First Day of Class (8/20/2009)

In most classes the first day routine goes as follows: teacher introduces themself, the students all introduce themselves, and then the teacher goes over the syllabus and what topics the class will cover.

In the first day for MIST 7500 we came up with topics we could discuss in class before we hit the syllabus. One of the ones that was mentioned was paying for content on the Internet. This is an issue that even the most casual Internet surfer is aware of: should the visitors to a web site pay to access the content, should it be supported by ads, or both? The short answer is, in my opinion, "It depends".

There's been plenty of news about companies wanting users to pay. The Boston Globe announced it would start charging readers earlier this month. Back in June a board member of Hulu stated that hulu.com might move to or add a subscription model. My first reaction to both is that neither will work. Readers of The Boston Globe will go to other news sites and they'll just flat out mess up monetizing Hulu by introducing bundles or tiers. On the other hand, people do pay for The New York Times online. **Correction: General access for The New York Times is free, it just requires registration. Only certain sections of the site require you to pay first.

But can any site exist soley on ad revenue? YouTube, which is free to users and has ads, is losing money. Most free sites I can think of are only free up to a point. If you want the really good stuff (or at least unlimited use) you have to pay: Flickr and Popcap are good examples. Even non-commercial web sites that don't require payment for any of their content ask for donations. I'm sure there are businesses baffled that people will donate money to a free web site but won't pay for content on a commercial site.

So what works best? I said that it depends and here's what I think it depends on:

• Whether the content can be obtained for free
  
• How difficult producing the content is perceived to be
• How popular the content is

No one wants to pay for something they can get for free. Similarly, no one wants to pay a lot for something they think took little effort to produce. It doesn't matter if it actually takes a lot of work if people have the impression that anybody could do it with little effort. Finally, no one wants to pay for something if they aren't sure it's going to be good.

The first and third items create a Catch-22. People don't want to have to pay for something that was once free but they won't pay for a completely unknown product or service. Businesses are stuck having to give something away for free to make what they're selling popular but then can't get anyone to pay later because the potential customers are used to getting it for free. This is what happened to newspapers. They put all of their content online for free and then no one had a reason to pay for the paper anymore. I remember the term "cannibalizing" being used by someone at work for this: one product or service taking away all of the customers and revenue from another product or service.