(Continued from yesterday.)
The virtual doesn't suspend the real rules of business.
It destroys them.
For decades, any media was the preserve of those who produced it, and more importantly, those who distributed it. Along came the Internet. Anybody could create. Download. And distribute. The whole edifice of limited supply, on which complex media empires had been built, would not work on the net.
Till date only a few specialised sites have sold content successfully. Examples: wsj.com, Penthouse.com profitable since it went pay in 1995, and sites like MagWeb.com, a military history site that offers articles to a niche audience on such obscure topics as "The Art of the War Yell". Points out Neville Taraporewalla, chief operating officer, Interactive Division, Mid-Day Multimedia, "The differentiator between a paid and free site is crucial. The surfer will look for a lot of value addition before paying."
The general news, which ITGO and other Indian news sites are hoping to earn money from, have a rather discouraging history, even when put up by well established brand names. However, there is some evidence that what Living Media could be doing is completely sacrifice online operations to buttress its offline ventures, India Today, and Business Today, which are facing the heat on the circulation front. Kalli Purie, COO, ITGO, claims that since access was restricted to subscribers, offline subscriptions to India Today and Business Today have gone up. "The game, as far as web editions goes, is not
numbers; we are not a destination site but a companion site," she adds.
However, by restricting access to their Internet sites to subscribers of the offline products alone, Living Media has effectively given up on the general interest surfer who might want to drop in, but not subscribe to the magazines. "The move shows that the primary focus of Business Today is on its magazine, and not on its online operations," points out Sandip Tarkas, associate vice-president and manager, HTA Fulcrum.
Yet, ITGO is clearly hoping that the pay-for-content model will take off in India. Kalli Purie does not rule out making www.thenewspapertoday.com pay, saying "We have built critical mass, have a loyal base, a unique proposition and are ready."
ITGO is likely to face an uphill task. Most major newspapers, both Indian and foreign, are already online, and of the Top 10 news sites measured by Jupiter Media Metrix - including MSNBC.com, CNN.com and NYTimes.com - none charge for their core web sites. Jupiter does forecast that the market for paid content will grow from the current from $1.1 billion to nearly $5.7 billion by 2005. However, that projection is not for news alone, but includes adult entertainment, online gaming, education and music.
And then there is the Indian surfer, who is likely to put the best-laid plans awry.
Take surfer habits. Most Indian surfers spend half their surfing time e-mailing, chatting or browsing. In a recent study on the distribution of applications on the net by Internet watcher NetSense, only 10 to 12 per cent used the net to gather information. One of the major reasons for the success of wsj.com was the high profile business user who logged on regularly.
To cap it are the demographics. IDC (Internet Data Centre) reports say that metro-based male students between 19 and 25 fuelled the early rise of the net in the country. Right now, the highest growth of the Internet is in second level cities like Indore, Chandigarh, Coimbatore, and Nasik, spurred by mushrooming cyber cafes that charge Rs 20 to Rs 30 per hour. Cyber cafés remain the main point of access, growing twice as fast as any other access point.
With such low net access rates, and given the financial status of mofussil town youths, pay sites are hardly likely to catch on. In fact, the greatest potential for growth is in the language market, rather than in the English-speaking elite market. NetSense projects the language user base will grow from 5,22,000 in 2001 to over 2.6 million by March 2002.
In the face of declining ad-based online revenue, sites are frantically exploring alternative models of revenue generation. Charging for archives, or cutting edge information, or collecting information on visitors and then selling the data are some of the options. For example, sites like Yahoo! have decided to either sell specialised databanks to potential advertisers, or to sell premium services. Deepak Chandnani, managing director, Yahoo! India, is emphatic that despite rumours to the contrary, Yahoo! will not charge for basic services like e-mail. Yahoo! is experimenting with targeted databanks to make money.
In a country where rushing to get a freebie is almost a way of life, and the friendly neighbourhood assembler, who according to the IDC, accounted for 71 per cent of total PC sales in 2000, is willing to give you all the software you want free, courtesy software pirates, only a revolution in thinking can make people pay for content.
