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Written: 2002

Introduction

Till last week, I could access the website of the Financial Times, UK, at no cost (save the phone rates when I was accessing it from home). Till last quarter, I was roaming freely on the South China Morning Post Site. Till last year, I could access a whole lot of stuff on the Economist website - and at some distant point of time in the past, one could probably access much the Wall Street Journal at no cost. Today, the privilege of accessing all those 4 newspapers online comes to me at a collective cost of approximately $300. Even The India Today websites cost Rs. 500 per year to access. The Times, UK has a fee. CNN charges for its Webcasts…
Strange as it may sound, all this is good news. In recent times, through the misguided hype and hope around non-revenue oriented business models on the Internet, content was one of the greatest victims. Not enjoying the critical mass required to draw the advertising megabucks, and forced into giveaway status, there was really nothing to separate the proverbial wheat from the chaff, you could spend hours trolling through the web looking for morsels of relevant or useful information about anything you wanted. Leading to the rise of "contextualization" engines, like Purple Yogi (now Stratify). It was all free and Frankly it was mostly worthless.
The year 2002, is proving to be the year of paid content. Apart from the ones mentioned above, many other Newspapers and Magazines are taking the plunge into paid content. What this is doing is making content an "economic good", which is bought and sold in a "market". And while most of us suffer the immediate impact of having to pay for it, there is, in fact a bouquet of hidden benefits.
First, the model allows content to stand on its own feet, rather than be driven by advertiser interest or worse, investor interest. This has a very big individual and social impact. Second, it allows the best in class to differentiate themselves through pricing - still the best barometer of value known to mankind. Third, it saves the user a lot of time and effort sifting through unappetizing and irrelevant stuff, for those genuinely in need of information (read: willing to pay). Lastly, since the Internet still rewards market leaders disproportionately, the best content providers will find themselves on a virtuous cycle of better service provision, paying customers and value accretion.
However, the debate of whether or not content should be free is an old one, and one that is colored by ideologies as much as they are results of economic divergence. This note focuses on helping you identify whether you can adopt a pay model from a business perspective and what are the technology frameworks and decisions you will need to encounter in order to make this work.

Paid content brings with it many technological challenges - payment, distribution, rights management, service delivery and billing efficiency are just a few of them. All of these rely on specific technologies and many are relatively new to media companies. Planetasia's Media & Entertainment Practice helps our clients to implement paid-content models.
Should You Go For Paid Content?

How do you determine if you're likely to do well with a pay model? Here are some simple checks you may want to perform.

1. Niche - how niche are you? This is one of the key questions you need to answer. You could even rephrase this as how much "niche" content do you have in your stable? Niche content is hard to come bye and people usually struggle to put together information about news from various sources. For example "rock-climbing" aficionados are like likely to pay for content aimed at their kind. The New York Times charges for crosswords. Specific financial information can be considered a niche. Broad financial information, business information, industry information, sports and hobbies related information all serve relatively niche audiences and can afford to go pay. Business News sites are among the first to market with paid content. This includes the Wall Street Journal, Financial Times and the South China Morning Post. Sometimes being unique in a socio-linguistic way can also work. The Jerusalem Post charges for content - being the only online English daily about Israeli news.

2. Loyalty - what's your base of loyal readers or followers who will give you company even in the brave new world of paid content? How many will at least try it for a few weeks or months? If you're a newspaper, with a good following in specific markets, chances are your audience will follow you online and even pay for content. This is probably one of the reasons why the Wall Street Journal has notched up over a million paid users till date. Market leaders in specific categories should look closely at the value locked in their market share.

3. Availability of Free Alternatives - of course, the availability of content that is free and in some way close to your content - will erode your ability to charge for it. This may sound like the niche argument presented differently, but its also about the quality of content. Good editorials, reliable reporting, data with depth - this is the kind of thing people pay for. This is also where your salience and known quality begin to play a role. Or perhaps the depth and accuracy of your data. Bottom line - you have to be appreciably better than the free option available.

4. Value-add - if you're delivering something that's original and a print or broadcast medium cannot provide - there's probably some value locked in there. Interactive crosswords or interactive real estate sections are probably the best examples here. Pay per view, interactive contests, games; community features and event-based alerts - delivered wherever the user is - are some of the value-adds, which are attracting interest today. The FIFA World Cup 2002 package comprising over 5 hours of video footage - covering highlights from all matches, great goals from the past and highlights of past world cups - is a good example of this. It comes at under $5 - and is available till the end of July - you have to view it on the www.fifaworldcup.com website.

5. Lest we forget, it's worth noting that users have traditionally paid for a few kinds of content - namely, career information, financial information and sports. Good sports content both on television and on the web, has always been able to attract a premium. Financial content - especially that which is directly usable for gain, is also an area where users have been found to be willing to pay. Of course, not everybody can rely on sports and/ or financial information. But for those who have it, you consider flaunting it.

How?

The WSJ charges for almost all content beyond front-page news headlines. The Financial times and Economist put a premium content tag on selected articles. Fortune charges for archived copies. The New York Times charges for Filmographies. CNN charges for special video content. Almost all publishers provide total access for the print subscriber. Most carry free headlines and lead-ins to the paid content.

Here are some of the strategies and models you can consider while creating your paid content model.

