In a world where everything is free, how do you sell?
It's the challenge that sites that wish to become pay are grappling with.
Last month, the Indore-based Hindi daily Naidunia, partly owned by Vinay Chhajlani of the Webdunia Network, began to charge a Rs 1,000 per year subscription fee. One more to join the bandwagon of the "sell-content-make-money" brigade was the Living Media group, that has made its sister sites - www.india-today.com and www.business-today.com - pay or conditional to subscribing to the offline version. There are also strong indications that the group plans to make www.thenewspapertoday.com pay, though officially, the promoters will only say, "wait and watch".
The logic behind pay sites? Quality content will sell. Says Kalli Purie, chief operating officer, India Today Group Online (ITGO), "Intelligent netizens know there is no such thing as a free lunch. And that quality has a price."
If only things were that simple.
Experience elsewhere in the world shows that pay for content sites, unless they supply extremely specialised information, run into the brick wall of "unlimited high quality free stuff available - just click here!", something that their offline cousins don't. When was the last time you were handed The New York Times free? Or the Economist? Or Time? Or Newsweek? Or Asiaweek? Or National Geographic? Even in the second hand bookshops of Mumbai and Delhi, a dog-eared copy sells for at least Rs 15. That is, only if you bargain hard. On the net, all these are just a click away. And free.
In the United States, subscriptions for content have generally not worked. The Microsoft-owned Slate's attempts to go pay, even though it charged only $19.95-a-year as subscription fee, failed miserably. And Salon, which began charging for premium content since March 2001, has seen losses peak. In the third quarter of 2001 it posted a loss of $5.6 million, or 42 cents a share, compared with a loss of $3.5 million, or 27 cents a share, during the same quarter last year.
Sure, as conventional wisdom goes, online subscriptions work for The Wall Street Journal, consumer reports and porn, but most online content providers would simply lose readers if they built barriers to content. It's no different in this country. Since Naidunia.com went pay, visitors to the site have gone down by 75 per cent. The site now has 3,000 paid subscribers, when earlier, 12,000 to 15,000 surfers visited the site.
Going pay is tough. The obstacles loom menacingly.
First perception. The idea that the net is a world where you can stroll in for free at will is deeply rooted. Says a senior media planner based in Mumbai, "People have come to expect that content on the net is free, just like radio programmes are free. To change that perception is going to be extremely tough." Research studies show that surfers are willing to pay only for content that either was extremely specialised, or was difficult to get elsewhere.
Blame history. The Internet may have started as the fervent brainchild of DARPA, the US defence agency - but it quickly evolved into a network of computers at the service of a community. Academics around the world used it to communicate, compare results, compute, interact and flame each other. By default, that became the guiding spirit of the net. From 1991 to 1993, the Web was dominated by academic content. From 1994 to 1996, the Web was mainly promotional, populated by marketing sites launched for the sole purpose of making a company look good. And, in 1996, when the net really took off, (a couple of years later over here) the idea was to get visitors, and then go pay, or earn money in some other way.
The result? Content was free. Those few ventures which went pay - The Wall Street Journal at $57 a year, or Playboy at $6.95 a month or $59.95 per year - either offer daily "need-to-know" content or, in the case of Hefner's magazine, "need to see".
On the other hand, Indian news sites are hoping that increased traffic, in the wake of the happenings in New York means that surfers would be willing to shell out even if they become pay. Given the abundance of news on the net, that is unlikely. In fact, what is crucial is the brand perception. Says Anu Babber, vice-president (portal) Webdunia.com, "What matters is a strong brand. Webdunia has a strong presence among NRIs," Adds Kalli Purie, "We (thenewspapertoday.com) are not another news site. We are a live newspaper. A category definer." However, such distinctions are unlikely to appeal in a country where even newspapers and magazines boost circulation by cutting down the price drastically.
Pay site managers argue if cable TV, which was free to begin with, can go pay, the same can happen on the net. That logic is deeply flawed, say analysts. While free TV shows broadbased content which appeal to the maximum number of viewers, pay cable networks offer shows that appeal to a more narrow demographic profile - history aficionados, geography buffs, home movie lovers etc. The model may not work on the net, say analysts, because of two things - the sheer amount of stuff that is available for free, and the fact that every niche is catered for.
And the cable experience in India is not encouraging either. Most TV channels still depend on advertisement as their prime revenue source, and subscription fees in India remain abysmally low. For example, in Hong Kong, a monthly subscription to HBO costs HK $298 (Rs 1,837). In India, a bundle of 70 to 80 channels, including HBO, Discovery, National Geographic, costs Rs 150 to Rs 200 per month, working out to an average of Rs 2 to Rs 3 per channel per month.
The main reason for this is the prolific cable TV distribution network. While in many countries, governments decide who runs cable systems and a combination of state control and market consolidation keeps the number of operators tightly controlled, in India, getting a cable TV licence takes a visit to the post office to register and make a down payment of Rs 300-Rs 350. With such low barriers to entry, there are an estimated 60,000 local operators, most of them running primitive, under-funded neighbourhood systems, often with toughs to zealously guard the turf.
(To be continued tomorrow)
