By: Steve Outing Where is New Century Network now that we need it?
As you well know, the online news media is in crisis mode.
Advertising has largely dried up for online media sites, and the
herd mentality is starting to kick in as online publishers look
to charge for content. Some newspapers are locking down their Web
content, making it available only to paying online subscribers
and existing print subscribers. Elsewhere, we see high-profile
sites such as Salon.com charge for "premium" online editions.
I see big problems with these trends -- problems that could have
been solved by the now-defunct online newspaper consortium, New
Century Network (NCN).
What's coming looks ugly
Allow me to set up the current scenario as I see it. News Web
sites and their parent companies are panicking as revenues drop
and there's not a recovery in sight. Paid content is suddenly the
mantra for many -- even though the concept was tried earlier in
the history of Web publishing and failed.
It seems inevitable that many news sites will soon start charging
for content. Some will lock down everything; others will keep
some content free while charging for unique or high-value
content.
The problem with this? There will be so much paid content on the
Internet that with the exception of the top publishers, no one
else will make much money selling their content. While The
Wall Street Journal will continue to do nicely selling
subscriptions to its content at WSJ.com, the Smalltown
Gazette will barely sell enough to meet expenses. Simply put,
for the small e-publishers selling content, there will be too
much competition.
Cable is like the Web
We can look to the cable television industry for a point of
comparison. With cable, the consumer pays a monthly fee and for
that gets a few dozen channels more than what's available free on
broadcast TV. A handful of premium channels (like HBO, The Movie
Channel, and Cinemax in the U.S.) get away with charging extra
for subscriptions; and then there are pay-per-view movie/sports
event channels. But the vast majority of channels are included in
the base monthly fee paid by all customers. If the Food Channel,
for example, tried to ply the HBO premium-subscription model, it
likely would have too-few subscribers and fail. The "lesser"
channels cannot charge for their content. Of course, they get a
share of the customer's money spent on the basic monthly
subscription.
The Web is similar, though it's not a perfect comparison.
Internet users pay an ISP for Internet access -- $20 a month for
an America Online or Earthlink account, for instance, or $40-$50
for a broadband account. For that price, the ISP subscriber gets
all the content that's available free on the Web. (But, of
course, the ISPs don't share their money with content publishers
the way cable companies do with the TV channels.)
Now what happens when many of those Web content providers start
charging for content? The Internet user has already committed
$20-$50 a month to pay for Internet access, and he/she is not
eager to fork over additional money to paid "Web channels" --
especially when there are a lot of them wanting money. A few
online users will pay, but most will settle for what's available
free because they've already spent as much as they're willing to
on the Internet.
Like in cable TV, a few quality, big-name Web sites will be like
HBO and succeed in getting people to pay. But while there are
dozens of cable channels that can't charge extra, there are
thousands and thousands of Web sites that won't succeed if they
ask users to pay.
The solution: Band together
I think that individual Web sites charging for their content is a
model that will fail. Online consumers won't -- indeed, they
can't afford to -- buy multiple subscriptions to Web sites. In
the most optimistic scenario, they will pay for one or two top
content sites' services -- and ignore the pleas of all the
"lesser" content sites that also want their cash.
The solution is for content sites to band together and offer
joint subscriptions to online consumers for a reasonable fee.
Consider this: If online sports news site A charges $4.95 a
month, and sports site B charges $3.95, and sports site C charges
$5, none of them is likely to hit it big. Consumers don't want to
pay $5 a month for access to their favorite sports site, and $10
a month for their favorite business site, and $4 a month for
their local newspaper Web site, and so on. The economics in this
scenario simply do not work, not to mention the hassle of
multiple payments.
What might work is a package, for say $10 a month, which includes
access to the premium content of a dozen or more top sports
sites. That will be a much easier sell than ESPN.com trying to
get people to pay $5 a month just for its premium content and
services.
But that's still problematic in the Internet environment. Because
of the ISP fees that Internet users already pay, e-publishers
can't expect people to pay $10 for all the sports sites, and $10
for the top business sites, and so on.
