Paying for Online: How Would This Work?
August 17, 2014
I read “The Internet’s Original Sin.” Talk about an interesting idea. Quite an insight: Pay for online access. So original. I believe the write up is confident in this radical concept.
Here is a passage I noted. The author recounts his experience at Tripod.com. He recalls:
At the end of the day, the business model that got us funded was advertising. The model that got us acquired was analyzing users’ personal homepages so we could better target ads to them. Along the way, we ended up creating one of the most hated tools in the advertiser’s toolkit: the pop-up ad. It was a way to associate an ad with a user’s page without putting it directly on the page, which advertisers worried would imply an association between their brand and the page’s content. Specifically, we came up with it when a major car company freaked out that they’d bought a banner ad on a page that celebrated anal sex. I wrote the code to launch the window and run an ad in it. I’m sorry. Our intentions were good.
Intentions that were good. Hmmm. Flash forward a lifetime in the zippy world of the Internet. I learn:
I have come to believe that advertising is the original sin of the web. The fallen state of our Internet is a direct, if unintentional, consequence of choosing advertising as the default model to support online content and services. Through successive rounds of innovation and investor story time, we’ve trained Internet users to expect that everything they say and do online will be aggregated into profiles (which they cannot review, challenge, or change) that shape both what ads and what content they see.
So what’s the fix?
One simple way forward is to charge for services and protect users’ privacy…Users will pay for services that they love.
I recall that the for fee online services charged their users for information. This worked reasonably well, but the number of customers was modest. Dialog Information Services was the Big Dog. LexisNexis had the law firms whose employees would spend when clients paid the bill. SDC Orbit survived with some must have specialty files. Similarly there was success in a few other commercial shops.
But these services reached only those who met certain criteria:
- Money to spend
- Interest/motivation to learn the ins and outs of the systems
- Expertise to figure out what the systems were outputting.
Consumer services did come along, but these did not capture the markets which the innovators sought. Remember CompuServe? The Source? Prodigy? Dialcom?
Charging for information, in my experience, trims the number of people using a service significantly. My rule of thumb is that only three to five percent of a free service’s users will pay for the service. Those who have to use the for fee service look for ways of reducing the cost of online access.
I am confident that the whiz kids at the Atlantic have better data. Their approach might be able to show the old, panting dogs like Cambridge Scientific (Dialog), Reed Elsevier (LexisNexis), Dow Jones (Factiva), and Ebsco (bunches of confusingly named services) how to make online information generate substantial dough. Thomson Reuters and Bloomberg have a formula, but the general population is not too keen on these services.
Good enough is the cultural hook today. If one has to pay for “better”, I think there will be quite a few innovators who go back to business models that produce substantial revenue.
Like it or not, advertising is the go to solution. Oh, don’t forget to subscribe to the Atlantic in hard copy. You don’t get the good stuff for free. What’s ad supported are analyses that call for Google to walk away from $60-$65 billion in revenue this year.
I bet that is an idea that Messrs Brin and Page will embrace.
Stephen E Arnold, August 17, 2014