Free Online Content: Can It Last?

By Bobbi Dempsey | February 10, 2010 AAA
Free Online Content: Can It Last?

Like many other businesses, media organizations have faced their share of financial challenges over the past few years. With advertising revenues dropping, publications scramble to tap new sources of income. As a result, several large news organizations have announced plans to start charging a fee to access their online content.

Major Players

  • Journalism Online: This relatively new company has developed a software system to control online access to publications' content and handles the process of collecting fees for content access. The service says it is already working with more than 1,300 publishers around the world. The service's affiliated publications will use a "freemium" type of model, also known as a metered plan. This means site visitors will be able to access a certain number of articles or content searches for free, and then will have to pay a fee per story or per month to access additional content. (Learn about the effects of media on business in A Case Study: Earnings Manipulation And The Role Of The Media.)

  • The New York Times: The Times has gotten a lot of attention for its plan to begin charging a fee for access to some of its web content. The company's plan won't actually go into effect until 2011, but lots of people have been weighing in with their opinions. Dylan Stableford, a writer for TheWrap.com, told MediaBistro the Times risks alienating some readers. On the other hand, Alan Meckler, CEO of WebMediaBrands, said the minimal loss of readership will be barely noticeable, especially in light of the extra revenue that the paper will receive.

  • Wall Street Journal: The paper has been charging for online content for years, but is in a somewhat unique situation because its financial content attracts a clientele who is willing to pay for that particular information. Unlike the Times and other papers, it doesn't use the freemium system. Instead, WSJ takes a "pay wall" approach: entire sections of its site are completely off limits to visitors who haven't paid for access.

  • The Intelligencer Journal – Lancaster New Era: a daily newspaper in Lancaster, Pennsylvania, says it will start using Journalism Online to switch to a paid content system within the next few months. As the paper's web editor, Ernest J. Schreiber, recently told the NY Times, even if the strategy only brings in a few hundred thousand dollars a year, "That's still enough to pay for a few reporters."

Pros and Cons of Paid Content
Some media experts say people have greater respect for content if it comes with a price tag. They say this also helps distinguish the more respectable media outlets from numerous online content providers that use amateurs who write for free (or nearly so). As the JournalismOnline site says, "Original content has real value. And it's produced by publishers who make significant investments in journalists to bring it to you." From a marketing standpoint, a paid system allows papers to identify their most loyal readership – and the paper can then charge higher ad rates for advertisers who want to target these readers. Reportedly, ad rates for WSJ's paid sites are several times higher than rates for ads on free sections of sites for The Times and other publications. (For more on business media, check out Financial Media 4-1-1 For Investors.)

Not So Black and White
The whole "free vs. paid" content debate isn't as clear-cut as it may seem. "One of the biggest misconceptions people have when they talk about online pay walls is the notion that they are all framed the same way or for the same reason," says Staci D. Kramer, co-editor of PaidContent.org. "That's not the case."

Kramer cites the case of Newsday.com, which put up an almost complete wall in October, limiting access to its own print subs and the customers of parent Cablevision's ISP Optimum Online. "Online-only subscriptions are available for $5 a week or about $260 a year but less than three dozen had been sold as of last month," Kramer says. "That's because the Cablevision strategy for Newsday focuses on local value and engagement, not growing online circulation, and adding value to advertisers by making the site more highly targeted." By contrast, with the Times' plan, Kramer says casual users will still be able to access some content and the site will remain open to direct links from social media and searches. The differences reflect the different goals and priorities of the publications involved. Each company may consider its strategy to be the smartest choice, proving there's no one-size-fits-all solution.

Conclusion
Media experts say the industry is facing major financial strain, and publishers must make drastic changes if they want to survive. While consumers may not like paying for content, it may come down to a choice between that and no content at all. As Schreiber told The Times, "Doing nothing is not an option."

comments powered by Disqus
Related Articles
  1. Essential Tips For Would-Be Entrepreneurs
    Entrepreneurship

    Essential Tips For Would-Be Entrepreneurs

  2. Why, How, Where and When Entrepreneurs ...
    Entrepreneurship

    Why, How, Where and When Entrepreneurs ...

  3. Why Entrepreneurs Are Important for ...
    Entrepreneurship

    Why Entrepreneurs Are Important for ...

  4. What Bill Gross, Steve Jobs and Steve ...
    Investing News

    What Bill Gross, Steve Jobs and Steve ...

  5. Entrepreneur Vs. Small Business Owner, ...
    Investing Basics

    Entrepreneur Vs. Small Business Owner, ...

Trading Center