The idea that people won't pay for content online has become such a part of the Web orthodoxy that New York Times Executive Editor Bill Keller risked getting lynched earlier this month for merely musing about paid models for the online editions of his paper. Not helping Keller's cogitation was a contemporaneous "secret memo" from Steve Brill and a Time article by Walter Isaacson, both which advocated variations on the micropayment model. Neither advances the topic much beyond what most Web entrepreneurs understood long ago.
Paid content's failures are well-documented. Slate gave up on the subscriber model in early 1999. The New York Times folded its TimesSelect product of columnists and archives in 2007, concluding a two-year run, even though it was taking in $10 million a year. The latimes.com set free its CalendarLive section of arts, reviews, and listings in May 2005 after a 21-month paid experiment. To name another ambitious venture among the many, the 2000 startup Inside.com, which charged several hundred dollars a year, failed to attract its 30,000 desired subscribers and expired.
These failures tell us much about what customers refused to pay for on the Web. But they tell us little about what customers will pay for. Not all successful paid sites are alike, but they all share at least one of these attributes: 1) They are so amazing as to be irreplaceable. 2) They are beautifully designed and executed and extremely easy to use. 3) They are stupendously authoritative.
Wildly unique and immensely useful describes the paid site ConsumerReports.org. If you're in the market for a new sewing machine, want to outfit a home gym, or want tips on buying insurance, there's no more comprehensive place for your queries than ConsumerReports.org. No free site on the Web compares. The site currently has 3.3 million paid subscribers: About 3 million of them pay $26 annually, and the rest pay by the month ($5.95). That's in addition to the 4 million print copies the magazine moves each month to subscribers.
Major League Baseball's MLB.TV succeeds by extending its monopoly over pro baseball to the Web. Baseball fans are insane, which explains why the site attracted about 500,000 fans last year who paid $120 to watch its live broadcast of games. According to a Times article, another 350,000 customers paid $15 to listen to games over the Web. The number of subscribers would be greater still if MLB.TV didn't black out local teams to preserve the exclusivity of the teams' and the league's contracts with TV networks. Miss the game in real time? MLB.TV will let you play it back later if you subscribe. Want to watch the game DVR-style? MLB.TV will let you pause and fast-forward live games if you subscribe to the "premium" variety. Love that madcap game from Up North? MLB.TV markets NHL games, too.
The biggest-grossing paid content site has got to be the Apple iTunes store, which became the top music retailer a year ago, displacing Wal-Mart, according to one study. The store is said to have sold 6 billion songs since it started in 2003. But why do customers flock to iTunes (or Amazon or Rhapsody or the others) to purchase a song or album from, say, U2, one at a time when they could easily download the band's entire discography via Bittorrent for free? Of course, many do. The napkin math provided by Hitsville's Bill Wyman estimates that iTunes sales are microscopic compared with the volumes moved on file-sharing sites. So, again, why do some customers pay for their music? The same question obviously applies to movies and TV shows.
Obviously, some people prefer walking the straight and narrow with iTunes rather than committing wanton copyright infringement with Bittorrent and tempting a fine or a jail sentence. But that's not the complete answer. While it's easy to acquire the entire U2 discography for free on a file-sharing site, it's still easier and faster to use iTunes to search for and purchase the tracks you really want. The iTunes app combines the player and the store inside one skin, and it also allows you to build playlists and to move your music to your iPod deftly.
That iTunes is a free-standing application and not contained inside a browser, as is the Amazon music store, is not accidental, and I reckon that its "outside the browser" design has played some role in its success. Consumers have been conditioned to think that content delivered by a browser is supposed to be free. They get annoyed when they encounter a pay wall on a browser but are more psychologically open to the nonbrowser Web interface.
By thinking outside the browser, Apple answers to nobody but itself when it wants to add features, such as movies and TV show sales and rentals—or when subtracting them. If the browser window is the commons, the iTunes application is Apple's castle, where you're expected to do as you're told.
Another outside-the-browser experiment, nowhere near as successful as the iTunes app, is the New York Times'Times Reader, which delivers a very readable version of the paper. I found the Times Reader good enough to pay for when I reviewed it in September 2006, and I have great hopes for the forthcoming version, built on Adobe's AIR 1.5 platform. A third example of "outside" product and software design for content is Amazon's Kindle, which thinks both outside the browser and outside the personal computer.
If I were in charge of recruiting paid users, I'd ape Apple, the Times, and the Kindle to create a boutique environment in which to push content. Luckily for Slate, I don't have that duty. The Plastic Logic platform, or something like it, is an obvious place to Kindle-ize or iTune-ize various types of online content.
You don't necessarily have to control the device to succeed at selling online content. Consider the Financial Times'Web site, FT.com, which had 99,000 paying customers as of last summer; the Wall Street Journal's WSJ.com, which counts 1,079,000 subscribers (some of whom also get the print edition); and the Journal's sister publication, Barron's, which has 150,000 Web subscribers. The mother company also sells the super-premium Barron's Daily Stock Alert—$795 for a year, right now—but doesn't release subscription numbers for it. A combined 2.3 million subscribe to its Dow Jones Factiva and Dow Jones Newswires.
Other examples of online success include Nexis (8 million "seat users"), the Bloomberg terminal, the 50,000 Times premium crosswords subscribers, and paying customers at NewspaperArchive.com; CooksIllustrated.com and FineCooking.com; Xbox Live; genealogical, fantasy sports, gambling, and pornography sites; and elsewhere. ESPN360.com, currently a loss leader for a number of large Internet service providers, could easily command paying customers if placed outside the fence.
Every successful paid site competes with free sites, and as often as not, competes with itself by offering its own free content. The free stuff is used to upsell the customer to the paid varieties. The extreme application of this model is giving away 99 percent of the product and selling 1 percent—it's called "freemium," and Wired editor Chris Anderson talks about it in this interview and on his blog.
If the commercial Internet didn't get going until 1995, then we're only 13 or 14 years into the Web era. When television was 13 or 14, practically no pay-TV operations existed outside of a relatively few cable television operations. Starting the 1970s and then in the 1980s, paid TV in the form of HBO and other premium stations started to take root. Radio, born in the early 1920s, didn't arrive in a paid form until just early in this century. Very few online newspapers or magazines are sufficiently useful to demand a paying premium. But for those who hold dear the notion that information on the Web will forever want to be free, it's early yet. Keep your eyes peeled for publications whose Web sites are sprouting nonbrowser apps, refining their content, experimenting with new reading devices, bulking up their databases, and above all, publications that are listening to the man from Google who this week wrote:
[O]nline journalism is still in its relative infancy. … The experience of consuming news on the web today fails to take full advantage of the power of technology. It doesn't understand what users want in order to give them what they need. When I go to a site like the New York Times … it should know what I am interested in and what has changed since my last visit. If I read the story on the US stimulus package only six hours ago, then just show me the updates the reporter has filed since then (and the most interesting responses from readers, bloggers, or other sources). … Beyond that, present to me a front page rich with interesting content selected by smart editors, customized based on my reading habits (tracked with my permission). Browsing a newspaper is rewarding and serendipitous, and doing it online should be even better. This will not by itself solve the newspapers' business problems, but our heritage suggests that creating a superior user experience is the best place to start.
Is the iPhone App Store software as content or content as software? Thanks to Adrian Monck for the Google guy clip and more. Send more examples of successful paid sites to firstname.lastname@example.org. (E-mail may be quoted by name in "The Fray," Slate's readers' forum; in a future article; or elsewhere unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)
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