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PayBITS: Acknowledging the Value of Informationby Adam C. Engst <ace@tidbits.com> It's time to rethink how we value information, and I have a proposal about how we can do it. Some information changes hands at sky-high rates - think about rewards leading to the conviction of certain criminals. More commonly, we have consultants, who may charge $100 or more per hour to convey information to their clients, and niche newsletters with subscription fees in the hundreds or thousands of dollars per year. But how radically does information from consultants or boutique newsletters really differ from the sort of content that appears in TidBITS, Macworld, or even many Web sites? In many cases, there's little or no difference. We've been conditioned to value the message by the medium. In part, we pay consultants high hourly rates because they filter information and present it to us in customized ways. Niche newsletters promise a similar benefit, often presenting a single person's view on a very specific field. A paperback book costs less than a hardcover, but the content is the same; we pay more to read the book sooner (plus a little more for the higher materials cost). We pay to subscribe to print magazines, but many of us expect to find the same content online for free, even if we aren't subscribers. We buy CDs of music, but millions of people download music for free from file sharing services. I'm all for different business models, but none of the traditional approaches let readers place their own value on content. Instead, value is assigned arbitrarily based on a variety of attributes entirely separate from the information itself. Despite the famous admonishment, we are valuing books by their covers. It's time we looked past external factors and put a value on the content inside. A Fragmented Business Model -- Over the last few hundred years, information has been delivered in collections - the newspaper, the magazine, the record album, the cable television package. That's been necessary in part because the inherent costs in distribution offer economies of scale to collections. It isn't significantly cheaper to distribute a single article on paper than it is an entire newspaper. Couple that with the concept of mass production for a mass market - multiple identical copies of the same item for sale to many people - and you can see why we've ended up with the now-familiar business models for information: per-copy sales, advertising, and subscriptions. When the number of sales are large, the price per copy can be low, which makes it possible to buy a magazine for a few dollars or subscribe to one for a low annual amount. If the audience is sufficiently large or appropriate, advertising sales can make it possible to give the content away for free. It wasn't always this way, and in some cases it still isn't. The patronage system was responsible for much of the art and music of the Renaissance, and even now, analyst reports can cost thousands of dollars. The patrons of old and the people who buy expensive reports today share one thing - they place a high value on content. I think we need a compromise - a financial model that values content irrespective of the distribution method or the physical medium while keeping that content both freely available and affordable. Many people have said they'd like to be able to pay musicians directly for downloaded music; we're now making a similar approach possible with authors of TidBITS articles. We're calling our foray into this space PayBITS, and in short, it will make it possible for a reader to compensate an author directly for the received value of a given TidBITS article. The PayBITS Proposal -- TidBITS is free for anyone to read, but we have a history of experimenting with business models. In 1992, when it became clear that we couldn't continue without earning some income from TidBITS, we created our corporate sponsorship program, based on the public broadcasting model (Masterpiece Theater is brought to you by...). As far as we've been able to find, it was the first advertising program on the Internet - a scary move back in the days when the National Science Foundation Acceptable Use Policies were still in place. Then, in 1999, at the instigation of our loyal readers on TidBITS Talk, we started our voluntary contribution program, resulting in over 850 readers contributing directly to the financial survival of TidBITS, with more than 200 people being continuing supporters. <http://db.tidbits.com/ getbits.acgi? tbart= 02995> The sponsorship program keeps the business going, although we subsidize TidBITS heavily with our time - we could all earn much more at other jobs. And the contribution program, though it can't replace the sponsorships, has also provided some extremely welcome income. Although the downturn in Internet advertising has certainly hurt us as well, we've managed to stay afloat. What we've never been able to do is figure out how to pay our authors. Our staff already earns much less than comparable positions at traditional publications - there's just no money left over to compensate authors with anything but whatever benefit they can derive from being published. Some authors have parlayed writing for TidBITS - sometimes with our help - into magazine articles and even book projects, but that's always an unanticipated