Yesterday I discussed how The New York Times is looking to subscriptions or some form of paid content once again to help it weather not only a tough economy, but a dire financial situation brought about by declining print revenue.
Paid content can be a great business model but it’s not always easy to pull off, especially when you’ve been giving your content away for free. After all, why would someone start paying for something you were giving them at no cost just a week ago?
ESPN has a model that the New York Times might want to consider.
It believes in paid content too but when it comes to its ESPN360 offering, an online version of its television channel, it’s going about selling it to a much different audience: ISPs.
Instead of convincing consumers to pay for ESPN360, ESPN is taking a page from the cable television book and is selling ESPN360 to ISPs. If you’re a consumer and want access to ESPN360, ESPN doesn’t want your money. It wants you to help it convince your ISP that it’s in your ISP’s interest to pay ESPN so that ESPN360 will be available to all of its subscribers.
“It’s just the point of view that we have: that as opposed to just selling speed, content is going to play a role in the high-speed data marketplace,” ESPN EVP David Preschlack told Wired.
And ESPN isn’t the only company buying into this notion. Disney (which owns ESPN) and the NFL are also taking a similar approach and are charging ISPs for access to their content. According to Wired, the MPAA is considering the model too.
What do ISPs think about this? They’re not exactly turned off.
A Verizon spokesman stated, “it’s a tremendous value-add — one more thing to help attract customers to our broadband service.“
The problem, as I see it, however, is that while such a model might be viable for large media companies, it almost certainly isn’t viable for smaller content creators. Which is fine. If ISPs believe that their subscribers will get value out of having access to certain online destinations, the model makes sense. In fact, I could see a major ISP paying The New York Times so that its subscribers have access to the company’s content.
So is the new business of paid content selling that content to ISPs instead of consumers?
Wait just a minute. One has to wonder just how long it will be before there are too many players on the field.
While it’s unknown how much ISPs are paying for content deals like ESPN360, if this model becomes widely-adopted by those at the top of the media industry food chain, the economics won’t make sense for ISPs unless they pass the costs on to their subscribers.
Lest we forget, the cable television model doesn’t always work so smoothly. There are fee disputes and in some cases, cable providers drop channels because they can’t come to terms on those fees. So just because the cable television model ‘works‘ doesn’t mean that it’s perfect nor does it mean that it’s an ideal model for consumers.
While I think there is some room for it online (as ESPN and others might prove), the truth is that the online space is extremely competitive. While a cable customer might be very upset if he or she doesn’t have ESPN, how many consumers are outraged that they don’t have ESPN360? Probably not many because there is so much sports content online; the online world is so much broader than cable television. In essence, there might be a handful of cable channels catering to a specific market but there are usually thousands of websites catering to that market.
In my opinion, it’s unlikely that the model ESPN and a handful of other major media companies are pursuing will amount to much in the overall scheme of things and at the end of the day I think there’s something to be said about being able to convince consumers to pay for your service themselves. With its brand and reach, if ESPN can’t convince consumers to pay for ESPN360, I think that pretty much says it all.