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Hypergene MediaBlog » Online news subscription models won't work, again

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Friday, 18 Oct 2002

Online news subscription models won't work, again

The free ride is over. At least that’s what many online news executives are hoping.

According to recent reports (Reuters, Poynter, OJR), U.S. and European news sites are again exploring plans to make readers pay for their news through subscriptions or charging for premium content.

Paying for online news in it’s current form does not make convincing business or strategic sense. Here’s why:

Shoveling stories on to the Web is not a “value add"
Posting stories to the Web verbatim is not taking advantage of the medium’s interactivity or the social network it resides within. There is clearly a lack of innovative thinking about how to make online news and information more relevant an useful to readers lives. As Vin Crosbie said recently, “Most don’t realize mass media products don’t ably work in the new medium.” (ref 1, 2).

News organizations say that banner advertisements don’t cover the costs of online operations. If the distribution is nearly free, and there is no new content, and the content has already been paid for by the offline operations, what are online subscribers really paying for? You can’t build a business by asking your readers subsidize poorly run online operations.

Readers already pay
In a way, people already do. They pay for their share of the distribution costs with their monthly ISP bill. They also pay with their time, registration information and content contributions. News sites do not rank high on anyone’s usability list with more obnoxious banner and popup ads contributing to the frustration. As well, some news site are also asking for detailed personal information including phone numbers, addresses, family income, birth dates and more. If you make readers pay, you’re going to have to consider giving that info back or cutting back on the display advertising clutter.

People don’t pay for what they can get for free
Even if all for-profit news organizations started subscriptions tomorrow, readers would still have NPR, BBCi, Voice of America, or Google News. It only takes one to let loose the news. Not to mention, so much of what constitutes news today is a commodity, with only a talking celebrity head or a local angle topper providing the value add. Vin Crosbie’s informal survey of news executives shows that despite months of planning, online subscription conversion is only about 1% of the audience. There’s no reason for people to pay for commodities.

Right now, general news sites will have three options: keep things status quo, survive on a small number of subscribers or become more useful and relevant.

We vote for the last one. And that we’ll pay for.

• Healthy discussion of this topic on Metafilter.
• Andrew Odlyzko’s research report Content is Not King.

The Internet Caused Paradigm Shifts in Media - John Motavalli, the author of Bamboozled at the Revolution, says that after losing billions on the Internet, media companies are discovering “part of what they once did has been usurped by the Web.” (10.18.02)

• Several industry experts at ONA agree with us and say it’s unlikely that readers will pay for news. (10.21.02)

Posted on Oct 18, 2002 | 7:22 am EST
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