1. Tiering - one of the commonly used methods tried is tiering. Where within the site, there are specific pieces of content that are free and those that are paid content elements. The benefit of this approach is that no matter who comes to the site, he or she definitely gets something out of the information, thanks to the 25% or thereabouts that is free content. The downside of this method is that people can get tired of hitting the wall of payment after a few clicks. However, tiering does work, and has been used by many newspapers - The New York Times is using this approach to good measure.
2. Lead-ins. The headline and the introduction to each piece is kept free but users need to pay to read the content. The home page of the Wall Street Journal uses this approach.
3. Build volume and convert - aim to invest in getting a very large and loyal user base to your site. This is tougher than it sounds, because to make it work, you really need to get to the "million" mark. Good examples of sites which have great, free content and are poised to convert this to revenue streams are Guardian (UK) and The New York Times. Of course, this also opens up better revenue opportunities in advertising.
4. Value adds - multiple delivery options, device support, personalization, and anything else that makes it easier or better for the user.

Also the payment model you can follow may be a subscription model or a pay per view model. Fortune archives are available as pay per view, but across the world, this may pose problems of managing micro-payments. Most people opt for a subscription model, which itself is tiered. Finally, you may just link online access to other media (subscribe to the magazine) and not charge separately for the online version. However this last model makes the online content a marketing expenditure for the real-world magazine and so may create avoidable dependencies.

To help you implement paid content models, there are many services available out there. Payment (Gator, Yahoo, MSN), or subscription management (Infogate, esubscription.org, SWEPA.com), or support and information sites like paidcontent.org are there for the asking. However, before treading down that path you may want to consider some of the technology issues you will need to manage.

Technology Issues

1. Content Management Changes. It is more than likely that you've implemented a content management system. Either on a platform such as Interwoven, or using home grown applications. Typical content management systems divide functionality broadly between content creation processes and content staging and publishing processes. While implementing a paid content system, you need to make some changes in both these modules.

First, your content needs to be tagged based on your subscription model. There are many models in use today. (see above) Depending on your chosen model(s), content needs to be tagged at a document, sub-document (headline and lead-in vs rest of story) or a meta tag (date of publishing) level.

Personalization is perhaps the starting point of value creation for paid content. It's the "least you can do". Personalization at the basic level takes the form of creating some space on the home page of the visitor, where content is selected based on parameters provided by the visitor. At advanced levels, personalization involves the use of complex profiling tools matched by complex rules for content selection and presentation across channels.

Second the content publishing has to be altered to reflect the model. Portions tagged as free need to be published. Paid content needs to be marked as "premium" so that the average user knows what his access boundaries are. Appropriate content aimed at persuading the user needs to be made available across the site. The page structure may itself change - especially to accommodate personalization.

2. Multi-device and multi-channel delivery is another sine qua non of paid content. The standard package involves sending structured updates in the mailbox, newsflashes and alerts to the mobile phone and perhaps a reduced version of the news/ analysis to a PDA. This may involve some more classification of content within the content management system. It also means support for wireless delivery - SMS, WAP, GPRS or 3G depending on your location and the device capability of your user base.

3. Clearly the user needs to be able to pay for content through the site. This brings into the picture transaction support, business assurance services, payment processes, security and rights management.

Transaction support would typically involve connecting to a debit card/ credit card gatway, although services like eWallets from MSN, Yahoo and others are gaining in acceptance.

Business assurance involves credit verification and fraud detection - a clear need if you're doing credit card transaction. However availability of Business Assurance services is non-uniform across the world.

Security planning and implementation broadly involves defining security policy, access control, authorization, identification, intrusion detection, incident handling and data encryption. Its worth noting that this is best implemented across application and hardware and that media sites are prone to attacks from unethical hackers not for financial gain, but for publicity.

Rights management becomes critical if the paid content has a long shelf life and is reusable. For example a music video. The problem is limited if the content is news or other perishable content.

4. The subscriber management piece, as you can imagine, is much more complex now, with individual details, personal profiles and personalization data, billing plan & preferences, device details and ideally, self provisioning capability. Typically, you would want to create a role-based distinction at the database level, with a dedicated database server handling user data. Also stored here would be access control data and data required by advanced profiling tools, such as usage data.

Billing systems are usually confined to the domain of telecom firms and media firms do not bill end users directly, as most media is delivered through distribution channels (the cable guy, the newspaper boy). However, it's imperative that at least a rudimentary billing system is introduced into the system to allow for schemes, promotions and tiered content billing. This is essential both for financial systems as well as for marketing information.

5. Having paying customers creates another problem media firms are not used to dealing with - Service Management. This has a human face - which involves responding to mails & managing complaints & expectations. This can be implemented through call centers/ online help applications, and can indeed, be outsourced. However the data from this area needs to flow back into the system, hence, an extent of integration is warranted. Further, there is systems side to this problem - this takes the form of application & hardware monitoring, and appropriate processes for troubleshooting. Given that media websites are prone to spikes based on external events, an instrumented approach to application architecture is a useful idea.

6. Having taken the big step towards paid content, it clearly provides visibility of the added value to your advertising model. For a start, you are able to identify paying customers. Second, you are now gathering a whole lot more useful data about the users profile and behaviour. A natural, and useful (but not essential) next step is an improved Advertising management system. This has 2 key components - Business Intelligence and Advertising Management.

The business system allows you to mine the additional data being generated to create powerful propositions for the prospective advertiser. The Advertising management module allows you to design implement promotions and campaigns together with your advertiser, in an automated and cost effective model.
Conclusion
The journey into paid content may seem complex, but in reality, there are some simple rules and guidelines, which can help you to get there with minimum time, cost and ulcers.