Brief encore from the subscription model
By David Walker (Google profile)
The existing commercial creators of text "content" - news stories, essays, magazine stories, stock market analysis and the like - could be forgiven for thinking themselves trapped in one of those horror movies where the victims die one by one in a seemingly never-ending stream. The venture capital dried up in the dot-com bust. Then the suddenly impoverished dot-com companies stopped buying banner ads. Then a generalised advertising industry recession made everything worse for the newest advertising medium.
Commercial text-content Web sites have fared so badly this past year that some are once again asking users to pay direct. This new subscription boom comes in many guises. Salon.com is charging $US30 a year for "premium content" - free of ads, and including such extras as a "gallery of erotic art". Variety.com now asks $US59 a year for all site access. Yahoo! Finance offers to stream real-time financial data to users for $US9.95 a month. TheStreet.com is charging for early access to its US investment articles. And the Australian Financial Review now grants access to most of its online content only if you subscribe to the print version as well. More subscription proposals come to light each month.
Subscriptions already bring in revenue in a few niches - financial data, specialist business research and so on. The Wall Street Journal, everyone's favorite subscription success story, claims around 600,000 subscribers at $US59 a year, or $US29 if you already buy the print edition). Many consultancy firms sell reports over the Web. The US magazine Consumer Reports' subscription product analyses reportedly make money. Elsewhere, thin pickings remain. Yahoo! and the Financial Review are garnering some revenue from their finance offerings. The niche Australian finance, politics and media site Crikey is crawling towards six-figure revenue.
Some strategists are supporting the subscription urge. One of Jupiter Media Metrix's most popular recent reports hints at a future for subscriptions, citing figures that more than 40% of US Web users "acknowledge that content can't remain free forever". It expects the paid content market grow to $5.7 billion by 2005 (albeit driven largely by the advent of paid video downloads). Lyra Research has come up with a similar polling result.
But to date most users have repeatedly demonstrated that they will pay for Web content only if it cannot be found elsewhere, and if it can then make those users money (or, in the case of a substantial subset of users, if it contains pictures of other people having sex). Outside these narrow constraints, online subscriptions have rarely worked, and seem unlikely to work now just because business owners need the cash. Even Jupiter's analysts say that "the majority of [new] stand-alone subscription offerings will fail, or at least fail to reach any critical mass of users".
Microsoft's Slate, USA Today, TheStreet.com, Business Week magazine and Salon have all tried charging users over the past four years, and all ditched the idea when the hurdle of payment sent their online audiences plummetting. In the words of Slate's Michael Kinsley, junking the scubscription experiment back in 1999, "Web readers surf. They go quickly from site to site. If they really like a particular site, they may visit it often, but they are unlikely to devote a continuous half-hour or more to any one site the way you might read a traditional paper magazine in one sitting. This appears to be in the nature of the Web and not something that is likely to change. And it makes paying for access to any particular site a bigger practical and psychological hurdle."
Research firms such as Forrester Research have found only a tiny minority of consumers saying they would pay even small sums for new, financial information, music or movies online. Pundits can point to no new online subscription success stories. Indeed, 2000's most high-profile subscription attempt, media news and analysis site Inside.com, simply confirmed the subscription model's hopelessness; the publication reportedly has less than 3000 subscribers.
The alternative to ads or subscriptions, of course, is to concede that the Web simply supports different business models from today's print media world. The Internet content successes of today are enthusiast sites and commercial sites whose Amazon-style justification is to support transactions. Perhaps we should accept what we have, and stop expecting the media world to evolve back to its pre-Internet patterns.