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Will Internet Users Pay for Content?
securitas writes "One of the most challenging business problems is trying to figure out how to make money on the Internet, especially with content. Louis Borders believes that Internet users will pay for online content and explains in an interview the how and why. He is founder of Borders Group, a $3.4 billion company that is the second-largest bookseller in the USA, as well as the billion-dollar online grocer and dotcom flameout, Webvan. Borders thinks he has found the answers and has just launched KeepMedia, an online newsstand subscription service. As someone who has had spectacular success and failure in his career, Borders' latest venture will be an interesting one to watch."
We are exceedingly cheap. We expect FREE on the internet. It's been burned into our heads since the dot com boom. At one point, "free" topped "sex" in web searches. We think if it's digitized and non-physical, we should have access to it and be able to copy it. We can't grasp the concept of monetary value for digital things. We can't wrap our brains around the idea that those digital things took work to create, and people that made them want to be paid for them. Since we can get it so quickly and easily over the internet, we just cant comprehend that.
If MS ever started selling Office exclusively as a download, they'd lose millions of dollars. Because Office just wouldn't feel like a real product to them. Put a CD in that consumers hand, though, and they're more willing to pay for it.
With the exception of Apple users, who will do whatever Stevie tells them to (buy music at the Apple Store! On your Ipod! Now!), most denizens of the internet are, let's be blunt, cheap bastards.
Life is hard, and the world is cruel
...but wasn't one of the original ideas behind the Internet and the World Wide Web the spread of knowledge?
Doesn't making people pay for ideas kind of make people not want to *have* ideas?
Edward@Tomato - /home/Edward/ man woman
man: no entry for woman in the manual.
"Qua!?"
Quoting ESR:
If you want to describe a feeling of comfort and satisfaction, by all means say you are ``content'', but using it as a noun to describe written and other works of authorship is worth avoiding. That usage adopts a specific attitude towards those works: that they are an interchangeable commodity whose purpose is to fill a box and make money. In effect, it treats the works themselves with disrespect. Those who use this term are often the publishers that push for increased copyright power in the name of the authors (``creators'', as they say) of the works. The term ``content'' reveals what they really feel.
As long as other people use the term ``content provider'', political dissidents can well call themselves ``malcontent providers''.
How small a thought it takes to fill a whole life
But:
1) only once (unless it's cents - micropayments)
2) no DRM copy restrictions
3) open file formats
2 & 3 are essential for fair.
I only started buying DVDs when 2 & 3 were true (playable under Linux).
We've been accustomed to free content and will tend to avoid payment whenever possible. Most people (especially AOL users) will figure they've already paid and shouldn't have to do so again.
Salon Magazine has been forced to modify its subscription model in order to survive (if you call that surviving).
Perhaps one model that might work is a monthly credit from your ISP that will go to pay for initial usage of pay/view content.
Given how few people will even pay for Slashdot content, we're not likely to see this widely adopted anytime soon.
Don't anthropomorphize computers, they don't like it.
As a /. subscriber I guess I'm proof positive they will pay.
But you are the wrong demographic. Most people could give a shit if they lost a site because it couldn't pay the bills (for slashdot, that would be me).
IMHO, people will never pay for content unless a system of micropayment is developed and *bundled* with their PC. For example, lets say that Microsoft packaged $10 of micropayment into their next OS... Users would have already paid for it so there would be no reason not to use it. So they would.
And then they would see the content that would be available in a pay-for world. If good enough, then I'm sure that there would be renewal. But you'd have to make that process easy, as well.
Life is the leading cause of death in America.
But there are certain obvious conditions that one seems to forget:
1. People have to want what's on sale
2. It must not be available anywhere else (cheaper)
3. Profit.
AFAICS everything comes down to 1 and 2, and if one does the job sem-decently, 3 as well. So, yes, people will pay for "content", but they must want it and it must be unique (or perceived to be unique, since perception is as good as, or possibly exactly the same as, reality.)
Ceci n'est pas une signature
"I love Amazon but I'd say 1 slightly successful company out of a thousand, probably doesn't make a good business model."
