Subscription for content is new Net trend Pt II
Published: 30 Mar 2001 13:54 BST
Pure subscriptions aren't the only models that cash-strapped Web publishers are trying out to boost revenues.
Acknowledging the difficulty of converting readers to paid services, some of the latest subscription models focus on giving away some content for free and putting a price on "premium" news.
Salon, for example, is selling an ad-free version of its material for those fed up with online commercials. In a recent filing on its third-quarter revenues in 2000, the company said production, content and product costs represented 110 percent of its revenues.
Many publishers have also turned to syndicating their content as a way to build revenues at little cost. Once the online news is created, distributing electronically to other outlets for a fee is commonly known to bolster revenues and reap marketing benefits cheaply.
Another model that may emerge as popular is charging "micropayments" for content, or roughly an amount of up to $5 charged to the consumer's credit card. Online bookseller Amazon.com has started working with several smaller online publishers in encouraging consumers to donate a few dollars for content that they read. Micropayments have become popular in Europe, analysts say, through mobile devices that charge for convenient access to email or other applications away from the PC.
Analysts also say that consumers might be receptive to subscriptions for multiple publications in one package, similar to a Publisher's Clearinghouse model. AOL Time Warner, for example, could sell Internet access at premium cost for access to several Time Warner publications, analysts predict.
Another attractive model could be selling subscriptions for bundled content available for download or over wireless devices, according to Scott Moore, publisher of Slate.
Some publishers, however, are still banking on marketing as their bread and butter in the long term.
When Slate abandoned its subscription model in January 1999 after less than a year, the site's readership grew tenfold, and advertisers increased six times over, Moore said.
"Advertising is going to be the long-term driver for content and specifically for Slate," said Moore, adding that he was not considering going back to a subscription model. "Anytime you introduce a subscription fee for content, you're absolutely going to radically reduce the number of people who will choose to pay or become readers, and that's what we found at Slate.
People always have substitutes for content, he added. "People aren't going to pay to visit a Web site and read it -- with a few exceptions."
It is that perception that may pose the greatest hurdle for online publishers seeking to recreate traditional publishing revenue models online.
Regardless of contrary evidence, publishers making the switch to subscriptions say that readers have grown more experienced with the Web and are ready to pay for valuable content.
Encyclopaedia Britannica, which went with a free model when it launched its Web site in October 1999, said it now believes consumer attitudes are ripe to begin a for-pay service.
"At the time [we launched] people wanted information for free. But things change," said a representative from Britannica.com, which plans to introduce subscription services over the next couple of months. "There's a growing awareness among Net users that not all information is the same. [Some] is worth paying for."
For his part, TheStreet's Cramer contends that every online publisher must charge for content if they want to succeed.
TheStreet charges $199.95 for an annual subscription to premium areas including its RealMoney.com section and reportedly announced plans to charge readers for access to articles from prominent commentators.
Even by its own count, however, TheStreet has been losing readers under its subscription model.
In a recent securities filing, the company said it had about 75,000 paid subscribers as of December 2000 "down from approximately 109,000 when we launched our free site" in June of 2000.
"We're trying to build a mosaic of money -- we don't want to depend on one revenue stream," Cramer said. "There's a sign on my desk that says, 'Revenue good, no revenue bad,' and I'm sticking to that."
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