Paying for it: An end to free content on the web?

First published 16.10.2001

'Content is king' - repeat the old adage now and you're likely to be laughed out of the pressroom. Yet some of the UK's biggest publishing groups are planning to launch online subscription services. Sally Watson wonders whether consumers will buy what they have in store.

Two years ago media companies were flocking online. Speed was everything and some of the world's largest publishing houses rushed to join the throng.

With the world turned on its head, editors who had spent years carefully crafting and launching new titles found they had only weeks to plan and implement a world-beating web strategy.

The story of the online publishing industry is, in essence, like that of many others. Small, innovative companies hit the web at a run, scared their established competitors into action and crowded out the market.

Then, as quickly as it had arrived, the madness ended. And as the dust settled publishers were left to face the reality of making a profit.

That's the crux of the question. Having given away your content for free, how then do you start to make it pay?

It's easy to see why so many publishers look at the Wall Street Journal enviously. Since its inception, WSJ.com has charged a subscription fee for its online content - the only mainstream title to have successfully done so.

At $49 - or $29 if you also subscribe to the paper - WSJ has pitched itself low, believing $50 to be a mental barrier for most consumers. But despite its relative success, registrations are plateauing out and the online arm is still losing money.

Chris Moisan, channel manager at GuardianUnlimited, knows all about the arguments. "We've always been looking at diversifying our revenue models," he said.

GuardianUnlimited is one the most successful UK brands pulling in 31 million page impressions every month, but being charged with turning a profit has been a major headache. Now Moisan believes the market is on the turn. "People have realised it's a costly business to create content. Many [smaller competitors] have pulled back, leaving room for the true content brands," he said.

The site recently ran a successful SMS poetry competition which attracted 8,000 entrants. Moisan cites its popularity as proof of the market for text messaging. "There's an appetite there," claimed Moisan. "The payment mechanism is very simple and the set-up costs are low." But although the competition didn't cost GuardianUnlimited any money, it didn't draw any in either.

Having forked out a rumoured £130m to set up its online arm, The Financial Times has also turned to SMS to help it pull in the cash. Launched in May, FT Mobile sends personalised information to users for a minimum 60p charge.

Joanna Manning-Cooper, head of communications at the FT Group, claims the service has had a strong level of consumer interest, but won't release any take-up figures just yet. If the rumours are right, it wouldn't take her very long to count.

FT Mobile is the first in a series of so-called premium services FT.com is planning to launch this year, but Manning-Cooper admits making content pay isn't easy. The site's most lucrative revenue stream isn't true content at all - but its staffed research service, Ask FT.

Increasingly publishers are turning to these supplementary services to bring in the cash. Rebecca Ulph, analyst at Forrester Research, believes the business user may be ready to pay, but the consumer audience isn't there yet.

"The successful subscription sites like WSJ and The Economist are paid for mainly by businesses," she said. "The future [for everyone else] is still advertising and sponsorship, supplemented by premium services and a little bit of subscription if you have the right kind of content."

The (London) Times Online believes it has that content. Its publisher, Katie Vanneck, is confident it can make the leap into subscription services.

"Once we've found the ideal technology solution we will move away from giving away all our content for free. People who come to us just for news coverage will go elsewhere, I have no doubt about that," she admitted. "But a lot of our users are highly loyal to The Times."

Vanneck, like others in her field, feels let down by the payment technologies on offer. Without strong micropayment systems, newspapers that charge 30p or 40p in the real world can't use that model online.

As an alternative, publishers are turning to the business market model of a single yearly subscription fee. "Consumers are happier with subscriptions from a security point of view and they're are also an ongoing reliable source of income for the publisher," said Forrester's Ulph.

But estimates as to whether the public is prepared to pay for online content in any form vary wildly. Market research conducted recently in the UK claimed over 50 per cent of internet users would be happy to fork out for sports and music coverage. But Forrester's latest US report suggests a much more conservative figure of 10 per cent is nearer the truth.

Contrary to popular perception some online publishers do make money - over a fifth of content sites in the US are already in the black. But these tend to be small niche players with limited spend on editorial and marketing budgets.

Larger media players - like the BBC, which spends up to £52m a year on web services - will take some time to pull themselves into the black, if they do at all. Unless, of course, something drastic happens. Which is why the big players will be watching The Times' subscription experiment with unashamed interest.

Vanneck admits the pressure is on. Her employer, Rupert Murdoch, is well known for his cynical attitude to the web. Like her rivals, Vanneck is reluctant to divulge her breakeven deadline but says it's "very soon". Her tone suggests the media mogul will exact a nasty penalty if she fails.

If Vanneck and her colleagues succeed it could create a whole new model for Britain's online publishers. Until then, a piecemeal approach mixing advertising, syndication and a few paying premium content services will rule the day.