Amazon sells books, music etc on the internet. Like people have done with ads in magazines etc. They were/are cheap and convenient. Not a new business model.
Micropayments IS a new business model. I'm not a slashdot subscriber, as i wouldn't get anything (of value to me) extra for paying.
I think you are comparing apples and oranges. Slashdot is different from content provider like the one mentioned in the article. Content aggregator would be a better definition. People subscribe to show an appreciation of that service other than the fact that it is largely a channel of expression.
Siggy Say, Siggy Do
Hmm - Maybe you should log in as a non-subscribing user and check out the huge .NET ad in the middle of the page! Somebody sure seems to be making money from my browsing...
In Soviet Rush, today's Tom Sawyer gets high on you.
You'll see people start paying for content, when distributers start pricing it correctly. Sometimes I only visit a site once, maybe twice. Do I want to buy a 20-50 dollar a month subscription to get the article I'm interested in? Obviously not.
However, I would be willing to make a 50 or 75 cent investment in a good article or two. Micropayments could be a huge boon to the net. Paypal or Visa or Mastercard ought to get their act(s) together and make it happen already
Just because you pay for one site that you likely sit on all day, doesn't mean Internet users in general will stand for being nickle-and-dimed to death by every site they visit only a few times per week/month.
The pay-for-no-ads/extra-feature model seems to be the best that they can hope for, IMO. If the content isn't spectacularly unique, people will go elsewhere. The idea is to get 'em hooked on free content, then probe for a few bucks for some extra features.
Opportunity knocks. Karma hunts you down.
As a long-time Slashdot reader (my other userid is triple digits) I'd have to say I disagree. Slashdot is proof positive that offering nothing of value for your money is reason #1 I wouldn't subscribe. I can easily get rid of the ads with Mozilla these days without even bothering to setup a junkbuster proxy. So you get to see articles 10-20 minutes before they go to the main page. So what? I've usually read them the day before on fark.com or some other news site.
I think the popularity of peer-to-peer networks alone is overwhelming proof that people will NOT pay for content if they have an alternative. I'm just as cheap as the next guy and would prefer to download songs off of Kazaa before I spend any money on a CD. The only exception with me has been movies. I feel a DVD offers a good value at the $9-$15 for 2 hours of entertainment and bonus material. Plus I don't have to worry about buying a DVD burner or saving 5 gigs of data somewhere (afterall, the whole advantage of DVD is quality and surround sound, etc. which I would lose if I used DivX or encoded to SVCD).
I know its music, but apple gets poeple to pay for music. Wall street journal gets people to pay for there services as does bloomberg. Information is valuable. There is no easy way to pay for web pages if you want a little at a time.
Its like newspapers. In boston we have a "Free" daily paper (The Metro) its small but has the days news. The "pay" Boston Globe is much bigger with more depth.
There is a place for both.
I have to disagree with you. The reason is people will pay for content if it's worth it. People pay for dating and meeting sites all the time, and I heard ESPN Insider does well. The problem is people don't want subscriptions. If I see an article I want to read, then I should be able to buy that article, and not a months worth for $9.95 or whatever. In the long run people will pay for quality sites, that are well run, well moderated, and deliver interesting content.
and people generally don't pay. We tried it as a last resort before shutting our site down awhile ago. The only way that worked for us to make money was to syndicate our content onto other web sites. We did pretty good business until the .com bust killed that. Another avenue we pursued was advertising but we didn't have many people on staff and chasing ad dollars (at the time anyways) was a full-time salesman's job. We were all techies. Needless to say, we didn't get many ad contracts. We also tried joining "networks" (think Home and Garden "Channel" on something like MSN)and that was a nightmare. Obviously, we weren't very good businessmen either but it was fun for awhile. People just don't expect to pay on the internet, there's simply too much free stuff.
We built a site for the New York Review of Books years ago with an online subscription model and it's been very successful.
The key -- that some folk seem to miss -- is that you need content that people are willing to pay to access. All too often the content provided by a subscription site isn't worth the price even if it was free. It also helps if your publication's demographic actually has money.
