Topic: Are You Ready to Pay for Each Site You Visit on the Internet?

[toasty0]

Please Note: This is an excert of an email I subscribe to. I post it here for discussion given the recent 'brew ha-ha over the rumor about Battle Clinic.

Are You Ready to Pay for Each Site You Visit on the Internet?

Well, some folks think (or hope) that's just what we'll be doing in a few years. According to Barry Diller, who runs an interactive services company, it's inevitable. He said in a recent keynote speech that the Internet will "absolutely" become a paid content system within the next five years. You can read more about what he has to say at
http://www.wxpnews.com/G8KIWD/090616-Internet-in-5-Years

I'm not so sure about that. After all, "information wants to be free" is the battle cry of the generation that grew up with Internet connectivity. The original quote wasn't quite as straightforward (It included the line "On the one hand information wants to be expensive, because it's so valuable. On the other hand ...") but the expression has been adopted as the motto of open source advocates and those who believe there should be no copyright laws. And there are a very large number of those people out there.

Note that Diller isn't talking about the cost of Internet access (which some believe should be "free," i.e. government subsidized). He's talking about having Internet users pay to access specific sites and services, on top of what they pay for the 'Net access itself. There are, of course, already some sites that use this model. The online Wall Street Journal and some other online newspapers require a subscription to view their "premium" content. Users have to pay to get into online dating services and "adult content" web sites. Information services such as Nexus-Lexus have a long history of charging for access. TechRepublic has a "Pro" membership level that costs $99/year and provides content for IT professionals beyond what's available on their free site:
http://www.wxpnews.com/G8KIWD/090616-TechRepublic-Pro

But just a couple of years ago, pundits were announcing that subscription-based web content was a "dying practice." That was the year the New York Times stopped charging site visitors and went to an advertising-based revenue model instead, and many other news sites followed suit:
http://www.wxpnews.com/G8KIWD/090616-A-Dying-Practice

Now the tide appears to be turning back in the other direction. The Frankfort Times put out the word this week that readers who don't subscribe to home delivery will lose access to free local online content on June 29th. They'll have to pay $20/month, which adds up to $230/year.
http://www.wxpnews.com/G8KIWD/090616-fTimes

Will folks who are used to reading the news without paying bite the bullet and subscribe - or will they just get their news someplace else? I'm guessing the Times may be in for a disappointment if they're counting on a lot of revenue from web subscriptions. I read my local newspaper, the Dallas Morning News, online. If I had to pay $20/month to do so, I would most likely just watch the nightly news on my local TV station instead. That's definitely the case if the online newspaper continued to have the same annoying, intrusive ads that it has now (and which I put up with because I figure that's the price you pay for "free" content). Here's an example of what I'm talking about:
http://www.wxpnews.com/G8KIWD/090616-Web-Advertising

On the other hand, there is content that I do willingly pay for. I've bought songs from Amazon (why Amazon? In a nutshell: no DRM). I've rented movies from Unbox. I've subscribed to the WSJ (a subscription gets you both the print edition and online access). I've subscribed to tech magazines for their online content. But I'm pretty picky about what content I'll pay for. There are many sites I routinely visit that I would give up if they started charging for entry.

Those who advocate making the Internet all (or almost all) paid content contend that the obstacle to that up to now has been the "hassle factor." They believe that if it were easier to make "micropayments" - small payments charged to your credit card or PayPal account - with just one click, people would be more willing to pay. There is some merit to that, I suppose. I keep "one click purchasing" turned off on my Amazon account precisely because I don't want to make it that easy to spend money.

One problem is going to be the recent trends in the credit card industry. Card issuers are raising interest rates, bringing back annual fees, and there's talk that some may do away with the grace period and make interest start to accrue from the moment of purchase. That means if I don't want to pay interest, I'll have to go pay off my credit card balance immediately after every purchase I make. That would certainly motivate me to use the card less often.

Of course, I could be completely wrong in my feeling that people are going to be reluctant to pay for web content. I would never have dreamed, back in my younger days, that today most people would be paying for television. When I was a kid, it was all over-the-air and it was "free," paid for by advertising (and there was no way to fast forward past it, either, although most of us did view commercials as an opportunity to go to the bathroom or replenish our drinks or mute the sound and engage in a bit of real-world conversation).

And if we don't want to pay for the content online, someone has to. That means more ads. In a recent discussion about Bing, Microsoft's new search engine, a reader brought up something regarding one of its best features: the pop-up preview box that provides you with a sampling of the content on each link, so that you don't have to go to the page itself. His concern: will people use Bing to get the info they need from a web site and never actually visit that site, lowering its hit count and thus reducing its attractiveness to advertisers? It's a good question, but I'm not sure it's going to be a problem. The Bing preview is great for such things as easily finding the address or phone number of a business without hunting through its site. It's also good for getting enough of the flavor of the content to know whether that site is really relevant to your search. But the preview boxes don't contain so much information that someone who wanted detailed content would be able to bypass the original site. If they did, I could see how that could become a problem for site owners.

