Online content charge faces challenges

Shrinking revenues are leaving many media outlets with a predicament: how best to charge for online content without alienating readers or turning them to alternate sources.

Shrinking revenues are leaving many media outlets with a predicament: how best to charge for online content – most of which consumers have enjoyed for free for more than a decade – without alienating readers or turning them to alternate sources.
One recommendation from the Pew Research Center's Project for Excellence in Journalism (PEJ) is including the fee on consumers' Internet-access bills. Yet such a payment model, analogous to that of cable television news, has a dubious chance at best of getting off the ground, experts say.
Alan Mutter, managing partner at Tapit Partners and author of the Reflections of a Newsosaur blog, says the plan could work under specific circumstances.
“[Paid content] has to be unique and valuable to the user,” he explains. “It can't be information that you can find elsewhere, like stock prices, sports scores, a plane crash landing, because everyone will have access to that somewhere else. And quite a large number of these [outlets] would have to move to this system all at once.”
Mutter adds that even if paid online news content were the norm, many news stories would likely remain free to compete with those of other sources. Outlets using the model would also have to guard their content from third-party sites, he notes.
Tom Rosentiel, director of the PEJ, recommended the concept on a March 12 conference call with media outlets, including PRWeek. He acknowledges that it would require the media industry to compel Internet service providers to embrace such an arrangement and to explore regulatory issues.
“It would require the persuasion, but I would suspect this is the easy part for the news industry to persuade the ISPs,” he says, adding that ISPs should have a vested interest in the news business surviving because their services are used to access news sites.
Steve Rubel, SVP and director of insights at Edelman, has a bleak view of the concept, saying, “It's not the cable companies' job to bail out the media.”
“The Cablevision plan could work, but asking the cable companies and [ISPs] to partner is just not a viable option,” he notes, referencing Cablevision's reported plan to turn Newsday's Web site into a service for cable customers.
“[ISPs] have no incentive to go along with that,” adds Rubel. “If they do ask for incentives, it could compromise the independence of the media, and I don't think that's going to work. At the same time, consumers are not going to pay for content, and what is going to happen is that they will turn to free sources.”
Rubel explains that there is a clear distinction between charging professionals a periodic fee for specialized content, which they are willing to pay considerable sums of money for, and general news coverage, which is available from various media outlets.
The Wall Street Journal [charges for specialized content], ThomsonReuters does that, and that is fine,” he points out. “But news is a commodity, so you can't charge for that.”
Rick Edmonds, media business analyst at the Poynter Institute and coauthor of the newspaper chapters of the PEJ report, acknowledges that outlets could lose readers to sites who are not a part of the plan.

“Let's say for the sake of argument that a TV station with a Web site decides to shake it up a little and continue to be free,” he says. “You could be losing an awful lot of traffic in a heartbeat there.”

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