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Information may want to be free, but InterActiveCorp's chairman thinks we're all going to be paying for it soon. Speaking at the second annual Advertising 2.0 conference in New York Wednesday, Barry Diller was emphatic that the free period of the Internet is coming to a close:

"People will pay for content. They always have."

The digital media chief disparages the idea that consumers expect free content online, calling it "an accident of a historical moment that will be corrected."

According to Diller, we're currently at the very earliest period of monetizing the Internet: "Right now, everyone’s at cross purposes, but that’s natural. At the beginning." The solution, according to Diller, lies in combining the creative strengths of old media with the new formats of the online space.

For starters, he thinks many publications will start (or revert to) charging for content. "At some point, they are going to say: 'We have no choice, we have to go behind a pay wall.'" That will of course shrink the size of audiences, but Diller doesn't see that as a tragic flaw.

"It will happen. It is absolutely inevitable. There's no way around it. It's going to happen. And some people will pay and some people won't."

IAC has seen revenue success in its varied portfolio of companies such as Match, Citysearch, Vimeo, and Urbanspoon through a variety of models that include advertising, subscription models and transactional costs.

But one thing that does not interest Diller is display advertising, which he thinks has been crippled by the standardization process. Rather than buying 200x300 boxes, he thinks advertisers want more flexibility: "We may want institutional, we may want traffic, we may want transactions... the whole range for action versus impressions is only possible in Internet form."

As creative talent fully migrates online, Diller envisions many more "contextual sponsorships." And Tina Brown, who heads the IAC backed Daily Beast concurs. She tells Econsultancy that "we've been going a different route. We're pursuing a new integrated ad model. For us, it's more about creative advertising and getting the user excited and more involved."

The less than a year old Beast is still sorting out its business model, but Diller points to some other IAC owned properties to demonstrate the future of online revenue streams:

"Look at the iPhone. Thre are examples there. On Citysearch and Urbanspoon. When people come to those sites through the iPhone, we get paid. People are now getting paid for transactions."

But will the gaming model prove successful for media companies and other content? Diller thinks so:

"What do you think a game is? A game is content."

Image: Deadline Hollywood

Meghan Keane

Published 10 June, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (4)

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Chris Averill

Good insight and something we have been discussing for a while. Of particular interest is BT's demand that the BBC pay towards iPlayer traffic. http://www.weare-london.com/blog/the-end-of-free-we/

about 7 years ago

Alec Kinnear

Alec Kinnear, Creative Director at Foliovision

This appears to be a concerted effort with old media demanding that the floodgates be closed.

Somehow I don't think it's going to happen. Free will always beat paid. Of course, split models, where commenting is a paid add-on or where time-based access is paid, might work.

i.e. if I want to see today's stories now, I have to be a subscriber. If I want to see stories 12 or 16 hours old I can visit as free.

That way you suck people in and then upsell them.

Hey wait, I just gave away the econsultancy business model. Except you guys are doing it with premium content. But you do have all of our names, business names and email addresses and can get a pretty good gauge of our visits and our particular interests.

about 7 years ago

Tina Whitfield

Tina Whitfield, CEO at EquisGlobal

Paid Content, I know it will not be so.  Why? 

People came out free in the late 90s.  Then they charged and they lost to free content provided by EOnline and Point Cast.  You can get entertainment junk(food) news anywhere. 

Until the content is originally created and exclusive in both concept and authorship, who will pay? 

So, if it's a feature is written for or by Brad Pitt, he better be talking about an original area of exploration - say bio agriculture and the article better not appear in any form anywhere else.  Additionally, he better not be talking bio agriculture as a topic to anyone else for at least 3 months.  Otherwise, people will just wait for the bloggers to read the story and re-post for free.

Get it folks, bloggers will repost the stories for free!

about 7 years ago

Pauly Singh

Pauly Singh, Founder at Marketing Method

As visionary as Barry Diller was in seeing the growth of commerce on the internet, I think his comments are only self-serving when he says that content is going to have to "go behind a paid wall".

I believe the content game has changed, there's simply too many sources to get information from for free, The newspaper industry is literally crippling because offline media is unable to keep up with the spread of news on the internet.

However, as Tina mentioned in her comment, the only real hope for some of these older content-publishing organizations is to create unique, well-researched feature content (not just offline written content, but online audio and video content). Otherwise, in 3-5 years when the Amazon Kindle gets a color screen and gets mainstream momentum, the offline-only publishing companies will simply go bankrupt.

about 7 years ago

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