bonus. Here's where PayBITS comes in. At the end of appropriate articles in TidBITS, we'll be placing a few lines of text and a link to an Internet payment service that will make it possible for readers to compensate the authors directly. Apart from a one-line explanation of PayBITS for readers who have missed this article, the specific text, suggested amount (if any), and payment service (likely PayPal or Kagi) will be up to authors. <http://www.paypal.com/> If you find an article valuable or particularly interesting, especially if it saved you time or money, click the author's PayBITS link to compensate them directly and support the concept that information has real value. The author may provide a suggested amount, but you can pay as much or as little as you feel is commensurate with the value of the information. I expect that only a very small percentage of the full TidBITS readership will find any given article sufficiently valuable or interesting to be willing to pay the author for it. That's fine, since in theory, we have enough subscribers for that very small percentage to still be a fair number of people. And of course, since authors aren't earning anything for articles as it stands now, any amount will be welcome. We'll ask authors to let us know how many payments they receive and the total amount to help us evaluate which authors and articles readers find the most useful or interesting. Concerns and Confusions -- I ran this idea past TidBITS Talk, and the feedback was fabulous (including the name, thanks to Maarten Festen). Most people were highly positive about the idea, but a few expressed concerns. <http://db.tidbits.com/ getbits.acgi? tlkthrd= 1696> A few authors said they weren't interested in being paid for their writing, which is fine. We certainly won't make authors participate in PayBITS, though they're also welcome to redirect any payments to other entities as appropriate. For instance, it would have been easy to see payments from Cory Doctorow's article about Hollywood's power play directed to the Electronic Frontier Foundation. <http://db.tidbits.com/ getbits.acgi? tbart= 06901> Some people went nuts with the idea and proposed complex systems by which we'd serve PayBITS pages to readers, sending the final click out to an appropriate payment service. Others suggested we solve the entire micropayment problem. Although I appreciate the potential elegance and utility of such systems, I want to keep this initial phase of PayBITS as simple as possible since we're already overworked. Any infrastructure changes must be designed, coded, maintained, and migrated to any new systems we create. That's just too much right now but definitely something we'd consider for the future. I saw some slight concern that PayBITS could affect our editorial mix, but I'm not worried about that, since we've always published what we've felt was important. Plus, even if PayBITS resulted in us publishing more articles that people find useful or particularly interesting, I fail to see the harm in that. Others felt that although they liked the idea, they were worried that it might cannibalize the general contributions to TidBITS. I'm not concerned about that either, since I'm thinking that our contribution program will move under the PayBITS umbrella. For articles about what we're doing with TidBITS (like this one) or those written by multiple people (like our Macworld Superlatives articles), we'll point the PayBITS link at our existing contribution program. More common was the sentiment that readers didn't want to think about the value of a given article and would instead prefer to pay TidBITS some annual amount and have us distribute it to authors. My response there is that thinking about the value of information is what the PayBITS experiment is all about - one person may find a given article incredibly timely and helpful, whereas it may not help another person at all. If people pay us and we pay authors, we're doing nothing new or interesting, and it would mean more bookkeeping and accounting work than we can afford. A few people seemed uncomfortable with the concept in general, suggesting either that we should switch to a subscription model, or that readers might go to other sources for their content. Again, subscription models are old hat, and although they're working a little better of late (a recent New York Times article looked at this trend), they haven't been widely successful on the Internet. I have no interest in switching to a subscription model at this point, since if trends bear out, we'd be lucky to retain 10 percent of our readership. It goes against my grain to keep TidBITS away from potential readers - our goal has always been to make TidBITS as accessible as possible. And as far as people turning to other resources, the entire point of PayBITS is to provide a channel for people to acknowledge the value of information they've already received, not to keep it away from them until they pay. If someone doesn't want to pay, we're not going to make them. <http://www.nytimes.com/ 2002/ 08/ 01/ technology/ 01ONLI.html> The Experiment Begins -- All that's left is for us to set aside our preconceptions of the value of content and try PayBITS. I'll report on how it has fared after it's been in place for a while, and of course, if you have any thoughts about it, feel free to send them to TidBITS Talk.
