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2009 July 13 - 12:00 am

TECHNOLOGY TODAY: Internet Content Destined To Migrate from Free to Fee

Say goodbye to free content on the Internet. The World Wide Web will become a pay service.

So predicted media legend Barry Diller at a recent advertising conference in New York City — unleashing, as you might expect, a considerable stir. Diller, who created the Fox Broadcasting Company and is currently chairman and CEO of IAC (www.iac.com), believes that over the next five years the bulk of websites will transition from free to fee.

Diller has a vested interest in the greater acceptance of pay sites. IAC operates more than 30 websites, including such well known brands as Ask.com, Citysearch, Dictionary.com, Match.com and Reference.com.

Said Diller in his keynote address: “I absolutely believe the Internet is passing from its free days into a paid system. Inevitably, I promise you, it will be paid. Not every single thing, but anything of value.”

The current system of most sites offering free content that’s supported by advertising is only partially successful, according to pay proponents. Not enough revenue is raised, they say.

Some sites currently charge for all or part of their content. Perhaps the most well-known pay site is the Wall Street Journal (www.wsj.com), which charges $103 for an annual online subscription. To beckon visitors, it makes some of its articles free, and to encourage visitors to become subscribers, it provides for free only the first few paragraphs of other articles.

Sites able to charge for their content typically occupy niches in which people have always been willing to pay for quality information, often but not always business related. The American Banker (www.americanbanker.com) is able to charge a $995 annual subscription to its website, a fee that no doubt is paid for by most of its subscribers’ employers.

Some consumer sites that provide specific services also are able to attract paying visitors, with the more pressing the need, typically, the higher the fees that are able to be generated.

Dating site Match.com (www.match.com), which heavily advertises on television, has one-month, three-month, and six-month subscription plans. You can’t find out, however, what those plans cost unless you invest some time in registering. The plans cost $34.99, $59.97, and $101.94 respectively, with a “platinum” six-month plan costing $131.94.

For those looking to connect to people from their past, Classmates.com (www.classmates.com) can hook you up. It also requires you to register to find out what the cost is. A three-month subscription is $15, one-year $39, and two-year $59. It doesn’t cost anything to look for old flames, but you have to subscribe to contact them.

Already some previously free sites are becoming or planning to become pay sites or have pay requirements.

Eastman Kodak just initiated a new photo storage policy at its previously free Kodak Gallery (www.kodakgallery.com). If you use less than 2 gigabytes of storage space, you need to buy prints or other products totaling at least $4.99 every 12 months, and if more than two gigabytes, your purchases need to equal at least $19.99. Otherwise, it says, your photos may be deleted.  

The increasingly popular Hulu video-on-demand site (www.hulu.com) just indicated it might begin charging for access. The site launched in August 2007, and currently you can go there to watch on your computer many television shows and movies for free any time you wish. The site is now supported by advertising as well as equity investments by NBC, ABC, and others.

On the other hand, some previously pay services on the Web have reverted to free. The New York Times (www.nytimes.com) in 2007 discontinued a two-year program in which it charged $7.95 per month or $49.95 per year for access to many of its columns, though it still charges $6.95 per month or $39.95 per year for access to “premium” crosswords.

Yet the trend is the opposite, and in some cases the charges reek of audacity. Professional basketball star Kobe Bryant, who earns a reported $21 million a year, now charges a $24.95 membership fee for his personal Web site, KB24.com (www.kb24.com). This gives you access to Bryant’s blog, lets you exchange messages with other visitors, and enables you to watch video of Bryant helping his team win the NBA championship. Reportedly the fee initially was $49.95. Apparently not enough people signed up.

What’s next? Will Google start charging for searches, Yahoo Shopping for comparison shopping and Facebook for social networking? If they do, will they succeed? No crystal ball here, but it’s reasonable to assume that they won’t in any given market if there remain free quality alternatives.

Comments: editor@ccweek.com

Reid Goldsborough is a syndicated columnist and author of the book “Straight Talk About the Information Superhighway.” He can be reached at reidgold@comcast.net or
www.reidgoldsborough.com.

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