TLDR: The problem with paywalls is mostly transaction costs. Utopia uses automated negotiation to make paywalls almost invisible.
Prerequisites: Identification
I experienced an interesting market-failure in November of last year when I was voting in the mid-term USA elections. As I always do, I attempted to learn things about the candidates who were running for office, usually by googling them. Many times there seemed to be interesting stories about local politicians on newspaper websites, but when I clicked the link I was confronted with a paywall prompting me to create an account and pay some medium-small amount of money for a subscription to the paper.
I almost never sign up for these sorts of subscriptions. It’s not because they’re too pricey, exactly; I’m fairly well-off and could easily afford to spend $30 once every couple years to be a more informed voter. (Though whether that’d be money well-spent is a different question.) It’s also not because I’m uninterested; I’d happily pay a dollar to read an interesting article about a local politician.
No, the reason I don’t sign up for newspaper subscriptions is mostly because it sucks to subscribe to a service just to read something. I’ve signed up for newspapers before — they’re very annoying to unsubscribe to. Newspapers make a decent amount of money off people who signed up once and don’t have the time/energy to unsubscribe, so they make it painful to do so. I’ve had services that are only able to be unsubscribed to by phone call. Ugh.
Subscribing to a service isn’t the only thing that turns me away from paywalls. I regularly encounter academic papers, for instance, that are bought on a case-by-case basis, but I still essentially never pay for them. In that case it usually is because they’re too pricey. I’m often interested in a single fact, and paying $40 or whatever on the off-chance that the paper has the fact I’m searching for is a bad gamble, especially when other sources might have the answer for free.
Newspaper subscriptions are also often poorly priced for a pay-per-view model. I don’t want to pay $5 for an opinion piece, though $0.50 seems fine. Some people might not be willing to pay $.50, but would pay $0.05… if there were no additional costs in time and effort. In theory a newspaper would rather get someone’s pennies than nothing at all, but it costs more to get people’s money than the value generated by the trade.
Ways to Pay
There’s no reason it has to be this way. Just like signing up for an account on a website could be automatic, we could automate away payment friction. A lot of effort has gone into this already, with services like Stripe, PayPal, and Google/Apple Pay. Browsers that save credit card info, and even credit cards themselves are technologies meant to (in part) reduce friction in making payments happen.
These kinds of technologies are very good. Not only do they allow for trades that otherwise would not have occurred, but they reduce wasted time. Time spent picking out exact change or filling in credit card info is wasted life, and so time saved adds up to lives saved. This waste of life is particularly prominent when coupons are involved.
In case you’re not aware, coupons are a form of price discrimination. When a business sells a product, they’d ideally like to set the price point at the highest level that each potential customer will pay (assuming it’s still profitable). For instance, if I’m willing to pay $5 for a news article, and you’re only willing to pay $0.25, then the newspaper would love to charge me $5 and charge you $0.25. The problem is that customers tend to hate paying more than other people, so companies have to be sneaky to pull off price discrimination. While people hate being charged more, they often don’t mind as much if others pay less. Price discrimination is thus almost always framed as a discount to certain groups, such as seniors, students, or loyal shoppers. Coupons are a way for stores to charge people less if they particularly value money relative to their time — i.e. people who are “cheap” or simply poor.
I’m a big fan of price discrimination. By allowing poor people to buy products at a discount, while keeping prices high for people who are too busy/wealthy to bother clipping coupons, businesses can make more money and create more value for the underprivileged. In general I wish there was more price discrimination in the world, so that rich people could have more “perks” and poor people could have more products.
But I’m also an opponent of wasted time. Offering discounts to people who are willing to wait in a line, or fill out a bunch of dumb forms, is a valid (albeit imperfect) way of distinguishing the rich from the poor, but it’s one that burns a lot of life. An ideal world would allow for coupons and other discounts that wouldn’t cost people time and energy.
Automated Haggling
What if we made robots do it??
Consider haggling, another form by which shops can engage in price discrimination. In many parts of the world it’s understood that prices are set on and ad-hoc basis depending on what a salesperson thinks the buyer will pay. This happens in the West sometimes, too, in areas like used car sales. The primary reason why haggling is rare in places like the USA is, I claim, because the gains (to buyers or sellers) from picking ad-hoc prices are typically lower than the added time and effort of haggling. Imagine if everyone in line ahead of you at the grocery store had to haggle. It’d be even worse than if everyone was paying with coupons and exact change.
But now imagine that everyone had a pocket-robot that haggled for them at digital-information-technology speeds. An automated haggler could do things like strategically reveal information, propose prices, and perhaps even give ultimatums or randomly refuse unfair deals.
Consider a system where each party has an AI assistant that negotiates on their behalf. The assistants start by revealing some (verifiable) info about their person/business/product. The prospective buyer might reveal their age, income, and/or name. The seller might reveal positive reviews of their services/product, special features that their product has, or a preview of the full article, in the case of newspapers/journals. The (agents representing the) buyer and the seller could then simultaneously request additional info, and then simultaneously decide whether to have another round of sharing where they provide what was requested (and possibly more). If both agents agree to share info, the process repeats until at least one party refuses to share more info, or both parties are satisfied.
Then, each assistant simultaneously names two prices for what’s being bought/sold: a minimum/maximum price, and a fair price. Only if the buyer’s maximum price is above the seller’s minimum does the trade take place, preventing either party from engaging in a harmful trade. When a trade takes place, the price point is one of the fair prices, selected randomly. If the selected price is considered unfair by either party (too low for the seller or too high for the buyer) then the trade fails with a probability that scales with how far the price is from fair. This gives an incentive for both parties to name a fair price that’s close to what the other party considers fair — to evenly split the gains from trade.
Utopian Paywalls
In my conception of Utopia, services like newspapers and journals sell articles on an ad-hoc basis, rather than through subscriptions. Subscriptions still exist, but they’re simply a sign that a person wants to be informed when new articles come out. Instead, articles are sold to individuals one-at-a-time at a price that’s determined through automated negotiation.
A reader’s computer will make deals with a variety of sources to pay a certain amount, conditional on the user clicking a button to approve the purchase, sometimes before a reader is even aware of the potential article. For example, let’s say that someone in Utopia is searching for an opinion piece on a recent fashion trend. Their computer will (with the help of search engines) search for every relevant article and try to make deals with each seller. If the deals fall-through due to unfair pricing, the article is hidden from the user (or perhaps revealed, but greyed-out, depending on the user’s settings), forcing buyers and sellers to name prices they expect are fair for that specific reader. The search might turn up three hits, each with a “paywall” that’s just a button that says “Continue Reading ($0.28).” When the button is pressed, the user’s computer finishes the deal, and reveals the remainder of the article.
Because of how hyperlinks in Utopia typically point at relevant search information, rather than at specific pages, users are used to their computer doing searches on their behalf. Instead of buying products on a marketplace website like Amazon.com, the user’s software searches all across the net for products and displays them on a custom marketplace personalized to the user. In a similar way, users buy information, be it in the form of news articles, blogs, or even social-media posts in a customized information marketplace that’s tailored to their interests.
This machine-driven market-making is especially convenient for the poor, who reliably get deals and lower prices by having their machine provide proof of wealth/income to another machine. These deals aren’t enough to make it advantageous to be poor, of course. Rich Utopians can still buy more. But it removes some of the sting by allowing deals that otherwise couldn’t have happened.
In Utopia, no time is wasted clipping coupons or fighting to unsubscribe.
