Pay-Per-View's Payback: Cashing in with Content

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Pricing Strategies
Convincing readers to buy is just one hurdle. Another is that "content providers need to do more to come up with viable pricing strategies," says Adventis' Hurd. He pinpoints a core problem: "Sometimes, $2.95 is too much to charge for an article. Sometimes it is too little. How do you maximize value from your offerings?"

When is $2.95 too little? When an executive is researching a take-over target, say, and the story is a detailed profile. But that sum probably is too high when Aunt Sadie wants a recipe for Hungarian Goulash, and it may still be too high when she would like to send an obituary of an uncle to Aunt Gladys. Pricing policies now in use are inconsistent. But maybe this isn't necessarily bad, at least not for the moment. "The only way companies will find pricing that works is with experimentation," says Dan Clark, vice president of marketing for San Francisco DRM provider SealedMedia.

Step one for many content providers is "offering a widening variety of price points," says Qpass' Wells. As a case in point, she cites USA Today, which presents readers with three ways to retrieve archived material: $1.50 per article; $4.95 for a one-day pass (up to 10 articles); and $14.95 for a one-month pass (up to 100 articles).

Another emerging trend is that users may be allowed to buy just a part of a product. Explains Kirstie Chadwick, CEO of DRM company Digital Owl, "This is proving very successful. We are seeing readers who want to buy just the chapter on restaurants in a travel guide book, for example, or only a selected chapter in a career development book." What price will people pay for a portion of a whole? "$2.50 seems to be a good price point for one chapter," says Chadwick, who adds that momentum behind this trend comes from the increasing adoption of PDAs. "People want to download a chapter to their Palm and read it on-the-go," she says.

Add up these findings and what conclusions can be drawn about pricing content? Nobody is releasing hard numbers, but a clue is offered by Qpass: "So far, we are seeing strong take-up for bundled passes rather than individual article sales," says Well.

Subscription Drive
Why are customers purchasing bundles of articles-paying $5 for a day pass-rather than buying articles one at a time? That question is top of mind for any content provider who wants to maximize online revenues. But the answer may be obvious, according to David Scott, a vice president with Burlington, MA-based NewsEdge, a provider of information packages to a largely corporate clientele: "Customers want predictability when it comes to online data expenses." Per-incident purchasing works for a user with a one-time need, but for the more profitable frequent customers, "predictability is what they repeatedly tell us is important," says Scott.

Selling batches of articles at a flat fee is one way to raise a buyer's comfort level with purchasing content, but some analysts are saying that there is an even better way to heighten predictability. "We believe we will see more subscription relationships," says Adventis' Hurd.

Brave New World
Still think there's a profitable future for sale of one-shot content? SealedMedia's Clark agrees. "We will see more creative packaging of material, and this will lead to a significant business." He offers as a case in point a bundle of otherwise-unavailable content-profiles, a few songs, perhaps a video clip-of pop princess Britney Spears. "There definitely will be buyers," he says.

Adds ContentGuard's Singh: "It's easy to envision sale of, say, one track from a record album, or perhaps a time-limited use of an article where, after 24 hours, a new fee has to be paid. Content will be sold in more inventive ways in the months to come."

More optimism about one-shot future sales comes from Christopher Warnock, CEO of Mountain View, CA-based ebrary, which has forged deals with a thick roster of mainstream publishers (Random House, McGraw Hill, Cambridge University Press, and others) to offer pay-per-view access to books online. Warnock (his father is Adobe co-founder and chairman John Warnock, who sits on ebrary's board) says, "We will price access to our content competitively with the price of photocopying at libraries, around 15 to 25 cents per page. This is content-new books and journal articles-that you cannot get elsewhere. Of course people will pay to access it."

A wrinkle at ebrary is that "one of our goals is to help publishers sell books," adds Warnock-and, in many cases, those books will be delivered the old analog way, in paper formats, by the post office. Warnock envisions few readers buying whole books from him-do the math, and a 300-page book would cost upwards of $45-but, for readers with an urgent need for the complete text, that option, too, will be available. "Our goal is to make this information available to everybody who's online," adds Warnock. "Some people already are telling us we aren't charging enough per page. There is a healthy market for this material."

Uncertain whether to plunge forward with a per-incident, per-page pricing plan or a subscription model? Join the club. Uncertainty is rampant, but one conclusion for content owners is this: It's far too soon to rule out any approach. The other, crucial conclusion: "We are telling clients to experiment with pricing, with what content is offered, with all the variables," says Adventis' Hurd. "That is how content owners will find the formula that works for them, their users, and their content."

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