Putting Up Paywalls on the Internet

June 8, 2010

This is John Reinan’s weekly marketing column for MinnPost.com. To see the original, go to http://bit.ly/9Di7sa.

The free ride on the Internet isn’t over yet, but there are a lot of people looking for ways to bump up the fare.

Last week, AT&T announced the end of its unlimited data plan for smartphones. The problem: Data hogs were using huge amounts of bandwidth, slowing down the phone network for everyone else. Other telecom companies are expected to follow suit.

AT&T is now going to charge an extra $10 for up to 2 gigabytes of data per month. How much data is that? It’s the equivalent of about 17 hours of video, 400 song downloads and a million one-page e-mails. And yes, there are people who consume that much data on their phones.

Meanwhile, the traditional media are still wrestling with how to charge for their content on the Web.

Starting in January, the New York Times will begin using what’s called a metered system. Subscribers to the print version will continue to receive free, unlimited access to the Times website. Non-subscribers will get a certain number of free articles per month, then will have to begin paying for content once they reach the limit.

Rupert Murdoch’s News Corp. already uses a paywall on its Wall Street Journal website; online users must pay for access to articles, although a limited amount of information is free. Murdoch says that he wants to extend the paywall model to other media properties he owns, such as the New York Post.

The Star Tribune has taken a step into paid content with its Access Vikings site, which charges $19.95 a year for Vikings coverage beyond what’s available on the regular Strib website.

In the early days of the Internet, Web acolytes repeated the mantra, “Information wants to be free,” and for more than a decade, the nation’s largest media organizations played along. Media continued to offer Web content for free, believing that the way to financial success was through advertising sold to the maximum number of eyeballs attracted to the free content.

After watching their revenue plummet for the last five years, however, the media companies are looking at paid content with a whole new fervor.

But the future of paid news content is far from certain. Earlier this year, the Pew Internet & American Life Project surveyed Web users about their willingness to pay for news content. The results weren’t encouraging.

Even among the most avid consumers of online news, only one in five said they’d be willing to pay for content. Among Internet users who said they visited a favorite news site every day, 82 percent said they’d go to a different site for news if their preferred site started charging them.

Meanwhile, the ad-supported model faces its own problems. In the Pew survey, 77 percent of respondents said they ignore web ads– the same ads that help fund the sites they visit.

It’s a mess, and if I had the answers, I’d go on the lecture circuit and charge media tycoons $1 million a head to hear my talk. And if I really did have the answers, they’d gladly pay.

But it’s safe to say that you can expect to begin paying for information you’ve been accustomed to getting for free. Maybe not tomorrow, and maybe not for everything. But the free, all-you-can-eat buffet of the Internet will soon be offering a more limited menu.