It's like television, which survives off ads. The only problem is we've learned that advertising on the net doesn't work very well. I think with clever, amusing, and less annoying ads, that could change. Also, I think most people base the success of an ad on the number of click-throughs; this is not logical, especially if you have an ad similar in nature to a print ad, where a click-through is not necessary to gain your interest in the product/service.
The Internet is still pretty young, and the Web is even younger. In time, hopefully, things will flesh out and new business models will emerge. I think for now, though, the industry is still trying to recover from the burst tech bubble.
"To confine our attention to terrestrial matters would be to limit the human spirit." -Stephen Hawking
But I won't give my credit card number to a thousand different sites. I will not subscribe to a bunch of sites (recurring payments or minimum payments greater than what I'll use on my visit), and I will not enter my personal information over and over and over again. And when it comes to downloadable books, software and music, I want that content downloadable forever, or the deal's off.
Until there's a standard for centralized payments (it's fine if there are multiple payment centers, so long as they all speak the same protocol), I'm going to use Google to hunt for alternate sites for information and entertainment.
Until downloadable content is as loss-proof as a book or a CD (meaning my library doesn't go away if a hard drive goes away without a backup or I run out of space and have to kill a folder of tunes I won't listen to for a few months), it doesn't feel like you actually own anything. If you have a permanent account with permanent access, you feel like you've purchased something, and it feels like your money's afforded you a little certainty. If you only get one, two or three downloads or a 30-day cap and then you're screwed, it's just as fulfilling (and often less trouble) for others to load up bittorrent and grab a few movies and CD images. The whole download-limited purchase thing seems really short-sighted.
If you post, you make the comments that make the pages that carry the ads. Even if you don't post, you read the ads and maybe click once in a while. You're not freeloading here if you don't pay.
...which I wish I could take credit for :)
I heard a guy speak about this a while ago. He is CEO for a large Australian portal site, and like all portals, is struggling to make money. His comment was that, as a general rule, people are more likely to pay for content that is user created, rather than content that someone else creates - bad news for traditional news sites!
Some examples: Hotmail premium services, dating sites, forums (see EZBoard), and yes, even slashdot.
Sure, most of those examples have many more people not paying, but the key thing is they are all getting people to pay money. Think about sites you pay for or might be tempted to pay for...
Read reviews of shopping cart software
Do you think the freeloader mentality on the Internet is ready for change? Have you noticed the way whenever a /. article is from the NYT, a google link pops up within the first several comments?
And the answer they'd get back would be a "Yes" with caveat. People will pay for something, if its more valuable than the money they're paying out and isn't available elsewhere (google's cache included) for less. They've chosen to compete in a marketplace where most of the content is free, and already encompases nearly every fine gradiation of the human experience. A tough way to make money to be sure.
Unless they're planning on going the SCO route, and intend to sue other content providers for "dumping."
--Jimmy has fancy plans; and pants to match.
In addition, we are the ones who are providing a lot of the content. The people who run this site *need* our input or it would just be google news. even if the site didn't have ads, we still woulndt be freeloaders.
The Television Wiki
- Same or similar, comparable, slightly lower quality content cannot be available elsewhere for free
- They have a meaningful value proposition (people will feel like they're getting what they're paying for)
- The economy (and their current income level) allows them to have the disposable income for it...as most online content is not vital to have
A prime example (although it's not "online") is HBO. I pay an extra $10/month for it because its content is (imho) that much better than the rest of what TV has to offer. If an online service can get people to feel the same way (that their content is that much better than the rest of what the Internet has to offer) no doubt people will pay.as a non subscriber but long time reader of slashdot, I guess I'm proof positive they will not pay. Thats also a testament to the number of linux users (and warezed windows users) that read the site.
slashdot is far from one of the largest content delivery systems, but it is probably one of the majors as far as the 'friendly' revenue model.
the simple fact that they have to think about the money involved must take a lot of the fun out of running the site.
This is my sig. There are many like it, but this one is mine.
My piss-poor website is funded out of my own pocket, and realistically, that's the way it should be.
