Paid-for online content
That fact that websites have managed to persuade users to stump up the cash for online content is proof, if any were needed, that the paid for format can, and does, work online. In fact, it works very well. Jupiter Research predicts that UK consumers will be spending £1billion a year on online content by 2006.
Many online publishers are currently faced with a dilemma – to charge or not to charge. Economics may automatically encourage publishers to charge, but is that really feasible?
Not only does switching to subscription charging require a large marketing budget in order to persuade existing users and encourage new ones to subscribe to the paid-for format, but the added cost of setting up and then billing, whether using micro-payments or not, each individual subscriber, can mean that the initial benefits of charging for content are considerably diminished.
Pushing online publishers into the paid for content format is the fear that if they do not begin to charge they will not be able to compete effectively. But there are ways for sites to compete without charging for their content.
The announcement last week that online advertising is expected to top £500m by the end of 2004, and wide recognition that the medium is now a serious challenger to radio in terms of ad spend, is positive news for those providing free content.
Sites that ring-fence their content with subscription charges and the inevitable decline in user numbers this leads to as a result, will do little to endear themselves to brand managers hoping to use the internet as a medium for boosting brand awareness. Therein lies the key to successful competition with paid for sites. Free content sites need to firstly attract users from subscription sites who do not want to pay for content, and then, secondly, aggressively highlight the benefits to advertisers of the free content medium, over that of their paid for content counterparts.
If the current trend of charging for content continues, opportunities will arise for sites providing free content to compete with their subscription based rivals. But, of course, if the content on a site has about as much appeal as a dirty weekend away with Jeremy Beadle, no amount of marketing will make a site competitive.
In the UK we are currently protected from the extremes of paid for content by the BBC. In so long as the BBC continues to provide an exceptional online service free from advertising and subscription charges, on topics as diverse as news, family history, finance and lifestyle, there is a limit to how successful a paid for content operation can be.
Currently the paid for format only works for a number of well branded sites that are usually supported by a strong off-line presence. The Wall Street Journal and the Financial Times are just two such subscription sites that fall into this mould. Making the switch without a significant offline ‘carrot’ to tempt users into subscribing can be extremely difficult.
However, with the BBC’s charter up for renewal in 2006 and the analysis of the Corporation’s activities outside the realm of public service broadcasting that this brings, the future may not be as clear cut when it comes to paid for content.
If the BBC is compelled to curb some of its online operations, as is becoming increasingly likely, and UK consumers continue to adapt to the subscription format, there is a very real danger of a ‘ghetto effect’ taking place online as a result of charging for content, with certain parts of the web becoming no-go areas, restricted only to fully subscribed members.
What none of us want for the future; publisher, advertiser and user, is for the web to become an online version of Satellite television, where everyone with a dish can receive it, but unless you cough up and subscribe to a monthly package it isn’t really worth it.
Dale Lovell is Content Manager at www.50connect.co.uk