The worsening advertising climate is forcing many publishers, facing only modest online gains after a decade of digital investment, to consider charging for content. News Corp is considering a strategy that may involve e-readers, GMG is mulling charging for MediaGuardian.co.uk and doubtless others are wondering how to finally start making real profits from online traffic. But there are risks and challenges - here's a rundown...
• You can't charge for abundance: First thing's first - there is still a healthy market for business-critical information. WSJ.com has steadfastly stuck to subscriptions, FT is profiting nicely and there are still dozens of business-to-business title serving niche communities with premium-access websites - it's the kind of unique information decision-makers will pay for. But for the raft of general-interest consumer news sites whose stories differ only slightly from the next publication along, the prospects for premium are less rosy. That's why sites like Times Online, Telegraph.co.uk and others are unlikely to ringfence themselves entirely. Instead, paidcontent will be piecemeal - publishers are looking across their networks to identify which individual sections and features might be chargeable (how about new, value-added services like databases and research?).
• The genie can't go back in its bottle: Web users have enjoyed 15 years of free content. That can't be reversed easily, and it can't be changed by any one publisher alone. No-one should want to blink first - any producer of consumer news that erects a pay wall will quickly find its audience migrating to rival sites offering a similar service. That's why any paidcontent initiative must be an industry-wide effort. Can bitterly opposed newspaper owners, so used to knocking lumps out of each other, join to all jump together? There's no sign of it - but perhaps increasing industry consolidation will get us to a consensus by default. Or perhaps a joined-up approach would attract dreaded competition scrutiny.
• BBC News is the gorilla in the room: Even if publishers manage to raise the pay wall together, they will be competing not just with alternative grassroots sources like bloggers but also with a well-staffed news site that appears to be "free" and enjoys unprecedented brand loyalty. It's a problem that some publishers have already voiced but, for all their protestation, the notion the BBC's public service remit should stop at TV just won't fly, especially with Digital Britain fixed on securing an online public remit. Besides, BBC News already has an invisible pay wall - it's funded by a £142.50 TV licence.
• Advertisers would hate it: Erecting the wall would instantly shut out a significant percentage of current users - in a downturn, perhaps the majority. That's not good for advertisers who want reach above all, and won't serve well when advertising is projected to recover late next year. So publishers had better be sure such a move would bring in more money than would be lost in ad sales. In this economy, it probably would. But which is more attractive - the short-term financial uptick, or the ability to inform and influence a mass audience?
• E-readers are a white elephant: The continuing belief by some publishing execs that, eventually, some mythical e-reader standard will rescue the business is misguided. In a quest for reach, newspapers have spent the last 10 years divorcing their bits from the shackles of atoms. Now that their intrinsic content is freely available via any number of outlets, there's no easy way to recoup any money by once again locking their text behind the tyranny of tangible form.
This longing for an 'iPod moment', replicating the boost Apple's iTunes Store gave to record labels, is understandable from dyed-in-the-wool print veterans, for whom e-readers comfortably reimagine the humble book, magazine, even newsprint. But the faith is retrograde - Amazon's Kindle is all well and good, but do consumers really want to carry yet another gadget that does only one job, when mobile phones, netbooks and a dozen yet-to-materialise devices offer the same content and more for free?
• Even paid-for content is infinitely copyable: In the digital age, there are no originals and everything is reproduceable. When the New York Times (NYSE: NYT) charged for opinion pieces under its TimesSelect banner, fee-paying readers simply re-posted the articles to their freely accessible blogs. When other sites forced users to register, the BugMeNot.com database let readers borrow someone else's login. Stories will be liberated from behind the pay wall because, unlike in online music or video, there is little effective protection for digital text - as the saying goes, 'information wants to be free'.
The music business once introduced digital rights management to stop customers ripping CDs to share online, but the problem just got worse. Now it's all but abandoned copy locks, instead warning freeloaders via written letter and letting music go free to users, funded by ad-supported web services. Likewise, the best model for newspapers may be one that embraces copying. Their own news agencies like Associated Press and Press Association have long practiced this syndication and nowadays use text watermarking services from companies like Attributor and iCopyright that, whilst nascent, manage to find the inevitable abusers. Copiers must either pay up or place publishers' ads against the content - it's a model that profits from proliferation.
Photograph: Guiseppe Bognanni/Some rights reserved
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