Wednesday, April 8, 2009

Online Content: Fee or Free?

WSJ has proven that consumers will pay for an online newspaper (currently, $1.99/wk for online access only). But just about everyone else is struggling to find the best formula for profiting from content on the Web.

USA Today
offers a digital online replica of its print edition for "only" $13.95/four weeks, but do these subscriptions sell? USAT's print edition subscription base is way down, thanks to the travel slump. I doubt its online edition is booming.

Today's NYT has a story about free-versus-paid content, wondering whether the newspaper industry can learn from other situations in which goods/services formerly provided for free now carry a price tag. Airlines are charging to check luggage, for instance, and getting away with it. But newspapers and magazines are another story, IMO.

Encyclopedia Britannica, once ailing as free online competitors attracted consumer attention, now charges $70/yr for premium access to its knowledge database (after free 7-day trial). Meanwhile, Microsoft will stop offering its Encarta encyclopedia by the third quarter.

Clearly, no one answer fits all. Asked about consumers paying for newspaper and magazine content, Professor Raghubir of NYU's Stern School of Business told the NYT that "maybe part of what you would pay for is the privilege of helping the business survive, but that is more of a difficult sell."

Difficult sell, but not impossible (as WSJ and Britannica have discovered). Just as consumers subscribe to Consumer Reports to get objective, factual information about goods and services, they may become accustomed to the value equation of paying for online newspaper and magazine content they value. The key issue is time. The middle of an economic crisis is not the best time to convince consumers to pay for content. Can publications survive the economic drought long enough to develop a viable subscription biz model?

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