Einstein famously described insanity as “doing the same thing over and over again and expecting different results.” But many commercial enterprises are employing exactly this tactic in a vain effort to replicate their offline success on the Internet.
So how do you make money online today?
The web has thrived on a culture of free and open access to information, willful disregard for intellectual property and a collaborative, inclusive ethos. Without it, we’d have no Wikipedia, no Apple, no Firefox… hell, there wouldn’t even be an Internet.
The news industry in particular has been hit hard by the web’s open nature. Organisations like the BBC and the Guardian Media Group, who have based their business models on a commitment to public service and journalistic independence respectively, have less of an ideological leap to make to fit in in this brave new world. Whereas strictly for-profit organisations such as Rupert Murdoch’s News International are doing their best to change that culture back to one where people pay for what they get.
As of July 1st, The Times online instituted a paywall to lock down their content. Now, it’ll cost you £2 a week to access The Times’ content (£1 for the first 30 days). It’s not a new idea but few have managed to pull it off. Given the myriad free/ad-supported sources of news on the Internet, this is a pretty huge test of reader loyalty.
Perhaps even more importantly they’ve prevented Google, Yahoo et al from syndicating their content. Even paying users can’t share content with their social networks. On a link-based infrastructure like the web, this is tantamount to moving your shop to an underground bunker. In the desert. And stopping anyone from signposting the way.
So how is it going for The Times? Not good. Results last week from Experian say there’s been a 66% drop in traffic and The Guardian is claiming a 90% drop in traffic for The Times. Other sources are reporting only 15,000 people have paid for access. There are no official stats from Murdoch but even the rosiest figures are painting a pretty bleak picture, considering everyone is still in their initial £1-for-30-days phase. Guess what will happen to those numbers when the £2-a-week price-hike comes?
The real question is: do The Times’ subscribers get something that’s really that valuable? The notable examples that have made a paywall model work – the Wall Street Journal, the Financial Times – have a specialist appeal that gives a (real or perceived) value in return for access. The Times is lacking that killer USP.
And this same battle is being waged in lots of arenas at the moment: the closed iPhone vs Android’s open ecosystem, the recording industry’s obduracy vs the subscription model of Spotify, Hollywood vs The Pirate Bay…
Everyone needs to get paid somehow but it’s time for more innovative solutions than Murdoch’s.
Shane Casey is pondering e-conomics
innovation is the key. So first build something that attracts an audience and keeps them coming back then figure out how to create wealth from it by being innovative. and lets face it – charging £2 a month isn’t exactly innovative.
Who’s making money out of the internet now? Infrastructure builders like Cisco and Nortel; ISPs; shops and intermediaries like Amazon and eBay – essentially old-fashioned businesses who worked out early on how to leverage the web into an existing business model; ad agencies and web developers and… um… somebody help me out here. I’ve never been able to figure out if the Facebooks and Twitters are actually providing a return on the massive amounts of money that seems to get pumped into them – Silicon Valley is a bit like Hollywood when it comes to transparency of the books.
So maybe, once you take away the business of building the internet, the way to make money out of it is to integrate it into your existing business model as best you can, like people did with railways, telephones, pc’s, photocopiers and every other tech revolution we’ve had.
Murdoch, interestingly, seems to be having trouble with this, but then he’s nearly 160 years old – he’ll be set in his ways by now. Plus, the internet does seem to be genetically built to destroy the newspaper industry. On the upside, at least our grandchildren won’t have to deal with Daily Mail readers.
The music industry, after trying to litigate its way to longevity, is going to have to change its business model or die. Either would be a good thing.
According to this http://www.p2pnet.net/story/41738 the RIAA paid $16 million dollars to their lawyers last year to recover just $391,000 in charges.
So there’s someone else making money out of the internet… lawyers.
and pornographers.
i’m going to register http://www.ratemynudebarrister.com.
i’ll let you borrow my yacht.
not only is the guardian free, it is actively encouraging us to use it’s content.
http://explorer.content.guardianapis.com/
Just come across this article on CNN that draws some interesting comparisons between how much more successful the casual gaming industry have been than the media in making micro-payments work.
http://tech.fortune.cnn.com/2010/08/05/zynga_farmville_media_micropayments/
Well worth a read.