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The Debate Zone: Will people pay for content online?
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Clay Shirky

The high price of charging for content

People will pay for content if it is necessary, irreplaceable, and unshareable. Businesses excited about the first five words of that sentence don't understand how constraining the next seven are.

First, most content isn't necessary. It's optional. Traffic to the New York Times's editorials fell precipitously during the days of their subscription service, TimesSelect. People wanted to read Paul Krugman and David Brooks, but they didn't need to. Second, replaceability is in the eye of the beholder. Your coverage of the bailout may have different words than the competition's does, but for the average reader, their reporting can be substituted for yours, and vice versa. Third, people like sharing—and dislike not sharing—but getting people to pay for content requires forbidding us from forwarding things we care about to family and friends.

In an analog world, per-copy pricing is a strategy for increasing the number of available copies. In a digital world, per-copy pricing is a strategy for decreasing the number of available copies. Pay wall revenues thus reduce audiences and ad revenues, while creating a competitive advantage for (and an audience exodus to) subsidized outlets—whether the subsidy comes from advertisers or users.

Pay walls also threaten syndication revenues, because syndicated content from even one subsidized outlet will spread at the expense of all locked-down versions.

Fees thus attach to special cases: people pay Cook's Illustrated to reward it for not taking ads. People pay the Financial Times because financial data is valuable in inverse proportion to its availability (unlike editorials, say, or political reporting). Harnessing users to expand reach is simple, cheap, and powerful; even if you commit yourself to pretending content is scarce, many of your competitors won't. This dynamic creates a competition between organizations working with and against the Internet's innate capabilities.

The key questions for the average publisher contemplating pay walls are: How serious will that competition be? How many users will you lose? Will banning sharing create a defensible advantage? And the answers are: crushing, most, and no.

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Steven Brill

Two revenue streams are better than one

When we launched Journalism Online last April there was a great deal of misunderstanding about what we were doing. We were not suggesting that any publication go behind a pay wall. Rather, we're enabling publishers to sell content (mostly through subscriptions, although there may be some micro-sales) to a small portion of their online audience while maintaining the traffic necessary to sustain advertising revenue.

So, if there's to be a debate about whether our model makes sense, it ought to center on this question: Will, or should, publishers who invest in significant original content—be they newspapers, magazines, or online only sites—continue forever to give away everything they produce to everyone who wants it? Or, as advertising rates continue to plummet amid a growing glut of inventory, should they, and can they, create a circulation revenue stream, too? Here are three of the ways our 16-dial Reader Revenue Platform™ enables them to do that:

Sampling: Publishers will set a dial so that only the most avid online readers are asked to pay. Everyone else will continue to read, and see ads, undeterred. These avid readers may be defined as those who come to the site ten times a month, or 30, or six—or any other measure of engagement the publisher sets (and re-sets as the market develops).

Market Access Pay Points: Publishers will adjust payment requests and amounts based on whether the reader is in- or out-of market. Thus, a newspaper based in London with a small but highly engaged U.S. audience could charge them (and sacrifice minimal ad revenue because its advertisers are likely to be looking for a UK audience.) Or, a college newspaper could use Market Access Pay Points to get alumni and parents to pay a few dollars a month while keeping the paper free to the college community.

Select Content Pay Points: Publishers can charge for certain high value content (perhaps in concert with a sampling plan), while keeping much of the site free.

Thus, we're not suggesting that any publisher make an either-or choice between ad revenue and reader-revenue but, rather, that publishers do what they've always done: go for both.

Shirky's response to Brill

Journalism Online assumes that publishers' failure to retain pricing power online is a readily reversible accident. Were this true, any publication could start charging tomorrow, as JO's technical solutions aren't rocket science. Publishers can't start charging tomorrow, of course, because their problem isn't technology—it's new and brutal competition. JO's real offering isn't tools, but collusion.

Adding fees online inhibits use while rewarding disloyalty. Deciding to aggravate only your most faithful users, alumni, or expats limits this trade-off but doesn't change it. It's no accident that the Big Three fee-for-content services—the FT, the Economist, and the WSJ—all reach price-insensitive audiences. The sad fact for most publishers is that there is no cartel large enough to make the average reader similarly price insensitive, and no user revenues that can offset competition from ad-supported and nonprofit publishers.

