Tech Rumor of the Day: eBay

With the news industry crumbling, analysts and others are looking at the micropayment approach, which could ultimately serve eBay well.

Author:: Scott Moritz
Publish date:: May 14, 2009 12:48 PM EDT

With the news industry crumbling, analysts and others are looking at the micropayment approach, which could ultimately serve eBay well.

The news industry, as you may have read, is collapsing.

A massive drop in ad spending and the rise of lower cost rivals online have helped put the decline of newspapers on the front page. Amid the crisis, industry leaders like

News Corps'

(NWS) - Get Report

chief Rupert Murdoch and

The New York Times

(NYT) - Get Report

editor Bill Keller have thrown around some ideas to help news organizations meet the challenge.

Always among the ideas is getting users to pay for the content they currently get for free.

''People reading news for free on the Web,'' said Murdoch at a recent cable industry conference, according to

The Times

. ''That's got to change.''

Call it small change, or charging as little as a penny-per-story. Analysts and industry leaders are looking at the so-called micropayment approach as a way to turn Internet publishing into a more viable business.

The Wall Street Journal

uses a subscription model for providing access to stories on its WSJ site, and

The Times

tried but later abandoned its select pay plan. But Keller has said that

The Times

is ready to "begin laying down some bets" including a possible micropayment strategy to break from the fruitless free model.

Here's where tech rides to the rescue. The winning method so far in micropayments has been

Apple's

(AAPL) - Get Report

iTunes store. Users keep credit cards on file with iTunes and rack up charges for downloading songs and apps.

While fine for big purchases or batches of small purchases, credit card transaction costs are far too high to make micropayments pay off.

The payment method with the least amount of this transaction friction is

eBay's

(EBAY) - Get Report

PayPal.

Google

(GOOG) - Get Report

has a rival service called Checkout, but that system is based on a credit card.

The advantage of PayPal is that if users want to buy content from various sources, without having to create separate accounts with each outlet, they could simply charge it through their PayPal.

The annoyance level is potentially high for everyone involved in the micropayment system, but if any outfit has a chance at smoothing out the process, it might be PayPal.

Read all about it: "eBay may have revenue opportunities on the Internet."