more money.

A bigger concern for him should be if Facebook, MySpace, or Apple ever decide to jump into the micropayments game. Meanwhile, he has an opportunity to stake out a piece of the micropayments market and fight it out with the other startups eying the same prize. For instance, Zuora recently launched subscription billing for Facebook apps, Zong and Mobilecash are trying to tap into mobile payments (although the fees are still too high). Whoever figures it out first will be collecting more than just nickels and dimes.

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Application platforms, broadly defined, are here to stay. Facebook's platform, first launched in 2007, now has tens of thousands of applications. MySpace, which mostly relies on Google's OpenSocial platform, has 4,500 apps available to users, and 211 million applications have been installed. The iPhone, which only launched its App Store in July 2008, has more than 3,000 applications, and they've been downloaded 300 million times.

These application platforms may even become a significant platform for more mainstream PC usage. Android is now being hacked to work on netbooks, and we believe Apple has plans to release a large form factor iPod Touch running their App Store platform. It's not inconceivable that Microsoft would build this type of software distribution mechanism directly into Windows in the future.

But there's a big gaping hole in all existing platforms. None have a direct payments platform to let applications collect micropayments from users.

Today app developers on Facebook and MySpace can create revenue by showing advertisements at very low CPMs. On the iPhone/iPod, developers can also charge for application at the time of sale.

Both of these are great ways to make some money on software. But the third leg of the stool, micropayments for things like virtual gifts and other things, has been largely ignored to date.

There are Facebook applications that have found a way around the problem by using third party payment services. Spare Change (powered by PayPal), Social Gold, Zong and other services let users move cash into the system, and applications like Mob Wars have gathered as much as $1 million per month from micropayments.

All three services have promised that direct micropayments are coming. Facebook promised the product would be released by September, but it never came and it is clearly on the back burner for now. MySpace announced their product in November 2008, but won't way when its coming.

My guess is neither MySpace nor Facebook will launch a direct payments platform. There's just too many headaches to deal with - fraud, chargebacks and security issues bring real costs and real liability. Duplicating PayPal's infrastructure just isn't cost effective.

Both will likely partner with a third party or parties to bring an approved service. They do this with other services (both Facebook and MySpace outsource classifieds to Oodle, for example). They don't have to bother with building anything, and they can try to get a cut of the fees generated.

Apple, though, will almost certainly do it themselves. They've already built out the basic payments platform through iTunes. Adding in payments for services won't be that much additional work.

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Could micropayments be the key to monetizing YouTube? The New York Times has an interesting article today about the history and future of micropayments. "In December 2000, Clay Shirky, an adjunct professor in New York University's interactive telecommunications program, wrote a manifesto that people still cite whenever someone suggests resurrecting the idea," writes the Times. "Micropayments will never work, he wrote, mainly because 'users hate them.'"

But, says the paper, micropayments are here, just not in the form we initially thought. Dot-com flameouts like BitPass, DigiCash, and Peppercoin all tried various methods of micropayments with the hope that content publishers would be able to charge a few cents to a few dollars for articles, reports, images, and other downloads. For the consumer, most of these schemes worked like a prepaid calling card -- load money into your account and buy stuff with credits.

"But wait. Amid the disdain, and without many people noticing, micropayments have arrived -- just not in the way they were originally envisioned. The 99 cents you pay for a song on iTunes is a micropayment. So are the tiny amounts that some operators of small Web sites earn whenever someone clicks on the ads on their pages. Some stock-photography companies sell pictures for as little as $1 each."

Certainly, it is far to early to judge YouTube's just launched video overlay ads, but early user reviews are mixed, at best. Morgan Stanley's Mary Meeker estimates (after some revised math) that YouTube's ads will pull in between $75 and $189 million gross revenue per year -- which, with the astronomical cost of streaming video, won't really cut it.

So what about charging small amounts for high quality, downloadable versions of commercial content on YouTube as a way to bring in money? Sure, Google already tried that with Google Video, and shut that service down citing an "effort to improve all Google services." But Apple has had a lot of success selling TV shows and movies (they sold a million of them in the first 20 days, and move tens of millions of video downloads per year through iTunes), so the model is sustainable.

YouTube is already the web's most recognizable video brand, and Google could take pains not to repeat the mistakes they made when launching the Google Video Store a year and half ago. This also seems like a good opportunity to tie in another Google service, Checkout, and put some heat on PayPal, which has become the web's most successful micropayment processor (though it is also used for macropayments).

YouTube could further offer a way for user generated content creators to monetize content other than ads. While it's unlikely that people would pay for single episodes of Lonelygirl15, die-hard fans of the web show might pay a nominal fee for high quality, DVD-burnable downloads of the entire series. Similarly, NBC has had great success with their YouTube channel showing clips of Saturday Night Live (including owning the 5th most watched all time), and they could use that popularity to sell DVDs like "The Best of Chris Farley" in a YouTube download store.

The biggest hurdle to a download store would be DRM. Apple has had some success convincing music labels to sell songs sans-DRM, but their video downloads are annoyingly locked into iTunes (I'm still sore I can't burn my 2006 Fiesta Bowl download to DVD). Any download service that can figure out how to convince the studios to do away with DRM -- or at least make it a whole lot less intrusive -- will be an instant hit with users.

YouTube coin graphic by Kelli Shaver of DesignMagus.