Brill's response to Shirky

This exchange demonstrates how last year the either/or debate has become. In fact, I agree completely with Clay's analysis, so this isn't much of a debate. We're against the same pay walls he is. What we're all about is providing our multidial Reader Revenue Platform™ to enable publishers to charge only their most engaged, addicted customers only for that which is, as Clay puts it so well, "necessary and irreplaceable." As for his point about readers being able to share, he's right, and we have a plan for that too. Space constraints don't allow me to describe it here in detail, but it has a lot to do with our sampling and viral marketing strategies.

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Comment [68]

Agree? Disagree? Let us know what you think. Please include your full name with your comment. Comments may be edited.

  • People in general will be averse to paying for any content, unless and until it is unique. Best option would be to get in to corporate subscriptions which would though impact other businesses. The content providers will have to be providing services in real time which will be another difficult feat to be achieved. Only way the media and newspaper companies will be able to get any payments is by letting people do research on their archives, loophole is by that time the cat is already out of the bag.

    There are already some pay per content or subscription models but they haven’t made much impact in terms of common man which the providers are after.

    How will we at the end of the day decide on the cost of a page in an article published in a journal if that is what the consumer wants?

    If the services will be marketed as a commodity where users may have a choice then any pay model will be ineffective.

    Posted 8 December 2009, 23:14 by asambhav

  • Chris Korakas, would you please elaborate/give examples on:

    “My guess is that most of the ground breaking content that can help you really progress in what you do, is non structured and scattered all over the web“.

    Posted 27 November 2009, 12:46 by roberto guareschi

  • Yes and No

    Some contents are “marketable” in the sense that specific sets of users are willing to pay for getting access to these, for a variety of reasons usually linked to business, career, personal (etc) development … all of which are supposedly related to revenue generating processes. So if a content is structured and targeted enough that it can help you leap forward in your business or any other money generating activity (money or any other gratification currency you might be using) saving you precious time and energy … yes they will pay for it.

    If on the other hand the advantage is not that obvious … they will try google instead

    My guess is that most of the ground breaking content that can help you really progress in what you do, is non structured and scattered all over the web.

    So yes I would pay for it if someone (or something) would do this painful job of putting the knowledge/ information pieces together for me in a way i can directly use and benefit from.

    But then again …

    Just accessing the right piece of information, doesn’t mean that we are ready to change our way of thinking and doing by converting this piece of information into knowledge and then practice …

    As the semantic web moves forward and extremely sophisticated knowledge virtual harvesters are being built … its for the harvesting and bread-making that you will pay … not the wheat …

    regards from rainy Brussels

    Posted 23 November 2009, 12:53 by Chris Korakas

  • Re entertainment content, pay TV proves people will pay for it.

    Re knowledge transfer, whether cumulative and wrapped in the form of a syllabus structure, or targeted, timely factual analysis to provide competitive advantage, the same rules apply. Only, here buyer discretion tends to restrict the secondary market, enabling pay walls.

    The Internet enables a greater degree of selection for the quality of content vs price. It enables interactivity, choice and market dynamics for content to a degree not formerly possible.

    Still, content providers have not inconsiderable leeway in deciding how to charge to maximise returns. And, unless there are downstream / associated benefits to providing free content, free provision offers no returns at all.

    Posted 16 November 2009, 10:55 by Andrew Grove

  • I’m not sure the question of whether people will pay for content is the correct one, and hence the debaters don’t reach conclusions that offer much help to the companies involved.

    Perhaps a better question is: what is the business model for content creators, producers, aggregators and deliverers that is sustainable in the internet world?

    the internet has caused a breakdown of vertical integration in the content delivery chain that existed in the physical worlds of (amongst others) news, music, TV and telephony. The traditional players are now faced with the same question of how to reorientate their business models to survive.

    This is in part about finding new revenue models (or mixes), but is equally about cost structures. The internet has enabled a much wider, more diverse mix of content providers to emerge, many of them offering content free and supporting themselves via ad revenue. This is managable for a player with variable cost bases, with no fixed cost base for physical distribution and no people intensive processes like sales or customer service and support.

