More on the ‘micropayments for news’ debate, this time from Wharton biz school profs:

Newspapers and magazines, saddled with high fixed costs and high distribution costs, have been hit by both the free culture online and the ease with which their product – which is costly to produce but easy to copy and paste – is hijacked by free sites put together by unpaid bloggers. Most papers have resorted to offering their content for free, but online ad revenues alone have not covered their high fixed costs.

A February Time magazine cover story by longtime print journalist Walter Isaacson titled, “How to Save Your Newspaper,” takes on the threat of “freeconomics” squarely. “This is not a business model that makes sense,” Isaacson writes. He suggests newspapers figure out how to protect their intellectual property and charge readers real money to consume it.

Zhang agrees: “Right now, newspapers are doing things that level the playing field, bringing themselves down to the level of lower-quality competition. They should move to the high-end and exploit their advantages and distinctions.” Isaacson advocates for a system that makes it easy for readers to pay small “micropayments” online for the articles they view. But that’s easier said than done.

The sort of online micropayments Isaacson and others advocate have a poor track record, in large part because the psychology of the “penny gap” is hard to overcome. It’s especially difficult because people have come to expect a vast selection of no-cost news online. “The last thing you want to do is get people addicted to free. If you’re going to go free, you ought to expect that it is going to be the price forever,” says Hoch. “If you’re going to be a low price seller,” he adds, “you sure as hell better have low costs.”

Mind you, professors – great looking back, not so good looking forward!