The myth of ‘inevitable’ paid content

Image by Flickr user retuta

In almost any article examining the changing news media business, either the author or some pundit will throw out a comment like this: “Eventually, you’re going to pay for good online content.”

Here’s a new and particularly blatant example from Andrew Zolli, writing for Newsweek:

“The theory was that companies were supposed to make back the money by, uh, “monetizing the attention economy,” or some other similarly vaporous concept, that meant either charging customers later on, or selling advertisements, or both.” …

“In the long run, the (free content of the) first decade of the Web could come to be seen as a momentary aberration—an echo of ’60s free culture”

The assertion is that free was clearly a mistake, an aberration, is usually not explained or backed up with any facts, it’s just out there.

But any fair assessment of the facts shows that forcing payments for news is barely possible, and certainly not inevitable.

Begin with the fact that for the past two decades people largely have not paid for online news content. That’s not an accident, as Zolli suggests. That’s the status quo of a functioning online economic system. If someone says it’s going to change, it’s their burden to explain why. And so far, I don’t hear any good reasons. The most common is that because the news industry is in financial trouble, consumers must bail them out by paying — an insular, backwards view of the consumer relationship.

Along with the lack of evidence for “inevitability,” there is significant evidence against it.

The spark of the whole paid-content discussion was the realization that display ads online aren’t nearly as profitable as in print. The theory arose, if ads don’t work we have to charge the user directly. Here’s the problem: The same reason that the display ad model is failing is the reason paid content doesn’t work — there’s no scarcity online. There are infinite other places to buy ads, consume content or even watch kitten videos, for free.

Meanwhile, the web has completely unbundled and fractured content consumption. So paying in bulk each month to access one site’s bundle does not make sense to most users.

And you can read any of a half-dozen recent surveys that find a very small fraction of users willing to even consider paying for news content, and even those people hedge with demands that it be unique and special — not just your everyday stuff.

I don’t doubt that for some types of content and some consumers, there will be paid-content relationships that work. It’s certainly possible. But at this point it’s not probable, and certainly not inevitable. Anyone who says otherwise has a difficult case to make. And it seems they often don’t even try to make it.

  • http://www.mubashariqbal.com Mubashar Iqbal

    The thing that these pundits forget to tell us is that newspaper content NEVER paid enough to pay for the creation of the original content.

    The majority of newspaper revenue always came from the classified ads, not sales, ad revenue or subscription fees.

    Newspaper were too afraid of cannibalizing their offline classifieds to make the move online in the wake of Craigslist and similar services. Now they’ve missed the boat completely.