Charging for Online Content Gets Closer

Expect the ecosystem of the Web to start feeling a little different once the summer slips away. Publishers, stung by an economic downturn and ongoing disappointment with online ad revenues, will begin charging for at least some of their Web content. Eager to help make this happen are two proposed e-commerce systems, Journalism Online and ViewPass, which are developing technologies to enable publishers to sell their wares. Gordon Crovitz, a co-founder of Journalism Online, says "we expect a very large number of news sites will have some elements of paid content beginning in the fall." Crovitz, a former Wall Street Journal publisher, says that a number of companies have already signed on with his service. He won't identify them, but one executive familiar with the situation says some may be announced by early July.

A key point, one that is often overlooked when people react to the prospect of such changes, is that hardly anyone has serious plans to wall off the entirety of their free sites. The preferred terms du jour describe "premium" offerings, or even, forgive them, "freemium," given the blend of free and paid. The dream dancing through some executives' heads involves a hybrid model: maintaining much or all existing free traffic while charging some subscribers fees for certain offerings, then using data from these users' browsing habits to help sell ultra-targeted—and thus higher-priced—advertising.

Too good to be true? Quite possibly. But given the state of things in certain precincts of the media world, there isn't much choice but to try.

Still, support for changing the free content model now comes from some surprising quarters. In late May, NBC Universal CEO Jeff Zucker said that the free Web video site Hulu, which his company partly owns, would consider selling some form of subscriptions. In mid-June, I interviewed IAC (IACI) CEO Barry Diller onstage at a conference and came away surprised by the vehemence with which he favored charging users. "People will pay for content. They always have," he said. "I absolutely believe the Internet is passing from its free phase into a paid system."

Not that there is anything resembling consensus on the way forward. It is not hard to find executives dubious virtually any plan to sell content online will succeed. (It is hard finding publishers willing to discuss these issues on the record, since talks are ongoing and many plans are far from firm.) Others, though, are banking on it. Given the stressed state of their industry, newspaper publishers are at the forefront of current discussions. Among those proposing to charge users for some content are top executives at MediaNews Group and Lee Enterprises (LEE) CEO Mary Junck. MediaNews, which operates 54 newspapers including The Denver Post, expects to launch revamped sites that include pay-only areas before the end of this year. (A spokesman for Lee, which owns the St. Louis Post-Dispatch and 48 other U.S. dailies, said there were no current plans to make its online audience pay.)

Meanwhile, Journalism Online and ViewPass are busy building their products. ViewPass is the brainchild of former newspaper executive and Silicon Valley CEO Alan Mutter and serial entrepreneur Ridgely Evers. When completed, ViewPass will work on multiple sites. Aside from giving publishers the ability to charge for certain offerings, it will capture data about users' online behavior to enable participating sites to sell much more targeted and tailored ads. (Journalism Online shares some of these capabilities.) The Associated Press is mulling backing some of ViewPass' developmental work, individuals close to the companies confirm, though neither ViewPass nor the AP will discuss it.

Will any of these moonshots actually work? For the ViewPass strategy to work, publishers would have to agree on a platform, consumers would have to use it, and then, most importantly, companies would have to buy ads. This is a complicated approach for an online environment that has typically rewarded simplicity. But we're well past the point where simple solutions would get the job done.

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