Ken’s Take: Didn’t AOL live (and die) by trying to charge folks for largely undifferentiated content? Didn’t work for them, and won’t work for these guys.
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Excerpted from New York Times, “They Pay for Cable, Music and Extra Bags. How About News?”, by Richard Perez-Pena and Tim Arango, April 8, 2009
Just a year ago, most media companies believed the formula for Internet success was to offer free content, build an audience and rake in advertising dollars. Now, with the recession battering advertising online, in print and on television, media executives are contemplating a tougher trick: making the consumer pay.
Publishers like Hearst Newspapers, The New York Times and Time Inc.are drawing up plans for possible Internet fees.
“People reading news for free on the Web, that’s got to change,” Rupert Murdoch said last week at a cable industry conference in Washington.
Only a few publishers have tried such a transition, with mixed results. The Los Angeles Times and The New York Times each tried charging for access to some content online, then dropped the requirement because it cost them audience and advertising revenue.
But from networks selling downloads of TV shows, to music companies trying to curb file-sharing, to struggling newspapers and magazines, the make-or-break question is this: How do you get consumers to pay for something they have grown used to getting free?
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Some industries have pulled it off. Coca-Cola took tap water, filtered it and called it Dasani, and makes millions of dollars a year. People who used to ask why anyone would pay for television now subscribe to cable and TiVo. Airlines charge for luggage, meals, even pillows. And some music fans who have downloaded pirated songs are also patrons of iTunes.
All of these success stories offered the consumer something extra, even if it was just convenience.
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“With newspapers and magazines, there have to be features you can’t get anywhere else, and maybe part of what you would pay for is the privilege of helping the business survive, but that is more of a difficult sell.”
By adding free features like e-mail alerts, blogs, discussion forums and video, news organizations are trying to persuade readers that they provide something more valuable than the aggregators and blogs that attract news readers online.
“You have to expect that at first, most of your customers won’t go along,” said a professor at the Kellogg School of Management at Northwestern University. “You have to train people — the academic word is ‘educate’ — to expect to pay, and unfortunately for media companies, they’ve trained people to expect the opposite.”
Edit by DAF
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Full article:
http://www.nytimes.com/2009/04/08/business/media/08pay.html?ref=media&pagewanted=print
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