Scott Rosenberg, senior vice-president of editorial operations, salon.com, warns in this article, "The Web's free-for-all is coming to a sudden, sharp end."
In April 2001 last year, Salon took the jump to a paid subscription model by launching its premium subscription service. "For $30 a year, we offer a package of content and services unavailable anywhere else. We signed up 10,000 subscribers in our first 11 weeks," says Rosenberg.
While surveys have suggested that online users are not ready to pay for content, the debate rages on with well-known sites joining the fray by introducing some kind of a subscription model for news and content. The site, End of Free, regularly tracks sites that are either becoming paid or introducing some kind of premium service.
Closer home, The Newspaper Today, a part of the India Today Group, recently introduced their subscription model. At Rs 499 a month for a year's subscription, the move took many readers by surprise since it gave just two days notice to go from a totally free service to 100 per cent subscription.
The debate of free versus paid has been going on since Web sites have been offering content for free. With last year's slowdown of the dotcom economy, many Web publishers discovered that advertising alone isn't enough to sustain a business. And the race has been on since then to discover a revenue model that works.
Justifies Rosenberg: "The Web continues to offer a vast, unprecedented array of gratismaterial. But professionally produced sites need to pay their bills and relying on advertising alone is a risky proposition in an economic slump. For content sites like salon.com, charging for subscriptions - once considered an anathema - is now an essential move for survival."
Agreeing with this thinking, Randall Scasny, contributor to the Online Journalism Review, says: "At this point, I think that online news users have to pay, it's as simple as that. The ad-only revenue model is clearly dead in my mind."
Amit Asaravala is the editor-in-chief of New Architect, a monthly print magazine for technologists. Asaravala feels that "the shift toward subscription-based services is a positive trend for online content providers. The truth is that advertising doesn't necessarily help either the producer or the customer".
Consumer surveys so far have indicated otherwise. A Consumer Electronic Association survey found that a vast majority of Internet surfers believe all Web content should be free. Seventy-seven per cent of Web users today oppose the idea of paying for information, according to the survey. Another 11 per cent say they are neutral about the issue. Only 4 per cent support it.
Despite these statistics, the Wall Street Journal's online edition has been charging for content and has been one of the few sites implementing the model with some success. Other sites that have joined the ranks are Blue Mountain Cards, 123India for email and ISP service provider Caltiger.
Even niche sites are going paid. India's cuisine legend Tarla Dalal now wants her site's patrons to register for a small fee. Even a Nepal based South Asia zine called Himal Mag sends you an e-copy of its magazine in Acrobat Reader format only on subscription.
Mouthshut.com CEO Faisal Farooqui is not optimistic about the paid subscription model in the country.
"In India it's not going to work, one reason being there is no micropayment solution available, similar to PayPal which is used in the US. People might not want to use credit card for an article they want to read for about Rs 35."
Farooqui reasons: "When there are 10 different people who are offering it for free, there is no reason why people will pay? The model used by Salon is very 'ambitious'." While it has been working in the US, Farooqui does not see the same happening in India.
Wil Forbis is the online publisher of the independent sites Acid Logic and Forbis the Mighty. He agrees with this view: "I think where Salon may have blown it with subscription content is that they gave it away for free for so long we're now thinking "why should we have to pay for it?"
He goes on to comment: "But I may genuinely weep when Salon dies (which it will) whereas most of the smaller non-commercial Web zines could pass on without me noticing."
So will consumers really pay for online content?
Offering his insight, E Redson of the Web Today published and edited from Los Angeles, California, says: "Subscription is just one of the ways online content will be able to compete in the market place. It can be successful, but the primary problem is not user acceptance (that comes in time) but cutting costs on the production side."
Farooqui too admits that cash is important for everybody, "especially after last year's holocaust" and they too have recently closed some of their deals with corporates and sites that have no cash exchange involved. "However, our services will always be free for consumers," assures Farooqui.
Asaravala thinks so too. "Absolutely. It's a myth that everything on the Web must be free. Consumers won't pay for everything, but they will pay for exclusive content that provides them with some service or entertainment."
But being first in the line might not hold much of an advantage according to Asaravala as he feels that many may actually fail because users just go elsewhere. "It's only when a number of competitors also switch to subscriptions that users will realise that they have to get comfortable with paying for content," feels Asaravala.
According to Scasny, it all comes down to value. People will pay for something, if it has value to them and they desire it. If people aren't willing to pay for it, then it doesn't take rocket scientist to figure out the product has no value. If it has no value, online news products need to be modified till they do have value.
