Saturday, 21 March 2009

Pay for online content

Well, I'm learning my way around blogspot. Which is nice, as it means I'll better be able to express myself, and pass on those views (of my own, as well as of others) that are the reason for this blog.

However, my first "news" style post is of bad news. The business model of the "free" internet is going to fall down, at least according to this week's Economist.

Key points to note:
1. They've said this before:

“IN RECENT years, consumers have become used to feasting on online freebies of all sorts: news, share quotes, music, e-mail and even speedy internet access. These days, however, dotcoms are not making news with yet more free offerings, but with lay-offs—and with announcements that they are to start charging for their services.” These words appeared in The Economist in April 2001, but they’re just as applicable today.

2. They weren't entirely wrong last time - think of the collapse in value of AOL and its ilk.

3. A certain fundamental of all business must assert itself:

The nature of the internet means that the barrier to entry for new companies is very low—indeed, thanks to technological improvements, it is even lower in the Web 2.0 era than it was in the dotcom era. The internet also allows companies to exploit network effects to attract and retain users very quickly and cheaply. So it is not surprising that rival search engines, social networks or video-sharing sites give their services away in order to attract users, and put the difficult question of how to make money to one side. If you worry too much about a revenue model early on, you risk being left behind.
Ultimately, though, every business needs revenues—and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two internet bubbles is that somebody somewhere is going to have to pick up the tab for lunch.

My two pence? Facebook and Twitter will survive. They might turn out not to be worth the billions of dollars that they once were, but they'll still turn a profit on day. Also, news websites will still allow free access to their articles. They might, however, charge for access to yesterday's, or last week's archive. At the very least, they might ask you to register, so that they can use your email address for marketing purposes. But there will long be free news articles available on the web.

The Economist itself allows you to read their £4 "newspaper" (I consider it a magazine) for free online. They clearly aren't too sure that the free model is dead, yet.

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