Running a web site takes a lot of time and can cost a good deal of money (I know that very well, since I run several of them). Site owners certainly need to be able to make revenues somehow. Tell us what you prefer: more (and possibly more intrusive) ads or direct payment? Or are you afraid that, as with cable TV, the for-pay "ad free" sites would soon be just as full of ads as the old "free" ones? How do you balance the site owners' need to make a living with Internet users' desire to maintain the status quo, where most web content is freely accessible?

[Nemesis]

Ad revenues are down right now due to the economy.  This results in marginal advertising supported sites either failing or being in danger of failing.  Result: prediction of "pay per view" sites.  When the economy reverses and ad revenues are up the prediction will reverse.

[toasty0]

I agree to a certain extent.

I think pay sites will propagate though as more people demand more specialized services through the internet or demand exclusivity from the 'unwashed masses'.  Also a factor is that folks like Frey--who're willing to shoulder hosting costs--are slowly falling by the wayside as hosting expenses (hardware, software, and connectivity) continue to creep upward. While revenue venues (ads versus subscription) will be a factor, I think that venue will only be a factor as a function of time. The real question as I see it is not if we will or will not transition to a primarily pay-for-access-site based system, but how long will it be before we make that change to a predominately pay-for-access-site based web system.

[Lepton]

The solution to the internets is simple.  Content providers need to charge ISPs for their content.  We already pay for internet service, much in the same way that we pay for cable television.  The value in an internet connection is for most people online content.  Were there no content to be had on the web, paying an ISP for the service would be largely useless for most people.  Sites that wish to raise revenue via an internet presence need to band together in an industry association and negotiate with ISPs to charge them for their content.  To avoid public backlash, part of the content providers negotiating position needs to be that there will be little or no increase in the cost of internet connection for people like us.

What content providers fail to understand is that ISPs are making loads of money based on their free content.  Don't punish people who want to view your content by charging them more for it.  Make the people who are profiting off of it pay a fee for access to that content.

[marstone]

The solution to the internets is simple.  Content providers need to charge ISPs for their content.  We already pay for internet service, much in the same way that we pay for cable television.  The value in an internet connection is for most people online content.  Were there no content to be had on the web, paying an ISP for the service would be largely useless for most people.  Sites that wish to raise revenue via an internet presence need to band together in an industry association and negotiate with ISPs to charge them for their content.  To avoid public backlash, part of the content providers negotiating position needs to be that there will be little or no increase in the cost of internet connection for people like us.

What content providers fail to understand is that ISPs are making loads of money based on their free content.  Don't punish people who want to view your content by charging them more for it.  Make the people who are profiting off of it pay a fee for access to that content.

well, problem I see is that it is already like the TV analagy.  You pay the cable provider, get channels (thing is programming is paid for by advertisements) the way most sights work now.  Cable channels probably charge to be carried by the cable companies. 


The problem with having sights on the net charge the ISP's, then you would have ISP's picking what you can access through them (the only sights they want to support with money).  Either end user pay (adult sight style) or advert pays (like alot of other sights) is really the only way to go.

[Bonk]

gnu.org or fsf.org charging for content? I just can't see it.

I still think a "speciation" of the internet is far more likely (a la Xenocorp vision). A commercial network, a porn network, a gaming network, an open source network, a science network, a music network...

To separate the internet by task makes more sense to me as each has it's own financial model and can't be expected to adhere to one that will kill it. I think it makes sense for a number of reasons: network structuring as it continues to grow to insane levels, logical organisation, task specific and optimised protocols... yeah, I like it. Oh and add the logical implementation of content filtering for the home, school or workplace in an up-front and clear way.

Then ISPs could charge for access to various "channels" based on what it costs them to carry it.

[Lepton]

Of course I would not expect sites based on an .org domain to be charging for content, but sites that are based on profit and business should be charging for content.  I'd be utterly surprised if cable providers were not paying to have content generated by cable channels on their service.  ISPs would have little value to provide if there were not so many sites providing content.

The speciation that you suggest already largely exists in some areas except that it is the user that opts in to those services: porn, music, gaming (MMOs, XBox Live).  Perhaps it's just the sites that have a poor business model or poor product (newspaper websites, for example) that would hope for some sort of paid access model for currently freely available content.

It seems to me that supporting websites based on advertising alone is very challenging, so there will have to be some other source of revenue.  I'd rather see ISPs pay for what they have been getting for free even if it's just in terms of access (ISPs to be charged for access to ITunes store for instance) rather than having more costs thrust back on the consumer who is already paying what I would consider an exorbitant fee for internet access and quality of that access.

[Dracho]

You can only charge as much as the consumer is willing to pay.  For most content, that number is 0.

The whole concept of advertising sponsored material is the acceptance that the public won't pay for something, but will take it if given free (or in exchange for attention).  Apparently, a lot of people out on the Net have now grown up under the enhanced self-esteem concepts of public education, and no one has been kind enough to tell them what they are producing is half-a$$ed drivel.  The Market will step in and deliver that message.

[Lepton]

You can only charge as much as the consumer is willing to pay.  For most content, that number is 0.

