BUSINESS BLOGS
BUSINESS BLOGS
category: business
06 Mar 2009

According to CNBC reporter Scott Wapner’s interview with the New York Times chairman Arthur Sulzberger (via SAI), the NYT is mulling ways to charge for content:

Here’s how that model works: Everyone gets access to 3 articles a month. Register with the site for free and you can read 10 articles a month. Pay something like three bucks a week and you get access to everything online.

Once the Genie is Out of the Bottle, It’s Impossible to Get It Back In  

If any publication should in theory be able to charge for content, it’s a brand such as NYT.  The problem, of course, is that while its competitor the Wall Street Journal has always had a paid product - and lucrative one at that - the Times took the free route.

While this strategy seemed wiser in boom times, today’s softer ad climate makes the Times move seem dumb, in hindsight of course.

B2B Maybe.  B2C?  Not a Chance in Hell

No one argues the rationale of charging for content, but convincing / converting users to do so is pretty hard, nearly impossible in fact.  When I was at online men’s magazine AskMen, we considered it all the time but we knew that our content was not unique or valuable enough to command subscriptions.  The reality is that it helps if people use the underlying content for their work, so they can at least expense it the way they would expense magazine subscriptions.  But when you advice is pick up tips, you can’t exactly charge for that.

Meet Subscriptions, Advertising’s Ugly Step Sister

Of course, that’s half the problem.  The paid product idea didn’t stand a chance because as VP of Ad Sales, I was fortunate enough leverage the free content, SEO, demographics and corresponding traffic to build our ad sales into a million dollar business fairly quickly.  It then becomes a catch-22: you want more free content to have more inventory to sell to advertisers, but by giving away so much for free, you don’t encourage users to pay for the content.

Is Video Any Different?

When I launched WatchMojo.com to produce, publish and syndicate video content, people asked me two questions:

1- will you go into adult?
2- will you charge for content?

The answer to both questions was no, because

1- once you go adult you can’t go mainstream (and of course, I was not into that industry)
2- as much as our content is great and our library unparalelled, not enough consumers would actually pay for it.

A Palatable Solution for Startups, But Impossible One for Big Media

However, as the ad-supported was slow to take off (because the online video ecosystem is infested with UGC, which is as appealing to marketers as gay Nazi porn is), I decided to change tactics and get other businesses to pay for our content via licensing deals.

In other words, we license our videos to some third party sites who can host it, build an audience around it and profit from it, but in exchange we get paid via guaranteed deals.

Now, I think this option only works if your library

- is large enough,
- the content is of high-enough quality and
- if you publish frequently enough

(which explains why 9 out of 10 video content business will go out of business, too).

But the trade off is other websites will build businesses around and off your content.  To a startup and entrepreneur, this is a source of pride.  To a big media company like the NYT, this is an impossible scenario.

Long story short: big media has all of the tools necessary to make their online units very valuable and profitable units and enterprises, but they won’t let their egos and near-sightedness make that happen.  In other words, the same way that

- the fear of online cannibalization of offline revenue streams has left many big media companies victims of the digital revolution,

- the greed of seeing other companies profit from their assets is too much to bear.