A very good piece in Fast Company (and, hey — when’s the last time you heard anyone say that?) about what we at NetGuide used to call Revenge of the Empire. No one knew just when the free ride on the Net would end, but even in the earliest days, everyone knew there was going to be a tollbooth somewhere. We just didn’t know where it would be, when it would be erected, or who’d be getting the cash.
The thing is, I don’t mind paying for content one way or another. I read the NYTimes for free online, but I also have a paid sub to the print edition; if they wanted to impose some nominal charge for all of you who don’t buy the paper version of the paper, I doubt that I’d squawk. Bandwidth and servers ain’t free.
I hate the idea of being nickel and dimed, though, which makes me wonder about the various ways of paying for content.
Let’s get rid of one idea right away: micropayments. I hate micropayments. Administering a large-scale micropayment system — billing in increments of under $1 for nuggets of information — is expensive and unwieldy, and only Visa wins. Micropayments just aren’t worth the trouble, either from the user side or the vendor side. Hell, even the porn industry — the first to use any successful business model or technology — doesn’t use micropayments.
The porn industry uses a two-tier payment system. You can get a lot of low-bandwidth and low-quality content for free, if you let them throw a lot of intrusive ads at you. Or, you can get high-bandwidth and high-quality content if you pay. Oddly enough, that’s what broadcast news sites are starting to do: you can read CNN and ABCNews all you want, but if you want streaming content, that’ll cost a few bucks a month.
But the adult industry does something even more interesting than that: they pay bounties for traffic. Here again, it’s a two-tier system. They pay a much, much lower bounty for junk traffic that just looks at the low-bandwidth low-quality stuff. But they pay a higher bounty for traffic that converts into paid subscriptions. I don’t know of any legit sites that do that kind of referrer business, but it seems like a good idea.
There’s another wrinkle. It’s not uncommon for adult sites to carry links to content on other adult sites — syndicated content. If you pay on the originating site, you don’t have to pay on the syndicated site. This is a lot like what Real Networks is doing with its Gold Pass: one monthly fee for a full menu of content.
Real is in a good position to succeed with the streaming media syndication business because it controls the player and server software. But there’s no reason that there can’t be other syndicators, too. What about, for instance, a Publisher’s Clearing House kind of site, where you’d pick from a paid list of content providers and pay the syndicator once, letting the syndicator deal with payments to the providers. On the back end of the deal, the content provider could cut deals with the syndicator for better positioning on the subscription page and so forth. Not all content providers would get the same cut from the syndicator.
This seems to me to be a particularly good business for an ISP. When you’re paying your $30 to Earthlink, maybe you could pay an extra $5 or $10 for access a list of paid content sites. And Presto! You’ve built a cable TV business model.
There’s no question that paid content is the future of the online world. The question is only who will pay who for what and how.