    Traditional players are caught in the middle of the decline in use of traditional distribution platforms and growth in online distribution. They can not sustain the cost structures of the past, and equally do not know how to compete as nimbly and efficiently as their new competitors. As they strip out cost and downscale their legacy distribution networks they should be able to sustain lower revenues and still produce profit. The question remains as to how closely those profits resemble those they earn today.

    Posted 16 November 2009, 10:09 by Geoff Willetts

  • Will people pay for content online

    I buy newspapers/magazines offline. The same newspaper/magazines are available free of cost online. Still i buy newspapers/magazines offline. Why? I like reading physical copies of newspapers. I like reading end to end. I read about 40% of my newspaper. Online, I browse through a newspaper, reading about 10%-20% of the newspaper.

    To the question, whether I will pay for the online content. Yes, if it is a company account and no if it is a personal account. However, if the content provides critical insight to my career or business, I surely will pay for content from my personal account.

    Posted 12 November 2009, 13:19 by Marutish Varanasi

  • The answer to my mind is a firm YES.

    People will always pay for certain types of content directly, if that content is scarce and unique, unfortunately for some of the publishers whose content is becoming a commodity, this payment may be indirect through e.g. eyeballs or other models. If they do not quickly adapt their model, they will not survive.

    The current situation with regards to newspaper business is a good example of an industry in-transit. Either the business model for the involved incumbent companies will change, or a large chunk of this industry will not survive.

    Philosophically: somebody will pay something somewhere, even if it is a so-called ‘freebie’…

    …Says a former Vice President of Pricing of a large publishing house, currently CEO of a web company.

    Posted 8 November 2009, 16:09 by Gert Staal

  • I think what people will pay for is not content – but insight. This can play in two ways, and I find the best description here: www.cyberjournalist.net/​nichepapers-the-future-of-journalism

    By bringing me an easily accessible broad range of of content on a topic including thought leader opinion across a wide or deep scope of the topic, I MIGHT (maybe, and seriously skews to not really)be willing to pay a nominal sum. I also agree with Sara, that I am pretty adept at sniffing out the free from the paid, so my willingness to pay is constrained. I would be willing to see some revenue share there – with the aggregator making its money in small bytes while the lion’s share goes to the creators. This is akin, at least in principle to Joe’s model.

    The second place I would be willing to pay is in an upfront model that allows those thought leaders to continue to develop topics of specific interest to me – where my input is sought up front. If a consortium could direct attention to emerging trends and weak signals – and then take that information as a means to pursue content that is of direct and immediate relevance, that could be interesting. In that way, the information I and my colleagial participants receive is directly responsive to our needs. This places the customer at the front of the effort, not simply as the receiver of output. Where new topics are emerging, these would take small investments by the content creators (the same way new products are tested in shaped in markets now) and tells them where to expand and direct their attentions. If the content creator develops somthing he or she believes is ground-breaking, the audience will jump on it and immediately provide the metrics to say “give me more of this.” This of course, represents a fairly sophisticated buyer model.

    However, that model is quickly becoming the reality in web-savvy world. People who are not seeking insight or directed knowledge are free to consume via the mainstream press and their own sleuthing, should they so choose. If they are simply passively consuming, their desire to pay would be limited/sporadic at best.

    The advertising model needs reinvention. It’s viability has long past. In a participative, collaborative, web 2.0 world, advertisers must become participants as well, providing value, not just pushing out their messages. Relevance and monentization is gained through interaction and value exchange, not by simply being located on the page.

    cjgw #IBMCRM

    Posted 6 November 2009, 07:03 by cristene gonzalez-wertz

  • Of course people will pay for content online. I do it all the time. My willingness to pay simply depends on the type of content, whether the value proposition is real or deceptive, and whether the price is fair.

    Note: as web sleuths go, I am unusually adept. I know how to get all kinds of information, at no cost, for which some pay foolishly high prices. Among the differences between me and those who over-pay are: I am a sleuth by nature; I know what I am doing; and I am not intellectually lazy. The challenge of finding and making sense of information is fun and profitable for me.

    However, when a web-based business (or non-profit) charges a fair price for something that I consider to be a real value, I am completely sanguine about paying for it. (Minor digression: flat fees are better; being ‘nickeled and dimed’ online is just as irritating as it has always been in RL.)