Asaravala also pays a high premium on value. "The product needs to be fair and exclusive. I do currently pay for WSJ.com and a service called fusionOne. The fusionOne service lets me synchronize my home and work computers via the Internet, at a fee of $3.95 per month. Because fusionOne provides a unique service that I need, I feel that I'm getting my money's worth."
"Likewise, I believe WSJ.com provides fairly objective and up-to-date coverage of business issues, I'm comfortable paying for it."
Mahesh Shantaram, an avid follower of TNT shares his views: "Now that it has taken the bold step forward, it must continue marching, for there's much work to be done. For example, there's tremendous scope to improve user experience on the site. And then, the pricing can surely be tweaked to favour the reader."
Shantaram also points out that subscription to one does not give access to the other. "That's odd because all of TNT's features are from India Today. Also, TNT users are getting everything they got when the site was free, including the ads (banners and popups)," he says of his experience after subscribing.
And what do current online news producers and publishers have to do differently to make users pay?
Customer service, feels Asaravala, is the key. "If I'm paying to access content or to use a service, I expect there to be few glitches if any. And if I should have a problem, I expect a customer service representative to help me fix the problem."
Redson opines that if the content is compelling enough and the production costs are low enough, the subscription model (for premium content) mixed with a creative ad strategy (one that uses email, banners, text ads, etc) might work.
"However," he warns, "it seems that subscriptions work far better for delivering information and not general articles."
Rosenberg attributes the success of Salon Premium so far to loyalty. "In the end, our subscription plan has worked because a small but significant portion of our users feel that Salon is worth supporting with their cash. That loyalty - which we feel we've earned over the years through the quality of our writing, editing and design - is precious and irreplaceable."
The disadvantage of having subscription fees for individual sites also means that a user would have to establish and remember several accounts and passwords to access his favourite sites.
To combat this problem, Steve Outing in this article in the Online Journalism Review, expresses the fact that industry must cooperate to save news sites.
"What the Web industry has built in the last few years will be destroyed by short-sighted publishers, who in desperation over the current online ad drought put locks on their content. The result would be the ruination of what the Web does best. And the ability of online news to become a viable business would be crippled," says Outing.
This is what Outing suggests. That Web news sites creates different levels of access to their content. Free access to everyone where every news site user will see headline and story blurbs (or first couple of paragraphs).
The subscription model could then work in two ways.
Outing proposes paid access via a Web-wide news subscription service. This will permit the user access to subscription content on any news site on the Web. For an annual, monthly or even a daily fee, a paying Web user would get access to all the news content that's currently free, but pay for the privilege.
Web wide users in this case will get seamless access. Participating news and content sites would share in the subscription fees paid to the Web-wide news service. A central organisation will look after registrations and distribute money to publishers.
The other way would be paid access via individual site 'premium' subscription. This scenario would not eliminate the option for Web publishers to have their own premium subscription services. That would be a viable option, but premium Web services would have to offer more value to be attractive beyond what subscribers to the Web-wide news subscription would get.
Asaravala proposes a model where ISPs could offer packaged subscription deals. "For example, a company like Earthlink might offer me an Internet access package for $25 a month, which includes a ready subscription to Salon.com and WSJ.com at no extra charge. This way, users still get access to the entire Web and the content providers themselves don't have to give their content to just one ISP's user base."
What should be the price for Web-wide news account?
"I believe it must not be too onerous, yet high enough that participating publishers benefit when they receive their share," believes Outing.
What this scheme accomplishes according to Outing is to get Web news publishers paid for the content they post on their sites - with money coming from the consumers of the content themselves (via a central intermediary). It also remains what it is today: a cornucopia of news sources, accessible in a most convenient way.
The revenue stream is added to advertising, which is little affected otherwise. If enough major news Web sites participate in such a plan, Internet users will be trained that they have to pay a price for online news.
This model suggested by Outing, though ambitious, is similar to what the adult online content industry has been doing for years with programs such as AdultCheck, which offers access to nearly 300,000 adult sites and has 4 million customers paying $19.95 every three months.
The ultimate solution, in Outing's mind is to convince news consumers that they must pay for online news.
Does this mean that all news sites will one day be subscription based?
"Probably not, says Asaravala, "More likely, we'll see a mix, similar to print publications". Some sites with exclusive content, like specialty magazines, will charge. Others with more readily available content, like news sites, will continue to be supported mainly by advertising.
[Note: Any quotes are all used reprinted with permission from the author]