Will everything online end up costing money?

I don’t think paying online will be an either-or question. Some say everything will become free. Others see iPhone and iPad apps as proof that everything will now cost money. I think both extremes are nonsense. Why would everyone suddenly choose the same business model?

These are my thoughts in August 2010, when the media industry is in upheaval and Apple’s new products feature heavily in the debate. I don’t know what the future holds. But I think we’ll get many different combinations of free content, advertising and user payments.

First, some news from Amino’s expert blogs

I’ve been a little quiet because I’m incredibly focused on Amino’s expert blogs right now. Among other things, we’ve launched a little feature that emails you if you’ve commented on a post and others comment afterwards.

It isn’t technologically amazing. But for a community, it’s a bloody good feature. It helps people return to the conversation they joined.

We’ve also gained some good new expert bloggers. Mogens from Miraklet will soon share his thoughts on what he’d do as a dictator. He’s incredibly funny, so I’m looking forward to both videos and writing from him.

There will also be content from Anders and Christian Bitz and lots of others. I’m probably forgetting someone, but we’re approaching 30 expert bloggers. That’s lovely. But it’s the debate about free and paid content I want to discuss here.

Paying online has become a black-and-white debate

On one side are those who think everything is moving towards free. On the other are those saying apps are the new thing, so everything will cost money.

I understand why the debate gets heated. The old media have paper, printing presses and distribution while much of the content moves online. TV faces competition from content delivered over the internet, and magazines face tons of new competitors.

Although some say the magazine industry is still doing well, I think much of that content will move onto something like the iPad. In my opinion, the entire media industry is going through a major upheaval.

I see media losing readers, viewers and advertising revenue while hearing for years that everything will soon have to be free. So it’s no wonder an iPhone or iPad that lets them sell content triggers a backlash.

Now we can charge again, they think. Now it’ll be like the old days.

I sketch it rather crudely as open, free-thinking people on one side and Rupert Murdoch and the old media crowd on the other. The latter sense an opportunity and see a new business model. Funnily enough, Apple has provided the opportunity rather than them doing it themselves.

But that doesn’t prove everyone will choose it. My prediction is a market split into many different offerings. In a way, as confusing as it has always been.

Newspapers have already mixed payments and advertising

Look at the newspaper industry historically. Have newspapers always cost money? No, not all of them. We’ve had several different models alongside each other.

At one end is expensive, specialised content with few or no adverts. I mention Mandag Morgen and Weekendavisen as examples in that direction, although I’m not sure about their precise advertising arrangements. What matters is the model: The reader pays a lot for the content.

In the middle are ordinary newspapers such as Politiken, Berlingske and Børsen. They charge a price and carry advertising too. It’s a mixture of reader payments and advertising funding.

At the other end are free newspapers, such as Søndagsavisen and many local town papers. Advertising plays a big part there.

I often think the journalistic quality of free local newspapers has been lower than in the major papers. That’s my assessment, and I’m not saying all local content is bad. But I’ve seen lots of material where the story about a new baker sits close to the baker’s advert.

I’m critical of that mixing of journalism and advertising. But the point here is that all those models have existed. It has never been inevitable that the entire newspaper industry had to choose free or paid.

TV has had many business models too

We know the same thing from television and film.

You can go to Blockbuster and rent a film or pay to watch a particular film through pay-per-view. There may be trailers and other advertising-like material, but by and large you pay for the experience itself and can often skip the rest.

Then there’s pay-TV such as Canal Digital and offerings with different mixes of films, quality and adverts. TV 2 also has a mixture of content, advertising and some payment through TV distribution.

DR is a little different because it’s funded through the licence fee and the public system. In my view, you get high quality without ordinary advertising there.

At the other end, I put TV 3, which I think has tons of adverts and very limp content: old films and stupid B-grade series. I’m harsh in my assessment, but again, the point is that several different combinations of content and funding exist.

The same outlet can offer several versions

What I find interesting about the internet is that a single media outlet can more easily offer several models at once. Also read E-pusher about my experiences with business and online sales.

Take Berlingske as an example. I imagine an expensive version with no adverts. A cheaper version with some adverts. And perhaps a free version with lots of adverts, fewer offerings or news delayed by a few hours or days.

That’s a prediction, not a description of an offer Berlingske already has. But I think those are the kinds of choices that will become interesting.

On Amino, we’ve already started on a related idea. Plus members get fewer adverts and avoid the particularly annoying ones. We’ve had great success with that.

I’d love to be able to pay, say, 50 kroner a month for Discovery Channel and avoid the adverts constantly interrupting. I find that incredibly annoying.

With traditional TV distribution, having multiple feeds, different decoders and different access arrangements is cumbersome. We’ve also seen encrypted TV get hacked and cracked.

I think the internet makes it easier to offer choices. I know people can still steal and pirate things. If people can watch something, they can find ways to copy it. And perhaps control isn’t even that simple when it comes down to it.

But at least you can give people the option of content with adverts or paying a small amount to avoid them. That’s more interesting than assuming one solution has to suit everyone.

Apple’s world reminds me of Disneyland

So will all content become apps on iPads and iPhones in closed worlds? I don’t think so.

Apple is interesting because its products are polished. I find them stable, with fewer problems such as viruses. But where’s the porn and everything else that doesn’t fit into that tidy world?

I compare the world Apple is building with Disneyland. It’s nice to visit Disneyland, and a place like that can certainly be a good business.

But do we adults want to live there all the time? At some point, we want to get out where things aren’t so polished. Where they’re more unpredictable and perhaps a little dangerous.

I think the tidy world will have a place and could become terribly profitable. I just don’t think it’ll take over the whole internet.

Euroinvestor and unruly user activity

I was a co-investor in Euroinvestor and helped build it back in the day. I remember people at Børsen laughing a little at users posting information, lying or saying incorrect things.

At one point, I called Børsen and asked whether they were interested in buying. They weren’t. They didn’t want that Wild West associated with their brand. They didn’t want to be linked with users distorting things.

Here in 2010, my assessment is that Euroinvestor is considerably bigger than Børsen online. Børsen may have good articles, but I think the polished world can be boring to visit.

People don’t necessarily only want the same stock tips as their neighbour. They’re also attracted by discussions, stories and the feeling of something happening that they can’t get in a completely controlled world.

That’s why I don’t think the polished world wins everything. I think a large part of the internet will remain more like the Wild West, through the browser or other platforms. I won’t guess precisely how the technology will develop.

My prediction: Mostly free, but lots of money in paid content

If I put numbers on my prediction here in 2010, I still think around 90 per cent will be free and 10 per cent paid. I imagine that split could still apply in ten years.

That’s an expectation, not something I know. And it certainly doesn’t mean there isn’t money in user payments. For fuck’s sake, there can be lots of money in that ten per cent.

I’m less sure how many of the old media will survive the transition. I think their thinking is too old-fashioned, they move too slowly and aren’t adventurous enough.

But I understand some of their problem too. Every time they put more online, they risk moving readers away from a paper product that still has large costs.

Starting the printing presses and distributing newspapers costs money. Whether you deliver two newspapers or many on the same road, much of the work doesn’t disappear. That’s why it’s hard to move the business while still paying for the old machinery.

So I believe in more models, more choices and a market where both free and paid content can work. You’re welcome to discuss it. And visit Amino’s expert blogs too, where there’s good content that’s free for now.

Lots of people think it’s either-or. I don’t.. So now I’m going on holiday. Take care 🙂