The whole concept of advertising sponsored material is the acceptance that the public won't pay for something, but will take it if given free (or in exchange for attention).  Apparently, a lot of people out on the Net have now grown up under the enhanced self-esteem concepts of public education, and no one has been kind enough to tell them what they are producing is half-a$$ed drivel.  The Market will step in and deliver that message.

ISPs have been making money hand over fist based on all the free content on the web.  We all pay for access to that content via the service in the same manner that one pays for cable television.  Would you really expect to pay for access to cable television and then pay an additional fee for each show you watch?  It's ridiculous.  Content providers need to go after the people profiting off their content not the consumers that have already paid for the access to the service.  And the content providers won't be doing themselves any favors by walling themselves off behind a paid content service with some much competition that exists on the web for people's time and attention.

I have no problem paying for content.  I already have.  I won't pay twice for the same damn thing.

As a side note, I find your arguments fairly right-leaning and borderline offensive.

[Nemesis]

Having the ISP pay won't work.  There are just too many sites and the ISP would not subscribe to enough variety.   They would also need to work out deals with too many sites to be practical across too many national borders.  Further it would be next to impossible for a startup without big money behind them to get anyone to carry them.

Just look at how widely spread Dynaverse members are.  We either have or have had members from countries all over the world.  For some of those countries there may well have been just one member, what ISP would carry a site in a foreign country with just one customer in their entire country?  (No I am not saying Dynaverse would be for pay this way, it is just an example of a site with diverse membership widely spread but not in great numbers.)

Only a small minority of "major media" sites could work on such a model in a Cable TV like "channels" model.  I don't think the transition could be made.  If it was made it almost certainly would freeze out the little ISPs like the one I get my service from.

[marstone]

Having the ISP pay won't work.  There are just too many sites and the ISP would not subscribe to enough variety.   They would also need to work out deals with too many sites to be practical across too many national borders.  Further it would be next to impossible for a startup without big money behind them to get anyone to carry them.

Just look at how widely spread Dynaverse members are.  We either have or have had members from countries all over the world.  For some of those countries there may well have been just one member, what ISP would carry a site in a foreign country with just one customer in their entire country?  (No I am not saying Dynaverse would be for pay this way, it is just an example of a site with diverse membership widely spread but not in great numbers.)

Only a small minority of "major media" sites could work on such a model in a Cable TV like "channels" model.  I don't think the transition could be made.  If it was made it almost certainly would freeze out the little ISPs like the one I get my service from.

If a model like that would form, it would probably end up using a model sub that would consist of a few major ISP wholesalers that subscribe to carry the sites and then sell access to local ISPs for the content carried to the end users.  Basicly it would come down to a franchise system.

[Lepton]

Only a small minority of "major media" sites could work on such a model in a Cable TV like "channels" model.

Exactly.  If it is part of a website business model to charge for its content, then the charge should be made to the service providing it, not the consumers who has already paid for the service.  Only a small percentage of websites are considering offering paid content.  So based on the market for such content, paid content should be very restricted.

However, my other argument is that ISPs have made millions of dollars based on this content that websites have been offering for free.  This is why sites that want money for their content need to be asking ISPs for money, not consumers.

My assumption is that under the model I propose there would be large aggregators of content that would partner with many websites as the intermediators between content providers and ISPs.  These aggregators would have something akin to the distribution rights for the content and ISPs would negotiate a price for that content.  Bear in mind, this model only pertains to sites that want to get paid for their content.  If it's not necessary to their business model, that is fine, but walling off content I really don't think is going to make any site profitable that is not currently profitable considering the amount of competition that exists out there for people's time and attention.

I have no doubt that there might be any number of legal and practical concerns with such a model, but I am sure that similar problems have cropped up in the past such as when the major networks were consolidating their positions with television broadcasters or with cable companies.  The content providers are only going to have leverage if they are large, major sites or if they can band together in large associations or aggregators that can negotiate as a single entity.

Only sites that want to get paid need to opt in to this model.  It need not apply to all sites, just in the same manner that all sites are not looking into providing a paid service.  No one's asking for dynaverse.net to charge for access to its service.

[Dracho]

ISPs have been making money hand over fist based on all the free content on the web.  We all pay for access to that content via the service in the same manner that one pays for cable television.  Would you really expect to pay for access to cable television and then pay an additional fee for each show you watch?  It's ridiculous.  Content providers need to go after the people profiting off their content not the consumers that have already paid for the access to the service.  And the content providers won't be doing themselves any favors by walling themselves off behind a paid content service with some much competition that exists on the web for people's time and attention.

I have no problem paying for content.  I already have.  I won't pay twice for the same damn thing.

As a side note, I find your arguments fairly right-leaning and borderline offensive.

So, by your argument, maybe the websites should be asking the ISP's for money?  That's pretty much the cable TV model.



As a side note, I don't care.  My opinions are exactly that and if this is the first time I've been offensive, then I've led a pretty dull life.   

Everyone should have a friend that is willing to say, "Dear God don't do that again.. you're just not good at it!"    Anyone can blow "happy happy joy joy" smoke up your butt because they aren't going to be around when your ego is destroyed.  Or alternatively, one can just externalize failures and keep the ego safeguarded.   I often find that works quite well.