I put up some banners for shirts and posters, but to date I have not had a single purchase. It really doesn't bother me too much. I realize that I'm making only a couple of hits a day, and as of late, have not been updating as often as I'd like to. Even so, I do not consider my site to be operating at a loss. My bandwidth is a fixed cost, which I pay anyway for net access. Any sales that I would make off commissions would be considered pure profit. The fact that I haven't made anything yet does not mean a loss.
Once more people can do this, and more bandwidth becomes cheaper, the big, pay-for-content websites will fall by the wayside. Anything that they put up will be mirrored in one form or another, new, fresh opinions with less business-centric morals will replace the need for 'organized content'.
Who wants the internet ordered for us anyways? I thought the whole point was that we were to sift through information and opinion and *gasp* make an informed decision!
I'm paying for my computer, electricity, my dsl connection and my isp account.
What more do they want from me?
So I took a look around the KeepMedia site. It seems you get access to ALL the magazines available for a pretty low price. And there's a huge list of magazines there.
I drilled a little deeper and notices, well, 90% of these magazines I have no interest in reading. There's a handful of titles that look pretty good but there's some serious gaps ... I didn't see enough newspapers or tech magazines that I'd like to see.
Finally, it dawned on me, this is not a good idea for me. I seriously doubt these articles have a lot of the PICTURES. It's not going to be as robust as a magazine. Lastly, what's the point of this, when I can just go to the library (as I do, maybe once a week) and just peruse the magazines there? Better selection, actual print copies.
This site basically is running against the problems with eBooks. In addition to paid content, we have the problems of, do people really want to read magazine-length content on a screen? Do people want portability? Do people really want to "own" content that's only online? At least these people got the price point right. But I think they're gonna have to think about some of these other issues, too.
It just seems like, when your business model is competing against the physical library, you got a hard road ahead of you...
I suspect that most people who subscribe to /. think of it as charity. Since the people who are paying are those who are also generating the content, it kind of is charity. IMSO this is different than requiring folks to pay (or no access) for content they have no real emotional stake in.
Yes, the current system is not suitable for payment.
The reason is that caching is optional and not under control of the user.
When you pay for content, using already paid and cached stuff or downloading again is much bigger difference than just a matter of time.
We need to enhance the browsers to enable micropayments.
While it's easy to find current news on the Web, finding old news (useful to put current stories in context) is almost impossible. Due to storage limits, most information providers don't keep a lot of old information. Yet, it's exactly this "old" information that is so useful in research. I, for one, would be glad to pay $5/month for a useable archive of information.
The question now is: does the KeepMedia content qualify as a useable archive of information? The magazines they have at the moment are actually promising. Aside from the trade journals (a great source of information for activists and other investigative types), there are some interesting magazines, including Mother Jones, one of the better muckraking magazines in the U.S.
I think I'll try the 7 day trial and see how much value I derive from what's available. If I wind up with the equivalent of 4-5 magazine subscriptions plus a library's worth of back issues of other material, this could be a bargain.
I like Borders bookstores, but this venture wouldn't get my investment money.
One thing that struck us is that the movie business (gets) two-thirds of their money from their archives, while magazines are getting zero. That's a huge pool of content that's not monetized at all.
By "archives" here does he mean DVDs, videotapes? I would think so, if it accounts for a 2/3 of revenue. I think there's a fundamental distinction here, in that a DVD has the advantages of rentability, playback on the medium of your choice, and reusability, driven by Hollywood's well-oiled publicity machinery. As such, it can command relatively high prices. A magazine archive strikes me as, well, old magazines. Why does Borders presume that the magazine industry would not have thought of the idea that they could keep selling their magazines? Certainly the viability of that doesn't depend on his "platform", and to a large extent the market has already spoken on this by the (nonexistent) profits old magazines can generate.
Co-branding is an interesting business activity, because some of the great success stories in business are co-branding models. One specific example is when Dryers Ice Cream and Starbucks got together and made their Java Chip ice cream. It became the best-selling ice cream in the world.
Nice buzzword, but I'm not sure how the example he cites has any relevance to the business model he's selling. Dryers and Starbucks worked together to develop a new product; what he's talking about seems to be just another portal.
