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It's funny the difference a couple of years can make. Two years ago, the global economy was roaring along and everyone was excited about internet advertising.

Growth in spend was strong and many companies big and small saw unlimited potential in their future advertising revenues.

Today, most of us would agree that companies heavily reliant on advertising revenues are in a bad spot. Advertisers have cut their spending and nobody has been immune.

So it's no surprise that something so many shunned over the past several years is now back in style: paid content.

You only have to look at the publishing business to see this. Newspapers are in serious trouble and some, like The New York Times, are looking at paid content as a remedy. At one point The New York Times did charge for online access but it dropped that and went with an ad-supported model. After all, ad revenues were potentially unlimited! That was a dumb assumption.

But the NYT isn't the only company in this situation. It's now being reported that Time is going to be experimenting with paid content online. What this looks and whether it might include a pay wall has yet to be determined or publicly stated.

The reason for Time's shift: there's too much ad inventory online. Didn't they notice this before?

The problem for The NYT and Time is the same: you don't go from free to paid in one quick, painless step. It's hard to get consumers to pay for anything and that's especially true when times are tough and everyone is watching what they spend. It's even harder to get consumers to pay for something that was previously free, which I've pointed out before.

Paid content is a tough business. But it can be rewarding and worthwhile. Unfortunately for the NYT and Time, anything worth doing has to be done right and for the right reasons.

Shifting to a paid content business model is not something that is done successfully when your primary rationale for doing it sounds something like this:

  • "We're not making enough money from ads."
  • "The recession is hurting our ad revenue."
  • "There's too much ad inventory out there, driving prices down."

Consumers don't care if you're not making enough money from advertising or if you changed your mind and now believe that there's more money in charging them instead of getting advertisers to subsidize them. They're only going to pay if they think there's a good reason to.

That usually means that you have to offer something unique, exclusive, and valuable. And you have to prove that it's unique, exclusive, and valuable.

This is what the Wall Street Journal has done. It never tore down its pay wall for the sake of short-term ad profits, despite all the people who told it to. Instead, it stuck by the notion that it had something worth paying for and it has been rewarded for that. Ironically, the WSJ reportedly has relatively healthy ad revenue because its pay wall restricted the amount of inventory it was able to produce. While the WSJ has to retain subscribers (no small task), I'd say that in this type of economic situation, subscriber retention is a better challenge to be faced with than subscriber acquisition.

For Time or the NYT to convince consumers that they have content just as valuable as companies that have been charging for their content all along (like the WSJ) won't happen overnight. They'll have to differentiate themselves to a far greater extent and convince consumers that they're providing content of real value. Content that they were previously willing to give away for free.

That's no easy task and for many companies accomplishing this task may take longer than they have. That's why I believe the paid content boat left before this recession started and some companies are likely to die at the docks.

Photo credit: jimg944 via Flickr.

Patricio Robles

Published 19 March, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2419 more posts from this author

Comments (1)


andrew rana

If the NYTimes can link a move to paid subscriptions with the public's realisation having watched Jon Stewart interview Jim Cramer that an independent and honest media matters it has a chance to turn back the non-sequitir of affiliated editorial. 

over 7 years ago

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