|Charging for Content Access.|
Norway trail blazing again? Content cartel formed.
An article on the FT [globalarchive.ft.com] by Alan Cane reports that a new micro-payment system has been put in place to charge for content. Not new - but..
|And in a move unprecedented in the online business, the biggest companies in the Norwegian alliance, many of them rivals, have agreed that from a set date - in about four weeks - content that they intend to charge for will be confined to special areas of all their sites that can only be entered by subscription or payment. So, surfers unhappy about forking out for information - news headlines, say - from one company will not be able to go to a competitor's site and get the stuff free. |
So the major Norwegian content providers are attempting to incentivise (force) surfers to use the system by forming a cartel.
This really got me thinking. Is this a bad thing for the internet?
Will this open up whole new niches for the smaller company to offer this type of content for free? Making money in other ways.
Is this something that is likely to be repeated elsewhere?
Anyway - definetly something to watch ;)
>Will this open up whole new niches for the smaller company to offer this type of content for free?
Would have to be very low overhead - imho
>Making money in other ways.
What other ways are there in 2002?
Would it even be legal in the USA for an industry to get together beforehand and decide to charge? Or would that be price fixing? Any lawyers here?
Imo whether you can charge for the content largely depends on the content.
A normal user won't pay for general news items, unless its like stock market quotes.
And if the content is hot enough, you won't be able to monopolise it, sooner or later it'll leak to a "free" source...
I like the idea of micropayments for content use, but for news & non-specialized info it would be tough to pull off in the US market. For one, companies getting together to agree to charge for a previously free service would be blatantly illegal. In addition, there are just too many players to exert any kind of market discipline.
Saw an article the other day that said Consumer Reports was the biggest online success story in content subscriptions. They have something like 800K subscribers at about $20, compared to the Wall Street Journal that has 600K subs (higher price, though). This shows that you CAN sell non-adult content if it is unique and if people want it. Certainly, the web is ideal for Consumer Reports, which is used less like a magazine and more like an encyclopedic reference.
Micropayments have yet to take off, but it will happen. There are lots of things that people might pay a few cents for, and the total volume could be large. Music labels haven't realized this yet, unfortunately. Imagine a legal, well-organized Napster with a 10 cent per song fee - I could easily imagine dowloading lots of music and spending far more money in total than my minimal annual CD purchases.
One thing that also has an impact is that content requiring payment to access by its nature will not be indexed by the search engines. (Cloaking? with no-cache/archive)
The more content that gets pulled behind subscription only sections, the more SERPs become the list of FREE content only. Will there be moves to provide search services to the micropayment internet? an extra tab in google?
> Imagine a legal, well-organized Napster with a 10 cent per song fee - I could easily imagine dowloading lots of music and spending far more money in total than my minimal annual CD purchases
If only ! can't see 10c a song ever happening - the RIAA are just to greedy - how does $5 a download grab you?
I'm just a guy with a business degree, but based on the limited info I've just read, I would think that such an arrangement by U.S. companies would be challenged in the U.S. per existing antitrust code.
For example, imagine if all the major sources of news in the U.S. (Gannett, CNN, etc.) got together and agreed on a similar pay-per-view system. Wouldn't the Federal Trade Commission take them to court for collusion?
Speaking as a norwegian journalist I must say 1) this is news to me, and 2) Im not 100% sure, but it would probably be affected by our antitrust laws (which are similar to those of the US).
Im not really sure about how they could implement this - in norway or anywhere else. Especially news headlines which are usually carried through from wire services. Charging for this - and at the same time keeping it from being free elsewhere - would mean changing the whole system of wire service subscriptions not only for local agencies but for international ones like AFP and Reuters.
As for content swaps, they could insist on keeping copyrighted content behind other peoples' walls, but that is as far as it can possibly go. You can own what you write or say or show about something, but you cant own the information about what you are referring.