    Often, I find that .orgs have better websites because they are purpose-driven, not profit driven. The best among them care, above all, about doing a good job. (OMG: value comes before profit for them. They must be miscreants and subversives!)

    ….Nota bene: Profit is an outcome, not an input. This should be self-evident, but clearly it is not. For the legions of doubters, my recommendation is to READ A BOOK: specifically,the PIMS (Profit Impact of Market Strategies) Principles. Of course a rational argument rarely changes anyone’s mind, but I consider even one changed mind to be a victory.

    As I write this, I am thinking about the Perseus Project, which is a phenomenal resource. I gladly donate money to Refdesk.com as well. This is a site that relies on donations and advertising, and I find it to be a wonderful resource. I also pay not- inconsequential fees (upwards of $300 annually per subscription) for three other content services: the American Psychological Association’s “Psychinfo” database, which is a treasure trove of obscure but extremely high quality work in my field; ancestry.com, an aggregator of a vast array of genealogical data that would literally take me lifetimes to find on my own; and The Cook Report on Internet Economics. I also willingly pay over one hundred dollars a year for subscriptions to Salon.com and the Wall St. Journal online. They offer not merely convenience, but also great depth, professional reportage, and information that is timely, rare, or both.

    To me, it makes sense for these wonderful publications to cost less than hard-copy versions, simply because there are fewer brick and mortar costs-(-if the providers are not intellectually lazy and are willing to do what one must to become an informed consumer of web related services). However, the content creators deserve to be paid and paid well. If anything, I am happier not paying for the building of a bunch of buildings that needlessly suck up resources, but instead having my fees go more or less directly to those who create the content.

    Posted 31 October 2009, 01:07 by Sara Wedeman

  • Should Content be for free?
    It is not about content. It is about context and collaboration. This is a web 1.0 question.

    This question has been around for over 15 years and the answer is still the same. Both Yes and No. Over 95% of what is in our brains comes from on demand “search learning” and only a tiny fraction of what we learn is from a school or a paid course. As Google flexes its muscles and continues to ignore copyright laws this will only force us further into a free model of brand and product placement for revenue. Talk to someone in the corporate market and they will say people will pay for content. Talk to someone in the education market and they will say it should be for free. As a matter of fact some schools have dropped buying text books because there are over 200,000 educational sites for free.

    Why not have the Department of Education buy one mass license of textbooks and Internet it to every school in the world for free? Now that is an interesting question.

    We have moved into a Global Learning environment that also shifts content from a top down learning-media environment into a bottom up publishing environment. More and More, CNN and others are responding to the bottom up street publishing. All those cameras on cell phones are in more places than CNN can ever be. Should CNN pay the iReporter?

    To understand this question is to understand the battle in Web 3.0 that deals with context. Marketing will strive to target ads and banners at profiles while at the same time the user community will continue to filter it out by only looking at what interests them. Internet users are grasping the power of filtering in vertical communities. Like any market, as it matures it will break up into more verticals, but at a rate that is staggering. Keep in mind that these verticals feed themselves content for free. Why pay Gartner for data that a news filter or social bookmarking can provide in seconds and real-time.

    There is other evidence for us. In the frenzy of eLearning dot com launch I watch hundreds of millions that invested in learning portals that all went under.
    The matrix of learning on the Internet is in Micro Learning Paths that all connect together: Search-Discover-Adopt-Share. Content does not exist the way it does in the New Times. It is constantly changing like the weather channel or a stock exchange ticker. We pay for a feed of information that is constantly changing. I will not pay for yesterdays weather.

    Here is the real kicker. The question is NOT will people pay for the “content,” it is will they pay for the “collaboration” around the content. Perhaps we do pay for Face Book in tolerating the ads and clicking them to be “inappropriate” over and over again. He is a hint. People are paying to upgrade their collaborations tools. Listen…. They pay for collaboration and to belong to something.

    Think about it. Do we pay for the text books at Harvard or for the relationship of the inner circle of influence. It is not about content, it is about relationship and relationship means community on the Internet.

    I am writing a book called the Global Learning Framework that is on a Ning if anyone cares to comment. While the content is copyrighted, the collaboration is for free.

    Posted 27 October 2009, 21:44 by Richard Close

Commenting is closed for this article.

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