Mission possible? Charging for web content
It is going to be just as tough for publishers to overcome their Original Sin as it has been for mankind to get past the original Original Sin committed when Adam and Eve partook of the forbidden fruit.
The Original Sin among most (but not all) publishers was permitting their content be consumed for free on the web. Now that ad sales are about as low as the belly of the snake who caused the mischief in the Garden of Eden, a growing number of us have concluded that consumers are either going to have to start paying for professionally generated content or there won’t much of it left.
But it isn’t going to be easy getting them to do so, because free is the presumptive price of news, information and entertainment on the web.
The challenge facing media companies trying to charge for something they have given away for 1½ decades is illustrated by the experience of the recording industry, which has been far more proactive than most print publishers and broadcasters about trying to protect its product on the web.
In 2005, the most recent year for which statistics are available, 10 times more songs were downloaded illegally than were purchased lawfully, according to the Recording Industry Association of America, the music industry’s content cop, and the Institute for Policy Innovation, a Texas-based think tank whose research is cited by the RIAA.
As illustrated in the chart below, the institute estimates that 12 billion songs were downloaded illegally in the United States in 2005. In the same year, the RIAA reports, 634.8 million physical units of CDs, tapes and music videos were sold, while 553.1 million tunes were purchased on the Net and for mobile devices.
iTunes notwithstanding, my hunch is that the proportion of bootlegged music is higher today than it was four years ago. And, remember, this happened despite the music industry’s vigorous and consistent campaign against piracy.
Life today would have been easier if newspapers, magazines and other print-to-web media had recognized in the first place that their content was too valuable – and too expensive to create – to simply give it away on the Internet.
This colossal strategic miscalculation bit publishers extra hard, because easy-to-acquire free content on the web rapidly undercut the demand, and therefore the revenues, for their flagship physical products.
"Why would consumers buy the cow when the milk is free?” I asked in one of the earliest posts to this blog in December, 2004. “If a newspaper gives away its costly and valuable product for free on the Internet, it may win friends and influence people in cyberspace, but it won't gladden the advertisers who pay the freight back here on Mother Earth.”
Even now, an amazing number of publishers defend free content, because it generates tons of page views for all the banner advertising they hope to sell. The problem with this thinking is that banners are fast becoming the lowest form of advertising life on the web, because marketers favor targetable and verifiable ads that require payment only when a consumer clicks on them.
Cost-per-action ads also are popular because they are a whole lot cheaper than the sprawling displays in newspapers and magazines that a legendary merchant once famously noted are disregarded by at least 50% of readers. “Half the money I spend on advertising is wasted,” John Wanamaker is reputed to have observed. “The trouble is I don't know which half.”
Wanamaker kept buying ads, but modern advertisers don’t have to. And they aren’t.
With the web awash in inventory and the demand for advertising slumping as the economy swoons, ad rates today are half of what they were a year ago. That’s another good reason to think about alternatives to the banner ad.
Next: How to get consumers to pay
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