>how does $5 a download grab you?<
Fine with me, $5 x 0 = 0 :)
I really believe that business models will change in fundamental ways with time and innovation. Right now, for example, one DVD maker (could it be Time Warner?) is getting howls of protest from the rest of the DVD cartel because they want to price DVD movies at $9.99 - the other guys see only lost revenue, but miss the opportunity to turn DVD rentals into individual DVD sales, creating far more revenue and profit for the producing company. All these Harvard MBAs (apologies, Winooski, if your business degree is colored crimson...) are forgetting elasticity of demand: as price goes down, for some products consumption goes up, maybe WAY up.
A lot of people are saying that a cartel of this nature would be illegal/not allowed in the US (and maybe Norway). But given here are two exmples of cartels doing exactly the same thing: RIAA and the DVD cartel, there is also OPEC and many others.
So why would this situation, the only difference being that its Internet based be any different?
Bait and switch?
gethan, I don't believe the RIAA is involved (explicitly) with setting prices for audio products, so I don't believe they're affected by U.S. antitrust regulation. OPEC is a better example: it is multinational collusion that has a demonstrable effect on not only the prices of petroleum products sold in the States, but on the country's very economy! ...And what's the FTC going to do re OPEC's obvious near-monopoly, take them to court? (Actually, I wonder if that's ever happened?)
Internet law's an Alaska-sized can of worms, but if the colluding parties mostly belong to a specific locus (in this case, Norway), then they're more vulnerable to being regulated or broken up.
(rogerd, the colors are green and gold for University of Vermont, only a BS...though I did win the business school's Arthur Andersen Consulting MIS Award. With the Enron debacle still raging, I wonder if I should still include that in my resume? :) )
Well, this ain't news. The FT story is wrong on one account: The alliance has not created a new payments system. The issued an invitation to tender and selected one system.
Another thing is that the alliance have worked for some time, and they've discussed more than one strategy.
Ragarding the cartel issue, the Norwegian Competition Authority investigated the current proposal and published specific requirements in february. (Basically, they're allowed to agree on a common payment system, and to select a common launch date. That's about it.)
However, there alliance doesn't cover all professional media on the net, there will be free content and some will charge for use without being members of the alliance. Anyway, the alliance members have decided to select a common launch date rather than playing a game of chicken.
What remains to see is how many of the users that will turn to foreign sources.
Another issue is the competition between the pay-sites. While many users visit several free sites at present, they will probably select a very small number of pay sites. In other words, some of the pay-sites are likely to go away.
At present there are some 60-70 Norwegian content providers that plan to go pay-for-play, and about 30 will probably be ready for the grand opening planned by the alliance (some time in Aril or May).
hstyri: Thanks for the extra info - that's what I love about this place there's always someone that knows the real story.
There is on other approach to makign the surfer pay that has not been addressed here. Ofcourse, it isn't directly related to the online market place as such but it will have a major impact on that field all the same.
The portal approach that has been slowly adopted by AOL, and that M$ seems to be targeting via their .NET initiative.
The central concpet is to not charge the surfer form something they are conditioned to recieving for free, but to build the cost for content into the price tag of something they already pay for (ISP or software) and expand the charges from there. The existance of an account with a service provider (in the case of an ISP) makes it easier to add a micropayment system for their customers and partner sites, and also requires far less thought from the comsumer in the act of paying online, they can click and pay before they think too hard.
Obviously this only applies to content with a wide market appeal, such as news and gen. mainstream articles, not a niche product like consumer reports.
i hope i am not too far off the mark, or the topic, here.
corvo, something similar to what you're describing was suggested in Sweden. A company tried to team up several large content providers and ask the larger ISPs to pay up or have their IP-adresses blocked with respect to the content in question.
The same approach was discussed by the Norwegian alliance of content providers.
There are two problems. One was that no ISP was willing to pay. More important, it's likely that the system would have been illegal with respect to European competition laws. ;)
Here in Portugal, what one ISP has made is that only people using them can see several sites that belong to the same company of that ISP. If you use another ISP, youīre blocked. What all free ISPīs have decided to do was to raise by 50% the prices for the connection to the internet ( dial up ), the telephone bill, not the access, because thatīs free. And they didnīt warn the consumers. 99% of their users still donīt know.
Nice isnīt it ? :(