Time Based Pricing for Internet Content

I am not advocating charging for content online, however, it may be a necessary evil for some content providers to survive. Without subscription revenues the newspaper industry is dying. The same is true for magazine publishers. Online content providers face similar challenges – the cost of doing high-quality editorial is high and the revenues from advertising are not always enough to cover them. Furthermore, smaller content providers – that don’t have the benefit of massive traffic-generating audiences – definitely cannot cover their editorial costs from advertising alone. Without some solution to this problem it is likely that many large and small content providers (both old/traditional and new/online content providers) will find it hard to survive in the age of the Web.

Various companies have experimented with charging for content. But these experiments have not worked. I think one of the problems with their approaches was that they were based on an old-fashioned view of why consumers pay for content. They didn’t really fit the way content is being used and distributed on the Web. But there may be a way to charge for online content that works. By “works” — I mean that it will make sense to consumers, will not completely shut out non-paying consumers, and will actually increase demand and distribution for their content. Sounds awesome? It could be.

The basic proposal is “time-based pricing” that is similar to how financial data feeds are provided. For example with stock ticker data, some providers offer access to their live feed for a subscription, but anyone can get the delayed feed for free. Let’s imagine we apply a similar model to online content and see what might happen.

For example, an online newspaper might charge a low annual subscription (a few dollars a year) for access to their live, current articles and discussion, but they let anyone see a 6 hour delayed view of their site for free. They also have an affiliate program that rewards their paying subscribers for helping to distribute their content to the non-paying majority. The paying subscribers get social and financial reward for seeing content earlier than the majority — it positions them as mavens, makes them more valuable to their followers, and may earn them real money. They become key distributors and promoters of the content. The non-paying majority is monetized through ads and upselling subscriptions.

Here are the basics of the model:

  1. Charge for non-delayed access to content. Paying subscribers get the current live content. Non-paying subscribers see a delayed view of the content (several minutes to hours). Do not charge for access to old archived content by the way — making that content visible helps your search rankings and gets long-tail ad revenues as well.
  2. Only expect that avid readers will pay. People who really care, or really need to know, or simply are avid readers will pay for content, and only if the price is LOW. In the online world, people read across a lot more content sources than in the print world, and thus they simply cannot afford to pay a few dollars subscription to each of those sources — there are far too many.
  3. Reward Paying Subscribers for being Distributors. The people who pay get the content first. In turn, they are allowed to¬† blog and tweet about the content, and share the content, before the non-paying audience majority. This sets up paying subscribers to be distributors and mavens for content they like — because the non-paying audience can’t see what’s happening in real-time, so they look to the tweets and blog posts by the paying subscribers to keep up. But that’s not all — paying subscribers should be rewarded for driving traffic to content by giving them affiliate¬† revshares of ad and subscription revenues they drive from their referrals.
  4. Sell subscriptions in bundles. People don’t want to be bothered signing up to subscribe to dozens of sites. Instead sell them bundles of popular sites they might like, or let them choose what sites to bundle, and charge them in a single transaction. This is not unlike basic vs. premium cable subscriptions with various bundles that people can buy.

It’s really a simple model. What do you think of the idea?

ps. Afterthoughts:

(1) Some online news publications publish breaking stories at midnight when news embargoes lift. For this model to work with such sites, they would need to have a long enough time delay so that in the morning non-paying consumers would still have to wait for access to the content. Another issue is time-zones — the delay would have to be sensitive to time zones. I’m not sure whether these are deal-killers for this model? Maybe some reader will solve them!

(2) One problem with a model like this is that if news site A uses time-based pricing, but their competitor, news site B, gives the same thing away for free. The readers will just go to news site B and site A will lose their audience. One solution this issue might be a proposal to the FTC for a new kind of copyright law that covers “hot news.” (thanks @jen_mctadden for sharing this link).

4 thoughts on “Time Based Pricing for Internet Content

  1. Very interesting idea. Maybe a tiered approach to overcome the news vs analysis angle e.g. 6-hr delay on news stories, 24-hr delay on opinion articles.

  2. The strongest endorsement I give a new business idea like this is “It's worth a test” if the market responds, great. If not, find a way to make it work or consider that the “need” for centralize news gather organizaztions is a 20t Century anomaly.

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