Publishers Wrestle With Killing Free Content
Jupiter Media Metrix released a study at its Media Forum in New York concluding that 70 percent of online adults "cannot understand why anyone would pay for content online." Whether consumers will pay was the running theme of the forum, dubbed "The Death of Free Content."
Publishers hit by the worst ad slump in memory have been looking for ways to bring in more revenue. Naturally, they are focusing on all the Internet content they've been giving away. This week, CNN began phasing out free video clips on its news, sports and financial sites, and aims instead to charge $4.95 a month, or $39.95 a year, for the services. AmericanGreetings.com charges $11.95 a year to send online greeting cards.
Discovery.com is experimenting with broadband content that it hopes will lead to paid offerings, William Allman, senior vice president and general manager, Discovery.com, Discovery Communications, announced at Jupiter's forum.
"We can't wait for paid content," he said.
The subject is contentious for many content providers now that it's clear online advertising isn't going to foot the bill for their offerings. For example, a promotional stunt in which tabloid publisher American Media shut down the Web site of its over-the-top Weekly World News last month reportedly drew e-mail from journalists who thought the company was "striking a blow" for paid content.
The site went live a week later with the following statement: "We'd also like to say the following to everyone who went ballistic when we temporarily closed the site, including many members of the mainstream press who take this stuff a bit too seriously. ... Lighten up!"
Reporters who don't get the joke aside, there's money in content, but a tough road ahead for those who want to put content behind paid firewalls. Revenue from paid online content will grow to $5.8 billion by 2006 from $700 million in 2001, Jupiter said.
"Jupiter's latest survey and market forecast numbers indicate that the mass market still largely shuns anything that smells like a subscription online," said David Card, vice president and senior analyst at Jupiter Media Metrix, New York.
However, a minority but significant percentage of consumers is resigned to paying for online content someday, according to Jupiter. Forty-two percent of online adults surveyed expect over time that people will have to pay for content online.
What's more, major media properties are in a better position than they were four or five years ago because they no longer face well-financed start-ups giving away quality programming and taking marketshare from them, according to Jupiter.
Meanwhile, trade publishers face a particular challenge in trying to shake the effects of free online content. Many trade publications are already free offline and supported by classifieds and space advertising. As a result, they are looking for ways to offset the cost of producing Internet content without charging subscription fees.
Larry Chase, publisher of Web Digest for Marketers, began sending offers last fall to his list of 40,000 e-mail subscribers on behalf of advertisers rather than charge subscriptions.
"[T]he marketing and media costs of convincing prospects to pay [is] far more than the cost of editorial," he said at the time.
Chase notified subscribers three times that they would begin receiving ads in exchange for his services before initiating the program. As a result, 153 people opted out.
E-mail list rental revenue is key to online trade publishers' survival, he said. "That and back-end offerings," he said, referring to money that can be made by charging for repackaged information related to the publisher's main product. In one such offering, Chase plans to charge something less than $50 for a collection of reviews this spring as well as access to his archives.