We've had a lot of meetings with them--extremely positive meetings--and I'm sure they'll come into the platform in short order.
Okay, what is this "platform"? I think I can substitute "web server" everywhere you're using the term "platform" and it'll mean the same thing. I'm not seeing any mention of any competitive differentators in this interview.
The more content that moves behind the pay wall, the more willing people will be to pay.
This is just bad logic. How does B follow from A here? In fact, I'd suggest the opposite, that this basically is just a bait-and-switch model applied to the internet. Personally, I'll go to the sites which give me useful content as a baseline.
Another was an execution error: They mixed really high-quality content with Joe's dissertation on something. And strongly branded publishers don't like to see their content next to second-rate content.
Hmm... oddly, I usually find Slashdot at a filter of 5 considerably better than the "strongly branded publishers". Or moreso, everything2. I must prefer "second-rate content".
They become too focused on making money in the short term, like paid inclusion does. I'm a fanatic about that--I just think that's a horrible thing. If you're telling people that you're paid to do this, like Google does when it separates its paid links from the rest, that's fine. That's good business. If you're not telling people, however, it just seems disingenuous, and it is certainly no way to build a brand.
Okay, so your platform is going to have 140 magazines you represent, from whom you receive your revenue, and you'll offer the user a choice of... those 140 links. Sounds like paid inclusion to me.
In essence, I think Borders should be looking for revenue not in co-branding between him and other word shops, but co-branding between himself and the user. That's what, IMHO, an internet user is most likely to pay for; a system that tailors itself to him, and which he is a participant in, a la Amazon, eBay or participatory sites like this very one. The primary thing the internet distribution channel can give the user is time, in speed of accessibility and speed of finding relevant content. The second thing is variety, which the range of, for example, on-line gaming can offer that 140 channels of old magazine content cannot. I'd suggest he start there with his business model.
~ Whence do you come, slayer of men, or where are you going, conqueror of space?
I pay $4.95 a month for a ESPN.com subscription. I also paid the $24.95 for a yearly subscription to IGN.
So I pay about $85 a year for content. Why? Because it's content I actually find really useful. ESPN has a lot of really good articles in their insider pages, in aditition to things like linking articles to the local paper's websites of my favorite teams on sports stories. Not to mention their own extra content is written by the top guys in the business. IGN has a few nice videos once in a while, and some of their previews are really good. Not to mention with both of them, I got printed versions of ESPN the Magazine, and EGM.
The problem with paying for slashdot pages, or other micropayments, is that I'm getting anything special. I don't care to "help out a website". I want something I can't get anywhere else. If slashdot offered something like a private mirror for linked sites, distribtutions, debian/gentoo mirrors, etc. that's something to pay for. Hell, if even slashdot had their own articles to read to "subscribers only" I'd at least look to see what they were.
So to make a long story short...to anyone that has a website and wants subscription dollars. Make something worth paying for, and people will pay for it. Too bad only a few websites really grasped that idea.
I don't understand the rationale behind this man's thinking...nearly all current articles and news is available for free online...and who cares about old magazines/newspapers? Sure, I keep my old National Geographic's and Popular Science, but I would not pay for virtual copies of then which will be riddled with DRM, which I won't be able to copy or place on DVD-R for archival (probably)... Case in point: I find an intresting article in Scientific American which I decide to share with my friend...I simply give the magazine to my friend (let him borrow if for a few days), how would I be able to do that legally and without breaking the EULA that is no doubt going to be bound to this service. Sure, I have not seen the EULA yet, but I am sure (100% sure!) that I won't be able to let my friend borrow it...
http://chrono.posterous.com/
This isn't really an attempt to get people to pay for online content. It's actually an attempt to get people to pay online for magazine content. The content in question is not freely available, and it's already proven to the customer. If you pick up a magazine at the supermarket and turn to the "letters to the editor", there will be a number than start, "In your article in the July issue...". If the letter is interesting and you didn't pick up this magazine last month, you may be interested to read this article. You'll probably have a lot of trouble finding it anywhere convenient. These people have it and will show it to you if you've subscribed.
