A daily newspaper costs anywhere from 75 cents to $1.50, depending on the day. Magazines are between $4 and $7. A CD is between $15 and $22.
It costs about $40 a month for a high-speed Internet connection that can get you all the news, magazines, and music you could ever want.
Incidentally, none of that $40 will ever find its way to the companies providing any of the content Web users currently enjoy.
So why are so many sites giving it away?
Today, almost a billion people on the planet have Internet access. Considering that the UN estimates that more than half of the six billion people on the planet live in relative poverty, that’s a pretty good number of POTENTIAL CUSTOMERS.
The problem is that computers cost money. Internet services cost money. People are already getting free television and radio, and libraries were giving away news and information for free. To win people over, the Internet had to be able to do more.
There was a rush in the mid-90s as every company in the world attempted to establish a foothold on the Internet. Thousands of new companies also emerged that were based entirely on the Web, although with the exception of porn sites, auction sites and deeply indebted anomalies like Amazon.com, most of these companies disappeared when the bubble burst in the late ’90s.
More than $2 trillion in investment dollars went up in smoke as company after company pulled the plug on operations, bankrupting investors by the boatload.
The reason these companies couldn’t make money is because they had forgotten the basic necessities of commerce – goods and/or services for people to buy or rent. These sites made nothing, sold nothing, and invested millions building sites that essentially did nothing.
They blamed it on the public, of course, maintaining that their business plans were good while suggesting that they might have been ahead of their time.
Most brick and mortar businesses didn’t lose when the bubble burst because they viewed their online presence as a necessary extension of their marketing focus, not as a core business strategy.
It was the same for companies offering news, music and other free Internet content, although a few of these companies were complete Internet start-ups that somehow have survived through banner ads, schilling, and pop-up windows.
Slowly, these companies are taking their free content back, hoping that we’re hooked enough to start paying for free services.
The most recent announcement came on March 27, when AOL Time Warner (www.aol.com) announced that only paying AOL subscribers would be able to access online versions of People and Entertainment Weekly magazines.
Other Time publications, including In Style, Sports Illustrated and Time are still free, but are expected to be included at a later date. Video from the CNN site is already fee-based through a partnership with RealOne Network expected to be cordoned off for paying customers any time soon.
You can’t really blame AOL Time Warner for charging for contents at this point, after reporting a loss of nearly $100 billion in 2002 – the largest annual loss in US history. Almost all of the loss was attributed to the AOL component of the merger, as their own dot-com bubble burst, and the market decided its stock value was grossly over-inflated.
AOL Time Warner is not the first Internet company to begin charging for content that was once offered for free.
Yahoo!, (www.yahoo.com) the Internet search engine, has announced the creation of Yahoo! Premium, a user pay site focused on news, entertainment and sports. The service was rolled out to coincide with live coverage of the March Madness college basketball games, allowing fans to watch the games online.
The cost of Yahoo! Platinum, which is currently only available to U.S. residents, is $16.95 a month.
CBS News also offers a subscription-based news alert service, including e-mail to portable phones and wireless PDAs. Other news organizations are watching closely to find out how receptive the public really is to this concept.
LimeWire, a peer-to-peer file sharing service, has started to ask users to pay $9.95 U.S. for a LimeWire Pro version that is the same as Limewire without all the pop-up ads. This would usually be a straight software transaction except for a series of unusual pleas from the developers. The first pleas mentioned the developers by name, and asked to download LimeWire Pro to keep the site going. The most recent plea has LimeWire asking users to "Please consider upgrading to LimewWire Pro to help support our ongoing development to make LimeWire and the network even better."
I actually found it refreshing for a company to admit that they needed the money, because I’m suspicious of all the online companies out there that pretend that they don’t.
NetZero, a free Web service based in the U.S. recently started charging customers $10 a month, which is half to one-third of what most commercial ISP’s charge, but infinitely more than the zero they charged at the beginning to lure customers.
The free ride is losing steam. Internet advertising revenues are down, and investors have had enough of the customer loyalty approach. In addition, news organizations are finding it harder to find advertisers, because their online audiences are getting the news content free of charge – their online sites are actually taking money away from their newspapers and programs. The war is an anomaly, as people seek out as much news as they can from a variety of different sources, and television news cleans up the ratings and newspapers sell out. It bucks the overall trend, which has been a declining market share.
To keep up with the shift from free to pay services on the Internet, visit The End Of Free (www.theendoffree.com) and The Start of Fee (www.thestartoffee.com). Both sites view the shift to fee services as a positive thing, and provide resources to companies to help them make the shift from free to fee.