The First Week of PayBITSby Adam C. Engst <ace@tidbits.com> Since PayBITS is such a major experiment for us, I thought I'd provide a quick report on how the first week went. Despite my not realizing that building a suggested amount into a PayPal URL would prevent people from entering their own amount (unless they cleverly edited the URL), my iPhoto Techniques article received 26 payments for a total of $116.50. I wouldn't walk past that on the sidewalk. Even more impressive was the response to the PayBITS block at the end of the actual PayBITS introduction, which attracted 53 new TidBITS contributors and generated over $1,100. A huge "Thank You!" to those of you who participated, not just for the financial support, but also for believing that it's reasonable to assign value to the information we consume. <http://db.tidbits.com/ getbits.acgi? tbart= 06909> Feedback about PayBITS continued to roll in to TidBITS Talk and to me personally, and I've tried to reply to everyone. Most people were still overwhelmingly positive about the idea, though some remain unconvinced that it will work in practice. All I can say is that you never know until you try. <http://db.tidbits.com/ getbits.acgi? tlkthrd= 1707+1696> As we continue, we'll be testing out a variety of different things with PayBITS, including varying the wording, testing different payment services, and more. Plus, a number of people have expressed interest in writing for us to help test PayBITS, so we won't have any trouble providing a wide variety of great articles in the near future. <http://www.tidbits.com/ paybits/>
Evaluating PayBITSby Adam C. Engst <ace@tidbits.com> We're almost four months into PayBITS, our experiment with attempting to let readers acknowledge the actual value to them of specific TidBITS articles. Although none of our authors have retired on their proceeds from PayBITS, we've had only one article whose PayBITS performance would have been ignored had the money been lying on the sidewalk. More important, we've learned some lessons about how people value the content they read. Let's look at the PayBITS responses to recent articles (in rough chronological order) and see what each one tells us. <http://db.tidbits.com/ getbits.acgi? tbart= 06909> iPhoto Power Techniques and Upgrading the TiVo -- My article about techniques for using Apple's iPhoto appeared in the same issue as the PayBITS introduction, and, thanks to its practical content, did quite well, garnering 31 payments for $136.50. In the subsequent issue, TidBITS-644, I wrote an overview of the options available for increasing the disk space in the popular TiVo digital video recorder, focusing on the specific solution I chose, an upgrade kit from Weaknees.com. The PayBITS block asked if readers found the article useful and made a suggestion of a $1 amount. The combination of the low amount and freshness of the PayBITS idea resulted in the most payments any article has seen so far, 52 for a gross of $95.60. However, since most payments were for the suggested $1, and PayPal's transaction fees subtracted $0.31 cents from that $1, the net amount wasn't stunning. <http://db.tidbits.com/ getbits.acgi? tbart= 06910> The Branding of Apple -- Simon Spence's three-part article explaining and discussing Apple's efforts to create and maintain a strong brand finished up in TidBITS-645, the week after the TiVo upgrade article (we put PayBITS blocks only at the end of multi-part articles). Although Simon's article didn't offer tips or how-to information, it was lengthy, which probably increased the perceived value, and it did a good job of explaining a topic that most of us generally don't consider. It also benefited from being near the beginning of the experiment, and Simon received 25 payments totalling about $70. <http://db.tidbits.com/ getbits.acgi? tbser= 1224> Interesting Bits of Jaguar -- In the same issue as Simon's final article was my look at some of the smaller improvements in Mac OS X 10.2. Its timeliness and practical nature made it a good candidate for PayBITS. In an effort to decrease the percentage of the fees that went to PayPal, I worded the PayBITS block to suggest "a few bucks," which increased the payment amounts to the $2 to $5 range. Even though the article brought in only 43 payments, the gross amount was $196.50, helped out by a couple of larger payments between $10 and $25. Clearly this article hit the sweet spot. <http://db.tidbits.com/ getbits.acgi? tbart= 06925> A Slew of Reviews -- The next few weeks brought a number of reviews from Contributing Editor Matt Neuburg and Managing Editor Jeff Carlson. Initially, we were disappointed in their performance from the PayBITS perspective, since we'd thought readers might find reviews quite valuable. As you can see by the numbers below, however, only about four or five people found these reviews worth compensating the author, and the amounts generally ranged between $10 and $20.