The general problem with online content is that, when you identify that it's worth paying for, you're done with it. The main way to escape this is to either make the content freely available, with some perks for subscribing, or to sell content that the user already knows to be worthwhile. Slashdot gives you everything, with a delay if you're not paying. There are comic strip sites that let you see dialy strips for free, but the old ones require a subscription.
To use a multi-billion dollar example, people are quite willing to pay for books on Borders; it makes sense that they'll pay for magazines on KeepContent. In both cases, they have some expectation in advance of liking the content, and they're used to paying for the same content in a different context.
Why in the world would someone pay for a magazine online? Can they take it to the bathroom with them? Can they take it to the beach? The hair salon?
Think about it. The internet is an AWESOME repository for free, highly technical, high quality, highly used information. It is not an entertainment venue. Now using TCP/IP to enable video, audio, and gaming applications is entertainment, and for that people are willing to pay: witness MMORPG's, digital song download services (iTunes), etc. But for reading scientific research papers, "how-to program in C++" guides, etc. the "Internet" (not the "entertainment internet") will always be something people aren't willing to pay for. What savings is it to me if I have to pay for it when I could just go grab a copy from the library to take all over the house and outdoors with me for the few weeks I want to be entertained and/or informed by it?
I find it funny that most retailers online still don't get it about online shopping. I'm not looking for market hype to pump up the product online! I'm looking for dimensions, included architectural design methods, interoperable components, stress tests and accompanying graphs, and all the other vast amounts of information to be had that doesn't fit nicely on the back of the box at the store. And if that's not what the online store is selling, it better be hard-to-find, very unique, very specific stuff they're selling or it's not worth my time and effort to order it from them -> I'd rather just run to the store on my way home and pick up the item(s) myself.
This service looks like another pathetic attempt to sell content on the Internet, which failed miserably and continues to fail. It's even easier to filter out ads on the internet than to filter them out flipping through a copy of the magazine on the shelf. I can't run a bayesian filter on the ads in the magazines on the rack at the store or on my home mailbox filled with Publisher's Clearing House junkmail, but I can on my email inbox. I can use everything BUT IE to filter out ads on Internet web pages.
This would never happen, because of the amount of competition. For every website that would charge there are and there would be a hundred that would not.
There is no way that you can corner people on the Internet as you can do with physical stores, where you can take over a key piece of land and play with that. That simply does not happen in Cyberspace.
All this is wishful thinking by companies. If you go to CNN, for example, they want people to pay for some stream-based content. But why should you? There are so many website within and outside the US that will provide you with the same content for free that it is ridiculous. And as more time passes, more people will be more aware of this fact.
I work at a publishing company with a slew of websites. Sure, we can do what AOL did and block access to everyone but paid subscribers... but then the web visitors will just go to the competition.
For every site, there are a dozen good/decent quality sites that offer the same content. I mean if CNN became a paid site would you pay or go to another news site?
No one has cracked the paid-for-content nut and this effort surely won't do it either. I mean maybe if they sent you a PDF of the magazine for offline reading - but just reading on the web? Forget it.
First off, the selection of mags is even worse than what the local teenager comes to the door trying to sell you so they can "realize their future." Second, after scanning that, I discovered they've added code to the site so you can't use your browser's Back button to get out of it. Did they hire porn techs to program it for them? Will they bring along other ethical practices from the porn industry?
"with their freedom lost all virtue lose" - Milton
I may be predudiced, but I would think that /. readers are not representative of the aggregate Internet population. I think it can have that appearance simply because so many similar types come together at the same waterhole for passionate discussion of techno-social issues.
Most people on the Internet are still of the mind that they are 'entitiled' to high quality content by their ISP fees. I think the real problem is that the average user out there hasn't yet groked the spirit of community that breeds responsibility and "giving back".
In general I don't see the Internet users ready to subscribe to content. Perhaps with micropayments - but those may also breed a disdain for 'nickel and diming' that will turn off newcomers.
It will take time before the average user can view the 'net as another dimension where their actions effect others, and the overall quality of life. When the *average* user spends time thinking about their postings on sites other than bleeding edge tech portals, THEN we will be ready to see digital subscriptions become a viable business model.