Watching out for paid content obstacles

Competing with former employees is not yet a major consideration, but could become one as newspapers and other content creators push forward with plans to make some or all online content paid.

Another problem, more eminent, is how to charge. Rupert Murdoch this year has been one of the main voices advocating paid content, but his News Corp. so far has not been too successful in finding the appropriate online payment software system, according to The New York Times.

Journalism Online received much attention earlier this year for its efforts to sell newspapers a payment system, an iTunes-like system of micropayments that aims to eliminate the cost, time and effort involved with online subscriptions. Steven Brill told SFN in June that he sees two barriers facing the online payment model: the initial cost itself and the laborious process of exchanging payment information in order to access content.

"We intend to eliminate the second part of it by having one account, one password, across hundreds and hundreds of newspaper Web sites. By presenting multiple options for people to pay, there are two reasons for that, one is so the publishers can work out what's best and second is so that the consumer has the choice the consumer wants," Brill said. "Having a micro-payment makes more sense than saying to me if you want to read that article you have to subscribe for a year, or a month, or even a week."

Yet, critics say the iTunes model doesn't apply to the news industry. Songs can be listened to over and over, but a news article, photo gallery, video or podcast is unlikely to be accessed more than once.

Just 3 percent of consumers say they prefer the micropayment model for paying for online news, Arianna Huffington wrote in an editorial posted by TheUnion.com, stating that "Desperate times lead to ... desperate revenue models!"

In an article posted by MediaGuardian, paidContent pointed out earlier this month that studies on who will pay for online content have widely varying results. According to Continental, 37 percent of UK adults said they would pay a micropayment, larger fee or monthly/annual subscription for an online newspaper or magazine. Meanwhile, a study of UK adults and teens by Olswang/YouGov found that 19 percent would do so, if there was no free alternative. The mean of eight studies shows that 21.8 percent of UK consumers would pay for online content.

A PricewaterhouseCoopers study of 11 countries in North America, Europe and Australia shows that the number of people willing to pay for content is much higher. Sixty-two percent of those surveyed said they would be willing to pay for online news if there were no free alternatives.

However, PwC's Marieke van der Donk was quick to point out that "if there are still free alternatives, it will be quite hard to [charge for online news]. But if you have a good proposition, it certainly is possible to get paid for an online proposition."

News publishers, when considering charging for content, must decide what to charge for. If all content, including general news, is behind a paywall, consumers are likely to get that news elsewhere, for free. So newspapers and magazines have a better shot at charging for the content no one else has. In the case of the Wall Street Journal or the Financial Times, that's high-quality, usually unique, financial news. For Newsday, which announced it would begin charging in October, revenue-making potential lies in the paper's highly local Long Island readership base. At the time, The New York Times reported that the paper has added value by launching new features, such as news reports tailored to a reader's postal code.

The list of questions newspapers must ask about paid content is still longer than the list of answers, but in 2010, expect that second list to grow.