<http://db.tidbits.com/ getbits.acgi? tbart= 06932>
<http://db.tidbits.com/ getbits.acgi? tbart= 06931>
<http://db.tidbits.com/ getbits.acgi? tbart= 06935>
<http://db.tidbits.com/ getbits.acgi? tbart= 06958>
<http://db.tidbits.com/ getbits.acgi? tbart= 06959> So why did reviews do so poorly? One possible problem is that no one can realize the value of a review until well after reading the article - the reader must read the review, decide the product is ideal for some situation, purchase it, and use it at least briefly. Only then can the user determine the value of the review, and that's too long for most people to remember. Plus, in some of these articles, the products in question were inexpensive, so it's likely that most people subconsciously weighed the value of the review against the low cost of making a mistake. Confusing that theory was the fact that the two products that were the most expensive, Tinderbox and the Treo, sat on either end of the spectrum, earning $40 and $8 respectively. Marketing Software -- TidBITS-647 brought the conclusion of Mike Diegel's two-part article on marketing software, which I was confident would do fairly well because it was practical and could help a reader's business. Unfortunately, it attracted only three payments for $7, causing us to ponder what might have gone wrong. In retrospect, although I'm sure many people who didn't have software (or anything else) to market found the article interesting, the audience that would conceivably find actual monetary value in it - small software developers - is tiny. Apply the already extremely low PayBITS percentages to that reduced audience, and the poor results make sense. <http://db.tidbits.com/ getbits.acgi? tbser= 1226> Mailsmith Filtering and QuarkXPress Tips -- PayBITS didn't work well for the next two external authors in TidBITS-649 either. William Porter's two-part article on Mailsmith's distributed filtering brought in only four payments totalling $17. And David Blatner's collection of QuarkXPress 5 tips struck out, attracting no payments at all. William's article undoubtedly suffered from the limited audience problem - there simply aren't that many Mailsmith users compared to users of the bundled or free email programs, and cool though distributed filtering is, it's a bit geeky. Although David is the world's best-known QuarkXPress expert, he may have run into a similar problem, not because there aren't many QuarkXPress users, but because TidBITS doesn't focus on desktop publishing. Also problematic was the fact that the article failed to note that the tips applied equally well to the older but more-popular QuarkXPress 4. Plus, saying the tips were taken from David's QuarkXPress book may have encouraged people to reward David not directly, but by buying a copy of his book. <http://db.tidbits.com/ getbits.acgi? tbart= 06951> O'Reilly Conference Report and Troubleshooting Primer -- At this point, we were mulling the possibility that name recognition was important, since the articles I'd written had done the best, with Simon Spence's three-part branding article coming in second. That theory was dashed over the next few weeks, when my conference report from the O'Reilly Mac OS X Conference drew only a few payments (four payments for $16), and my troubleshooting primer brought in even fewer (two payments for $3). With the conference report, I wasn't too surprised, because it would likely have been found valuable only by the small number of people for whom it confirmed their decision to attend next year's conference (assuming there is one) or not to spend what could have been several thousand dollars to attend this year. <http://db.tidbits.com/ getbits.acgi? tbart= 06953> The weak performance of the troubleshooting primer did surprise me, though, since it seemed like a helpful article, judging from the complimentary email feedback I received and the number of reprint requests. My guess is that it fared poorly because I said that the information came from the book Glenn Fleishman and I are sending to the printer this week, The Wireless Networking Starter Kit. It's likely many people figured they'd just buy the book when it comes out (something I certainly wouldn't argue with). The moral of the story may be that book authors writing for TidBITS can pick only one of two benefits - PayBITS payments or possible book sales. <http://db.tidbits.com/ getbits.acgi? tbart= 06975> Jaguar's Tabbed Windows and Mac OS X Report Card -- These two articles, which I wrote in TidBITS-649 and TidBITS-650, changed direction, asking people to contribute to TidBITS instead of compensating me directly. In both cases, I chose to direct payments to TidBITS in general because of the assistance of TidBITS Talk participants. It's difficult to map contributions in a given week directly to PayBITS, but the tabbed windows article seemingly attracted seven new contributors for a total of $215. The Mac OS X Report Card article performed similarly, attracting eight new contributors for a total of $150. <http://db.tidbits.com/ getbits.acgi? tbart= 06949> The number of payments was pretty much in line with other articles, but, the value was much higher. Even after sharing the proceeds with the other staff members, I earned more than I had from many other articles, and more important, a number of these people indicated a willingness to contribute every year. I do think the amounts are slightly inflated over the perceived value of the articles, since a number of people noted they paid more as a way of thanking us for years of publication. iMac Blacked-Out Screens -- For his important article about how certain iMacs could be rendered unusable by installing Jaguar, Geoff also chose to direct payments to TidBITS as a whole. Although the potential audience was probably relatively small (only people who have those iMacs or help others who do), the extreme utility of the article resulted in it garnering 16 contributions for a total of $360. <http://db.tidbits.com/ getbits.acgi? tbart= 06973> Doing the Work of Three --We hadn't planned on including a PayBITS block after Derek Miller's tale of how he single-handedly published a daily conference newsletter with the aid of a Titanium PowerBook G4. Although it was a good story, little of it was likely to be useful, and we didn't see the potential value to readers. But after talking with Derek, we decided to test how PayBITS would perform on such an article. We specifically worded the PayBITS message to make the point of the article clear and joked about how he could buy his own PowerBook with the payments. Amazingly, Derek received 11 payments for $53, though at least one person commented that he was paying in part for Derek's earlier article about editing video on the cheap. Perhaps the point here is that the value of an article doesn't always have to be practical. <http://db.tidbits.com/ getbits.acgi? tbart= 06981> Overall Lessons -- Although we plan to continue the PayBITS experiment to see how response changes over time, we have come to a few interim conclusions. As we expected, no one will get rich from PayBITS. Although the overall TidBITS audience is large, the number of people who find an article sufficiently useful or interesting to compensate the author directly is still very low. Even so, even earning an unexpected $10 or $15 can provide a warm, fuzzy feeling of being appreciated, not to mention a nice lunch. That said, using PayBITS to encourage contributions to TidBITS as a whole has been successful, in part because the suggested contribution amounts are higher than the direct PayBITS amounts, and also because many people choose to contribute to TidBITS regularly. I suspect people don't mind the higher amount because they feel as though they're paying for years of TidBITS. Unfortunately, small suggested amounts work poorly because PayPal's transaction fees eat at least $0.31. For those folks who paid a quarter for an article, we appreciate the thought, but it all went to PayPal. Plus, even if a low amount encourages more payments, the total amount is likely still lower than it would be with a higher amount. So far, our feeling is that non-specific amounts like "a few bucks" work better than picking a number. Although we're open to authors using payment services other than PayPal, no one has chosen to do so yet, and the research we've done indicates that PayPal offers the best combination of widespread support, a simple payment interface, and low transaction fees. Most other services fall down badly in one of those areas. The number of payments received has dropped off somewhat over time, likely because new ideas such as valuing content directly need reinforcement, but we have to balance that with making sure people don't feel guilty about not paying. TidBITS is free; the point of PayBITS is to create a channel by which readers can compensate authors directly for particularly useful, relevant, or interesting articles. I'll be curious if this evaluation of PayBITS so far will increase interest again for a while. The question of what types of articles perform the best remains open. Though some highly practical articles have done well, others haven't. Reviews as a whole haven't done all that well. We haven't had a serious tutorial article since starting PayBITS, though it would be interesting to see how one would fare. No matter what, it's clear that our content hasn't changed in any significant way because of PayBITS, as some had feared might happen. We have pulled back from including PayBITS blocks with articles that don't feel appropriate, such as news reports, simply because it's not worth causing any unintended guilt for an article that's unlikely to attract compensation. At this point, I remain positive about PayBITS, not because I believe it's the solution to the problem of how those of us who create content of all types can earn a living, but because I fear we're headed for a dark time in which monied corporate interests will attempt to exercise ever more control over how we are allowed to consume content in general, and that in turn will dictate what and how we're able to create and publish. To avoid a future where all our content comes from huge media conglomerates, we need new approaches like PayBITS to show content creators that there are viable alternative business models. The Internet is a strong counter to A.J. Liebling's famous quote, "Freedom of the press is guaranteed only to those who own one." But even though the Internet provides the necessary distribution medium, we still lack the structure and customs to ensure that those who have something valuable to say can afford to say it. Freedom of the press is not just political, and not just practical: it's also economic.
PayBITS EFF Donation a Rousing Success -- I'm overwhelmed. You've seen my reports about the amounts that PayBITS has generated, and for the most part, they've been sums that you wouldn't walk by on the sidewalk, but that wouldn't buy you a new Mac. In last week's article about the dangers of the DMCA, I said I'd donate all the PayBITS proceeds to the EFF to help that worthy organization continue to do their important work (which is increasingly done on Macs, by the way). I figured sending the EFF a hundred bucks or so would be a nice gesture, but I never imagined that my article would raise over $2,800 from more than 150 people (before PayPal transaction fees). The total amount was significantly boosted by very large donations from two generous individuals, but even without those, the amount would have been over $1,500. I think the lesson learned here is that many people felt strongly about the problems with the DMCA, about supporting the EFF, and about funneling the payment through us to show support for PayBITS, and for all of those things, I thank you. A few payments are still trickling in, so in another week or so, I'll figure out the total amount and send it to the EFF. [ACE] <http://db.tidbits.com/ getbits.acgi? tbart= 06997> --by Adam C. Engst <ace@tidbits.com>
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