Editor's Note: A Pox on Premium Content


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It's a pattern we've seen over and over again—and sometimes we're guilty of perpetuating it ourselves: a Web-based content provider, after having provided quality content for free, makes the decision to bolster declining ad revenues by charging for stepped up "premium" content. Suddenly, detractors leap out of the woodwork. It's analogous to a Hollywood scandal. Humiliating shortfalls in revenue are dug up, lavish parties and office space are derided in hindsight, shareholder bickering is exposed. But above all, the very idea that a company can start charging for product that was once free is a definite career-ender. Never gonna work.

Where does this behavior come from? Purists may claim allegiance to a democratized Internet philosophy where everything should be free and open and Corporate America should keep its dirty hands off it. But very few of us could actually prove we really belong in that camp. The easily offended, or perhaps just cheap, may be hurt that they will have to pay for something that they've actually been quite lucky to be getting for free. But if the content business keeps going in the same direction, these folks won't have much choice. Lastly, there's the ignorant. A group that sadly thinks they'll simply go elsewhere and find the same free stuff. Options will quickly run out for them, too.

So maybe pundits are just angry that content sites are beginning to branch off into different money-making strategies at the expense of their wallets. What's that cycle you learn in Psych 101? Denial, anger, fear, acceptance? Perhaps some folks are in the anger stage.

Salon is a perfect example. That was never given a chance, though last I checked, the site was still there. Yahoo! is another more recent example. The search directory giant is an interesting target. The more precipitous the fall, the better. And Yahoo! was about as high-flying as they get—and still not too shabby by today's standards. But increasingly, that's not how the media seems to be measuring them. Also, consistently in the lower end of the top five Web properties, Yahoo! enjoys many millions of unique visitors—current stats as of this writing from Nielsen/NetRatings puts them at number two with over 34 million unique visitors spending about 25 minutes on the site each. This point is interesting because there's a presumption out there that mega sites that attract these kinds of numbers are the ones that have the best chance of an ad-supported revenue model. Apparently, Yahoo!'s management team isn't the presumptuous type—ad revenue has been slipping and the company is beginning to charge for some of its services. So far, they've added sponsored, or paid, search result placements, courtesy of Overture—formerly GoTo.com, the current champ of paid placement search results. Sponsored links are clearly marked, so don't let that nasty paid placement stereotype spook you. Additionally, as reported in Silicon Alley Daily, Yahoo! is bundling an extra charge into each transaction made by consumers using its PayDirect service, and they're making a move into charging for premium broadband content.

Okay, here's where everyone gets all aggro. How can a site like Yahoo! start charging for stuff they've always offered for free? This will be at the user's expense and they won't like it! Broadband is a dog, only a fool would bet on it.

Let's all calm down and take this for what it is: an opportunity to observe and learn as a marquee media site makes a fundamental, but critical, change in its business plan. So far, it's the smaller players that have been forced to show their hand, understandable because they don't have a billion-dollar war chest to rely on. Yahoo!'s success or failure may greatly determine the outlook for those who will need to make the free to fee switch. Who knows? If the company succeeds, it will likely go a long way in changing some attitudes toward content and commerce on the Web.