no more free stuff?

["Ian Murray" <seamus2001@xxxxxxxxx>]

[Washington Post]
Charges Of the Site Brigade
By Leslie Walker
Thursday, March 7, 2002; Page E01


Hold on to your wallet: This may go down in Internet history as
the year millions of people started paying for online content.
My digital radar shows a blip of activity in electronic
subscriptions, enough to make me think real online businesses
are finally being born.

In case you hadn't heard, fee replaced free as the Internet's
rallying cry last year after advertising sales hit the skids.
Hundreds of Web sites slapped subscription gates on their
content or began charging for premium services.
Advertising-supported content did not totally disappear. Rather,
it increasingly coexists with paid services.

But the trend raises two huge questions -- how much people are
willing to pay, and who will be the chief money collectors for
new media.

Analysts are watching closely to see whether some content owners
will be able to bypass America Online, Yahoo and other Internet
networks to collect subscription fees directly from consumers,
as magazines and newspapers do. The outcome has major
implications for both traditional media and the
telecommunications industry, which controls the Internet
transmission pipes.

It seems every day another company announces plans to charge for
all or part of its Web content. This week the British-based
newspaper Financial Times said it will soon stop giving away
much of its online edition. As part of a redesign of its Web
site, FinancialTimes.com plans to ask users to pay as much as
$140 annually for access to its best content, including detailed
analyses and reports on particular industries and countries.

"It's a critical piece of our revenue plan for 2002," said Zach
Leonard, chief operating officer for FinancialTimes.com.

The company will not go to a fully paid model, in part because
ad revenue jumped 26 percent at the site last year, despite the
global decline in advertising. "With advertising being so
critical to us, it would be risky business to put the entirety
of the site behind the veil," Leonard said.

Indeed, several American newspapers saw a drop in traffic to
their sites after they started charging for access.

Tulsa World, an Oklahoma daily, reports that nearly 3,000
non-print subscribers have signed up for its $45-a-year Web
subscriptions. But traffic to its Web site dropped 25 percent
after it switched to paid access last summer, according to
online publisher Dilene Crockett. The Albuquerque Journal made a
similar move and reported a Web traffic drop of about 40
percent.

At larger news sites that still rely on advertising, the
prevailing trend is to add premium content. The New York Times
Digital, for example, collected $1.4 million last year from
special Web products such as bundles of articles and electronic
crosswords, which have 35,000 subscribers. Another 2,200 people
are paying to receive an electronic edition that visually
replicates the printed New York Times. (So far,
washingtonpost.com, the Web edition of this newspaper, doesn't
offer premium content.)

CNet Networks, a technology news publisher, plans to start
charging soon for some of its e-mail newsletters and Web games.

"One of the surprises now is that you are seeing the beginning
of traction around providing paid content and services," said
Shelby Bonnie, chief executive of CNet Networks.

Who would have guessed, for example, that 900,000 people would
ante up $12 for the privilege of sending e-mail greetings?
That's how many people American Greetings Corp. says have bought
annual subscriptions to one of its three sites,
BlueMountainArts.com, AmericanGreetings.com and eGreetings,
since they began charging for some greetings last fall.

The four largest online portals -- America Online, Microsoft's
MSN, Yahoo and Terra Lycos -- have been adding paid services of
their own to supplement their revenue from advertising and
Internet access. AOL, MSN and Yahoo now offer one of the two new
Internet music subscription services, MusicNet and PressPlay,
with monthly prices ranging from $10 to $25. MSN, meanwhile,
reports that 300,000 people are already paying extra for its
premium services, such as the $12 a year it charges for
e-greetings, $6 a month for bill payments and $20 a year for
extra storage at Hotmail.com.

Perhaps more interesting than the paid content at the portals,
though, is a new subscription service from streaming-media
pioneer RealNetworks. Few analysts would have guessed that
RealNetworks would get half a million people to pay $10 to $20 a
month to watch the streaming music and video service it rolled
out in December. One of the most closely watched experiments,
the RealOne bundle features video clips from major-league
baseball, entertainment news, FoxSports, CNN news and
commercial-free versions of ABC's World News Tonight.
RealNetworks reported last month that its paid subscriptions had
broken the half-million mark.

"This is a watershed moment for the growth of video on the
Internet," said Bernie Gershon, general manager of ABCNews.com,
citing improvements in the quality of Internet video and the
increasing willingness of people to pay for video on demand.

To make sure its paid video is exclusive, ABC News recently
yanked the free video footage it had been distributing through
Yahoo.com. While Yahoo pays little or nothing to license
content, RealNetworks is paying content providers in a
subscription-sharing model that is based partly on usage and
resembles the model for cable TV.

Fox Sports made a similar move, stripping free video off its Web
site to enhance the likelihood that people would pay for it.
Even CNN, until now the leader in distributing free news video
online, announced this week that it, too, will remove most of
its free video from CNN.com so it will be exclusive to paid
services such as RealOne.

All of this must disappoint those who believe the Internet's
essence is about the free sharing of information. The reality is
the Internet affects almost every imaginable human activity --
research, personal communication, education, medicine,
government and, of course, the money-obsessed corporate world.
That makes it highly unlikely any one financial model will
prevail.