You're Probably Charging Too Much Online

By: Steve Outing Recently, I've been doing research on pricing of online content (for an

upcoming workshop that I'm presenting and an industry white paper). And one

issue has become painfully obvious to me: Online news publishers are

charging too much when they have online content to sell.



I touched on this in my column two weeks ago about selling online content. But the industry

needs firmer advice. Here it is in a nutshell: lower your prices if you

want to succeed selling news-related content.



No, don't stop giving it away



Let me preface my comments to come by saying that news sites, in

particular, should continue giving much of their content away free online.

What we're talking about here is content that's so special that it does

warrant a cash price: downloaded articles from archives; premium-content

subscription services; special reports or databases that go deeper than

free site content; republication rights sold to other Web sites; etc.



Let's start with Web news archives. The newspaper industry, in particular,

is guilty of overpricing downloads of individual articles. The most common

prices charged to a Web user to download old articles from U.S. newspaper

site archives are $1.50, $1.95 and $2.95 per article. Only a minority of

U.S. newspaper sites charge less than $1.50. (A few offer time-based access

to Web archives - for example, the Atlanta Journal-Constitution

charges $5.95 for a 24-hour period, which allows an online user to download

up to 20 articles.)



(Most larger newspapers do charge for archive access - though there

are some exceptions, like the San Francisco Chronicle, which offers

free Web archive downloads - while medium and smaller newspapers are

split between charging and giving away archive downloads.)



If we focus on those newspaper sites that do charge, we see a "follow the

leader" approach has been adopted on pricing. Papers that believe their

content is most valuable charge $2.95 per article - including the

Wall Street Journal, Washington Post, Jerusalem Post,

and San Diego Union-Tribune.



The most common price is $1.95 per article downloaded. Newspaper sites that

use Mediastream's Newslibrary

service to host their article archives charge $1.95 per article. This has

become the de facto Web archive standard for the entire newspaper industry

- as non-Newslibrary clients looked for pricing guidance and simply

copied "what everyone else is doing."



Get it under a dollar



Frankly, per-article pricing over $1 (U.S.) is wrong-headed. I hear this

every time I write a column about newspaper archives, or about content

pricing. My mailbox fills up with messages from people expressing

incredulity that newspapers charge so much for an old article, when you can

buy the current edition in print for 25, 50 or 75 cents. The typical

message (which I've heard many times) is that newspapers are losing Web

archive sales because potential customers balk at the price and do without

(or look elsewhere).



Part of the rationale for retaining high prices is concern that low Web

archive prices will cannibalize the high rates charged for the same content

on article database services like Lexis-Nexis. But that's clearly a myth.

Users of professional database services like Lexis-Nexis pay premium rates

for the convenience of searching across multiple publications. It's not

rational for them to save money by spending much more time searching a

bunch of individual news archives that charge only 25 cents per downloaded

article. Convenience outweighs price for the professional and corporate

researcher community.



Ergo, newspapers are leaving money on the table by not lowering their

archive prices to rates that will entice consumers to go ahead and buy an

article after they're found it in an archive search.



What the hell ...



In my recent content pricing column, I quoted a Qpass executive who advocates "what the hell"

pricing of digital content. He means that the price should be low enough

that when an online user sees the cost of pulling up a piece of desired

content, the response is, "What the hell," and the user makes a purchase.

The Qpass spokesman said $1.50 is a "what the hell" price, and suggested

that there's generally no need to go below $1.



I think he's right about the need for a "what the hell" price, but his

threshold should be much lower. Indeed, anything above 99 cents is too high

when it comes to selling consumer content to a consumer audience.



Think of a high school student doing research, or a parent helping their

kids find some information. At 25 or 50 cents an article, these online

customers might make several article purchases. This is new money that will

make up for prices lowered from today's typical, untenable archive rates.

(Publishers employing low archive fees also can implement targeted

advertising within search results, to supplement fees income.)



Beyond archive downloads, other types of premium content should be priced

low, too. Sports- and finance-oriented Web sites occasionally develop

premium services and set a monthly or annual fee for access. What's needed

is an accompanying "day pass" rate that's less than a dollar - so

people can sample the premium content without feeling cheated if the

offering is not to their liking.



NHL.com does this with its premium

service, offering various subscription options, including a 98-cent day

pass. That's the right way to do it. The wrong way is represented by ConsumerReports.org,

which currently offers an annual subscription to its premium

content, or a monthly subscription of $3.95, which automatically renews. It

lacks a 99-cent day pass, which would be a "what the hell, I'll check out

what they've got" rate. By offering only the monthly or annual r

ate, CR loses online customers and leaves money on the table.



For any consumer-oriented content, price it below $1, or at least offer a

below-$1 option for limited-time access.



Missionary work



A strong rationale for pricing consumer online content below $1 is that

we're still in a period of growth in Internet usage. And online users

aren't used to paying for content, so it makes sense to start with low

prices to get consumers used to the idea of paying for premium online

content.



Offering 25-cent archive downloads, for instance, is seeding the consumer

market for article purchases - stretching it beyond the professional

researcher and corporate user market that has sustained newspaper article

archives for so many years. In time, online content rates for consumer

premium content likely will rise. For now - while we're still in the

infancy of online content as an industry - keep rates low to ease

consumers into paying.



Selling to other publishers



A new market for online content is other Web publishers. I'll explore this

in a week in my next column, which will be about developments at iCopyright, which among its

services facilitates other Web sites "reprinting" a news site's articles. News

publishers look to this new source of revenue - having other Web

sites, intranets, etc. pay to publish articles online - and get

overzealous with their pricing, oftentimes.



If you price re-use of your articles by other Web sites low enough, you

stand a good chance of lots of other sites (especially corporate sites and

intranets) picking up your content. Price it too high and such potential

republication clients will look elsewhere. Again, this (licensing content

to other Web sites) is a new market phenomenon, so "missionary work" of

keeping prices very low to get more Web sites used to the idea of buying

content from you for republication is advantageous in the long run.



High-value content



Lastly, we haven't considered high-value content - that which warrants

a price tag in the hundreds of dollars and higher. Clearly, it doesn't make

sense to lower the price of a valuable research report of interest to a

narrow niche audience, or a premium vertical news service that represents

high value to a narrow clientele, just because it's offered online.



But it is important to let online users sample before buying. If your news

site develops a vertical news and information subscription service, offer a

trial run, or at the least a low-price day pass. Too many publishers make

the mistake of expecting online users to sign up for a lengthy subscription

and not offering other options.



Whether dealing with low- or high-priced online content, the key lesson is:

Don't leave money on the table. Offer super-low pricing options; price

consumer content lower than your initial inclination tells you (for now);

and let online users sample high-priced content.



Other recent columns



In case you missed recent Stop The Presses!, here are links to the

last few columns: OK, It's Time to Get Serious About Audio, Wednesday, November 1

Is Now the Time to Start Charging for Your Content?, Wednesday, October 25 The Hows and Whys of E-mail Publication Advertising, Wednesday, October 18 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.



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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 2000, Editor & Publisher.