Monday, January 18, 2010

5 reasons why charging for online content is risky business

The New York Times Online is in the news for moving toward a paywall. That means they're considering going away from free content online. They want to start charging money for it.

"We're Going to Have to Pay to Read the NYT Online" by Althouse.

"Slim Times Option" at New York Post.

"After 3 Months, Only 35 Subscriptions to Newsday Paywalled Website"

5 Bad Things That Happen With Paywalls

What can you expect when you throw up a paywall on your web content?

(1) Decrease in readership, since only paid subscribers can view it.

(2) Decrease in linking, since blogs and websites can't link to paid content, it's blocked, entry is denied unless the reader is a paid subscriber.

(3) Decrease in search engine results, since nobody's linking to your content If people can't link to your content, reputable bloggers won't quote it because only paid subscribers will be able to verify that the quote is accurate. With fewer websites linking to your articles, your authority and popularity rankings with search engines will plummet. Say goodbye to blogospheric buzz, too.

(4) Decrease in ad revenue, because your readership, linking, and search engine results have sharply declined. Fewer readers of your content means fewer eyeballs seeing the ads surrounding it.

(5) Decrease in competitive advantage, because now everybody's going to the free online content of your competitors, rather than bother with getting a paid subscription to your content. Your competitors will end up providing information to people who used to read your free online content.

If you provide extremely rare, unique, exclusive, hard to find, unusual online content, and that special content is extremely valuable to a large number of people, you might be able to use a paywall.

If you provide online content that helps people make money, find a job, or succeed in their own business, and if that content is consistently superior, you might be able to charge for it.

But how do you become known, in all the noise and clutter of the internet?

You'd have to spend a ton of money advertising and promoting your paid online content. Good luck with that.

Does the New York Times, which has repeatedly suffered loss of credibility in recent years, due to various editorial scandals, have such super-valuable and super-exotic content? Time will tell.

Alternatives to Paid Online Content

One alternative business model is to charge for exclusive premium online content, targeted to a specific audience. Another idea is to charge for special tools associated with your content, that helps people use it or enjoy it more.

I've thought a lot about how YouTube could generate revenue, aside from charging users to view regular content, so let me use YouTube as an example.

YouTube could charge premium users for access to an exclusive video editor that would enable them to add titles and effects to their videos.

YouTube could also make special editions of content not available online, or hard to find in their website, and charge money for it. For example, high resolution DVDs of video compilations, in categories like music video, comedy, home-made craziness, documentaries, and science/technology.

Perhaps the New York Times could package some sort of valuable content, call it the premium edition, and charge money for that. But their regular content, the news and opinions, are basically more generic than specialized. You can get the same news story, and even similar opinions, all over the internet.

Paywalls are risky business. Before you start charging money for online content, consider less risky alternatives.


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