Thursday, February 11, 2010

Why is a Facebook beer worth more than your news story?

As Chris O’Brien asks at the PBS IdeaLab, “Why will people spend $1 to send you a virtual beer on Facebook, but not to read a news story online?”

Good question — and there’s a lot more than a dollar at stake. Americans are spending something like $1.6 billion a year for “virtual goods” — that is, things that exist only in cyberspace, like that Facebook beer, or status upgrades in a game — but we’re told they won’t spend squat on news. What’s up with that?

If you’re a journalist, your first impulse might be to ask “What’s wrong with them?” But a far more useful question is to ask “What’s wrong with us?”

There’s only one reasonable explanation: people spend discretionary money on the things that matter most to them. If it turns out that buying intangibles to enhance experience in a virtual (non-physical) world is worth more than consuming another isolated, incremental news fact, that’s where their dollars will flow.

These distinctions aren’t all black-and-white, of course. (Honestly, these days, what is?) Some news consumption is related to the immersive, satisfying virtual experiences people pay for; by and large, organizations that provide some of that experience — not just a collection of individual factoids written in a peculiar news dialect — tend to be doing better than those that don’t.

But news-as-social-community happens by accident nowadays. What would happen if a news organization set out to make its product immersive and satisfying on purpose?

Writing in TechCrunch, Susan Wu said, “Virtual objects aren’t really objects – they are graphical metaphors for packaging up behaviors that people are already engaging in.” That sounds like something that could very well apply to an online community defined by common interest in civic affairs, doesn’t it?

Sharing and caring about news is an inherently social activity.  “Everybody who is interested in Ahmadinejad” or “People worried about a property tax increase” certainly comprise communities. The problem is, news organizations don’t treat them like communities — don’t feed and nurture and satisfy them — and so they fragment and drift apart. Much of their value drifts away with them.

Why would somebody spend real money on a virtual rose or make-believe beer on Facebook? What Susan Wu said: because it’s a graphical metaphor: it stands for something, it’s part of an integrated system that rewards participation.

An individual news story is itself a virtual good. What’s missing is the community environment in which it is recognized as valuable, an ecology where caring about the news becomes satisfying and rewarding social behavior. Instead of becoming an integral part of a social community experience, consuming news stories remains an isolated individual act.

When somebody creates a social ecology around news, I’m willing to bet they’ll also create a place where the virtual goods we know as “news stories” become valuable for their creators.


Anonymous said...

I'd rather pay $1 for a virtual beer than drink Budweiser for free. But this is completely beside the point.

Mary919 said...

I understand that we need this to happen, but I have a hard time believing that people who share and care about news would adopt a behavior similar to spending real money on virtual beer. Would they pay to join a conversation about a particular story just to be part of the social group that was discussing that story? I think that the people who would care enough to pay to read a story would do so for other reasons-- like to find information.

Perhaps if the fee were to access forums aimed at coming up with real solutions for real problems-- but does that make journalists activists?

Howard said...

Mary -- charging for activities like commenting or conversation would be problematic for a few reasons, including the fact that part of being a news community means having everybody in on the conversation. But there might be non-core activities that fit the virtual goods model, or perhaps we could think of a subscription as being payment for the virtual good of "news" -- which is, after all, as intangible as that FB beer. The key here, I suspect, is that you'd have to organize and nurture the community, make sure there was a psychic/emotional payoff for participants. I think we've already learned that it won't work if we just pump out individual, discrete stories.

Joey Baker said...

I'm a bit confused on what your final suggestion entails. As I read your post, it's either:
• Charge users micropayments for the option to share news with friends.
• News is a virtual good and therefore has some value, the trick is to figure out how to extract that.

If you could perhaps clarify for me?

Steve Farrell said...

In Sway: The Irresistible Pull of Irrational Behavior, the authors make an argument that there are two brain centers that motivate most behavior. The first is linked to materialism and pleasure, and the second is linked to altruism. I suspect that the motivation for giving someone a virtual beer is associated with the former, and civic behavior is associated with the latter. Moreover, people tend to spend money for the former, and not for the latter (think buying a flat screen vs. paying taxes). And worse for journalism, the authors argue that the two motivations are mutually exclusive.

I guess another way to look at it, is that in a free society, people feel entitled to information. That's the sense of the word "free" that we mean by "free society". The other sense -- as in "free beer" -- is not something (most) people feel entitled to.

Howard said...

Joey -- My post is more in the nature of a question than an answer; it doesn't pretend to be prescriptive to any level of detail.

It certainly does not anticipate micropayments for discrete individual stories or sharing. It envisions a system under that serves the community of people who most appreciate/want/need news and commentary in ways that make it valuable to them -- not as a virtual good (story) but as a service (community).

Anonymous said...

The answer is simple. The people who read news realize that the people writing it are loyal only to their editors who are loyal to their publishers who are loyal to Halliburton et al. This is because of people like Jay Rosen.

Anonymous said...

To anon 11:50
As a news reporter, I of course owe a certain allegiance to my supervisors and the organization that employs me (which as far as I know doesn't have jack to do with Halliburton et al). But my primary duty (and indeed, that of my supervisors) is to cover news and inform the reading public of things they need to know. I have, in my career, quit jobs where I felt that wasn't the case.
If all I cared about was pleasing some boss, I could make a h--- of a lot more money writing press releases for a phone company.
So spare me your ill-informed and paranoid media conspiracy theories.

Joey Baker said...


Thanks for the clarification – I'm happy to leave it as an open question as well, as nobody that I know of has tried to treat news as a virtual good.

However, I think your second to last graf incorrectly phrases the problem:

→ "An individual news story is itself a virtual good. What’s missing is the community environment in which it is recognized as valuable, an ecology where caring about the news becomes satisfying and rewarding social behavior. Instead of becoming an integral part of a social community experience, consuming news stories remains an isolated individual act."

News, as it exists now, is a commodity, and once known, it looses its value. This is drastically different from a virtual beer that once bought is displayed on a profile forever.

I'm fairly certain the problem is not the fault of users for failing to self organize an ecology. It's got to be the fault of the industry for failing to provide the right structure. Every community site out there was built with community in mind. Newspaper (and TV, Radio, et al) sites are still built around the old format of articles.

I think you've actually hit the nail on the head by pointing out that it's possible to create a community around "'Everybody who is interested in Ahmadinejad; or 'People worried about a property tax increase.'"

My proposed solution therefore is a bit of an ode to Jeff Jarvis: stop using the article. Instead, write "stories." The "virtual good" is the story "Iranian President" (or somesuch) which would give the customer access to every update on the office and a full history of the characters. The format would look much closer to


Howard said...

We're absolutely on the same track here, Joey. I agree the responsibility for creating a community environment rests with the industry. When people won't use our products, that has to be our problem, not theirs.

Livingstories is a step in the right direction, tho implementation thus far is lacking. I like to talk about "news services" now rather than "news
stories" to acknowledge that the old atomic unit of news -- the article -- is insufficent.

News articles are a commodity. Communities of people who care about news are not.

jessicacaress said...

"Live Interactive Journalism" that is what I think the new business model for newspapers should be. Take the reporters out of the building with equip them with laptops, video cameras and a live streaming feed and put them out there. I think the community would be willing to pay for live coverage. It doesn't necessarily have to be anything groundbreaking or exciting but interesting. For example imagine a food critic live at restaurant taking the reader/viewer through the experience. Like Reality TV he could chose a few readers to correspond with throughout the review, who knows what would happen because its live. Then if people want to catch it later they can. I think it is time to think outside of the box and engage people, have fun and change this industry. That's just my opinion.