IQ News: The Charge Is On – Some Prominent Sites May Solicit Paid Subscribers.




As most online publishers have spent the past few years in a headlong chase for advertising revenue, it is easy to forget that, at one time, the online media had dreamt of being able to count on more than one revenue stream. But the most popular of those proposed other streams–subscriptions–has failed to materialize for most sites.
Online consumers, accustomed to getting content for free, expressed little interest in having to pay for it. And most of it wasn’t viewed as being worth paying for anyway.
But with few sites able to make money solely on advertising revenue, the dream, or perhaps fantasy, still lives. Now, there are signs that several prominent, Web-based publications may be ready to stick their toes in the thus-far murky waters of paid online subscriptions.
Slate (www.slate.com), the Microsoft-published e-zine edited by Michael Kinsley, is making renewed rumblings that it will charge within the year, as is political and cultural digest Salon (www.salonmagazine.com). And the recently launched online sex magazine Nerve (www.nervemag.com) will try to lure paying subscribers early next year.
If these journals succeed, they will upend conventional online wisdom that only the most special sites can charge. So far, the success story is brief. Wall Street-obsessed TheStreet.com, which launched late last year, has been a hit, as has The Wall Street Journal Interactive Edition.
Disney, which developed a children-oriented Web presence called “Disney’s Daily Blast” last spring, also says that it is on schedule in reaching its end-of-year target of 100,000 subscribers, and some sports sites have been able to successfully launch special, premium-priced areas.
As the next wave of online publications looks for subscription revenue, most eyes will probably be on Slate. When it launched in June 1996, it did so with the understanding that it planned to charge $19.95 per year. According to Rogers Weed, Slate publisher, the plan was postponed because the publication’s executives weren’t satisfied with its billing system. But most online veterans would argue that the real reason was that Slate sensed that the market wasn’t ready to pay. “There was no dispute that we’d have to go paid to establish a viable business model,” Weed says. “It’s a question of when, not whether.”
Now, however, Weed thinks it may be time. He believes that Web veterans who have spent the past two years surfing the Internet can tell the difference between professional and amateurish content. Therefore, they will be willing to pay for at least some of it.
However, questions of how to go about it remain. The $19.95 annual plan may not be dead, but the publication is now conducting focus groups to determine Slate’s value and considering charging annually or per article. Above all, Weed thinks it important to keep the plan simple.
“The online services experience points that out,” Weed says. “Everyone was ˆ la carte for a while. Then [subscribers] wanted a flat fee. They didn’t want to keep track of their bill.”
The lack of a clear-cut payment model is still scaring some sites off, such as Feed (www.feedmag.com), an online literary magazine. According to Steven Johnson, Feed’s editor-in-chief and co-founder, “In the long run, I think the market will support it. But there’s no easy payment method now.” Although he observes that many sites ask visitors to send their credit-card numbers over the Internet, that is still a concept that “people are uncomfortable with.”
It may be a sign of the times, though, that Johnson is intrigued by the issue. He says he has thought about a pay-to-play fee for special events that Feed would conduct online and also may poll Feed users to ask them whether they’d pay for faster, advertiser-free Web content.
Whatever such user polls uncover, the few sites that have succeeded in charging offer little insight into the potential marketplace. The Wall Street Journal Interactive Edition launched in April 1996 as a paid publication, charging $49 per year or $29 per year for off-line subscribers to The Journal, Smart Money or Barron’s.
Having reached 100,000 subscribers within a year, it may be the most successful subscriber-based online publication yet. Even though many online pundits predicted that the WSJIE would succeed because of the print Journal’s must-read status, Tom Baker, its business director, disagrees. He stresses that online publishers must provide additional resources such as archival material to warrant a subscription fee. “People think online should deliver more depth than print,” he says.
But outside observers think there are other forces at work. “Someone with an established brand name has an easier time of it,” explains David Dowling, president of Media.com, an online media buying division affiliated with Grey Advertising.
The recent experience of Disney, which charges $4.95 per month or $39.95 per year for Daily Blast (the service is free to those who log on via Microsoft Network), supports that theory. Not only does the site have the weight of the Disney franchise behind it, but it is heavily promoted on Disney.com, the company’s much-visited, free mega-site for everything in the Disney world. By contrast, an online venue such as Slate does have mighty Microsoft behind it, but that brand is known for technical prowess, not creating great media properties.
The recently launched Nerve, a blend of sexual content and literature featuring such writers as Norman Mailer, may prove a testing ground for whether an independent Web site can successfully charge. In January, the site plans to start asking subscribers to pay between $2 and $4 per month for a special section that will mix content and community.
The area, a joint venture with New York online community Echo, will feature online dating games, discussions with authors and writers and instant messaging capabilities. And such features as a look at the work of controversial artist Andres Serrano, which is currently in a password-protected Nerve gallery, could also be part of the paid area. (The gallery launched last week with 10,000 registrants.)
But it is interesting to note that Nerve editor-in-chief Rufus Griscom, who launched the site in June with his girlfriend, Genevieve Fields, believes community, not prepackaged editorial content, will lure paying subscribers.
“There are a few precedents that make us think we can succeed,” Griscom says. “People are used to paying for community–America Online, for instance. A lot of this technology is like AOL. People are used to paying for that.”
For now, however, industry observers will likely take a wait-and-see attitude. “Individual sites bring their unique perspective and their own slant to differentiate themselves,” says Media.com’s Dowling. “It remains to be seen if they can charge for that.”