What we're going to need in the new Internet content environment
is a subscription fee that covers all (or at least, a lot of) the
paid content services on the Web. What we need is a master
organization that handles billing for subscriptions to a wide
range of premium Web sites. For a reasonable fee (which might be
as little as $10-$15 a month), a user should get access to the
premium content of leading Web sites like Salon.com and
Slate.com; sports sites like ESPN.com and CBS Sportsline;
national news sites and local news sites.
A single category that should work under this model is "news."
Imagine a subscription service that gets you into the premium-
content areas of hundreds of news sites. That's something that
online users might pay for, while individual subscriptions are a
much, much harder sell.
Who will manage it?
What I'm suggesting won't be easy to pull off. It means that
Internet publishers who are fierce competitors must cooperate.
But the point is that if e-publishers try to go the paid-content
route alone, they'll fail. If they want to get Internet users'
money, they have no choice but to ally with competing publishers,
offer a multi-site subscription package, and share the money
among themselves. There's too much content and too many
"channels" on the Internet for individual-site sales to bring in
more than small amounts of money.
(This paid-site-cooperation concept may sound familiar. The
online pornography/sex content industry has, as is often the
case, led the way with adult verification services, such as
Adult Check, which allow online users to pay one price and get
access to thousands of participating sex sites, which share in
the money collected.)
Perhaps in the future, multi-site subscription services will be
independent entities, who work with a wide array of e-publishers.
Possible scenarios for a consumer interface include:
o Consumers select broad categories of content that they
wish to subscribe to, with pricing based on how many categories
of premium content they want (e.g., for access to premium sports,
entertainment, and business news sites, the monthly fee is $15;
for sports only it's $7).
o Consumers select from an a la carte menu of sites (e.g.,
$10 a month for access to premium content of 10 sites in a variety of
categories, selected from a
list of several hundred sites).
Where would online users go to select premium content packages?
With some sort of central site, registration for multi-site paid-
content packages could be offered by major portal sites,
individual sites that are part of the program, and ISPs. Buyers
would get a login and password that work at the sites they'd
chosen to pay for, or a "super-cookie" that subscribed-to sites
would recognize to allow instant paid-user access. (There would
of course be major technical access issues that people far more
tech-savvy than me would have to solve.)
NCN, where are you?
Getting back to New Century Network, that failed joint-newspaper
online enterprise would have been the idea vehicle to drive in
the coming online media environment. Assuming that news
publishers continue on the road of paid content -- and all
indications are that news executives are hell-bent on charging --
NCN would have been well positioned to be the central agent
handling subscriptions to hundreds of news Web sites' premium
content (since it already had relationships with dozens of
newspaper Web sites).
As premium content proliferates -- and the problems I allude to
above accelerate -- there will be an increasing need for a
central paid-content aggregation agent to sell content on e-
publishers' behalf. This could be a new entity created to take
advantage of the opportunity. It could be a service provided by a
major portal site (like Yahoo!), which recognizes the money
potential. Or perhaps an online content transactions company
(e.g., Qpass or Clickshare), or Web content syndicator (like Screaming Media)
that already has business relationships with many publishers.
A final thought
Another trend that intersects with the paid-content trend is
expansion of digital media to devices other than the Internet-
connected PC -- such as PDAs, mobile phones, e-readers, etc.
Publishers offering premium-paid services via multi-site
subscription programs will also want to offer digital content
beyond just the Web.
The trends are setting up. The opportunity is near on the
horizon. Who will step up to the plate to take advantage, and
thereby help the e-publishing industry solve its most vexing
problem?
Other recent columns
In case you missed recent Stop The Presses!, here are
links to the last few columns:
o Two Money-making Techniques You Haven't Tried Yet, Wednesday, May 9
o What TiVo Teaches Us About the Internet, Wednesday, April 18
o Lessons From the Online Sex Sites, Wednesday, April 11
o Mining Your Site For Multiple Revenue Streams, Wednesday, April 4
o Archive of columns
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Got a tip? Let me know about it If you have a newsworthy item
about the online news/interactive news media business, please send me a
note.
---
This column is written by Steve
Outing for Editor & Publisher Online. Tips, letters and feedback
can be sent to Steve at steve@planetarynews.com
Copyright 2001, Editor & Publisher.
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