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There is a debate raging on the internet at the moment about whether the move by some of the major national newspapers in the US, away from subscription to a free, advertising driven business model, is a signal that the days of paid content is over. This debate shows a lack of understanding of content publishing on the web. The reason that the national newspapers are failing in the subscription market is because most of their content is available elsewhere for free. If there is a free alternative, guess what, people will always take the free option.
So do huge national newspaper sites being forced to go free mean paid content is dead? The figures suggest not. In fact they suggest that the market has blood surging through its veins. According to the Online Publishers Association, paid-for content billed over $2bn in 2005 and is expected to reach over $5bn in 2007. In Europe according to a study for the EU, revenues will increase from €849m in 2005 to €2bn by 2010. So if the large national newspapers with their huge audiences are not generating subscriptions, who is? The answer is highly focused niche websites. As Gary Hoover said at the recent SIPA (Specialist Information Publishers Association) Conference "In the information business all the money is in the niches". At the specialist information end of the market, knowledge and expertise is still a limited resource and there are many reasons why people pay to get access to it. These include: • When knowledge is restricted to one individual or a small group of individuals e.g. share tipping and investment information - www.t1ps.com and Bull Market Report www.bullmarketreport.com • When knowledge is inextricably linked to one personality or celebrity e.g. Jancis Robinsons' expertise in wine, www.jancisrobinson.com • When the editor has privileged access to source material e.g. insider industry information like www.beernet.com
• A specialist website aggregates information which saves the reader time and hassle e.g. www.lvtbulletin.com provides analysis of court judgements that are relevant to landlords. • The website hosts a specialist community. Charging for access acts as a quality filter to ensure all members have a reason and interest in participating e.g. the many collectors clubs and niche industry groups such as www.restaurantowner.com • People pay for exclusivity. Many paid-for websites are driven by people wishing to be a member of a small elite group. It's much the same as private members clubs or exclusive golf clubs in the real world e.g. www.smallworld.com • People who are passionate about a subject often want to submerge themselves in it and are prepared to pay to mix with likeminded people e.g. fans of the T Bird car www.tbirdfans.com • Training sites that give people access to information that will improve their skills or knowledge e.g. the photography site www.photographytips.com and the writers bureau's writing course www.writersbureau.com • Help sites that enable people to improve themselves or their health e.g South Beach Diet, www.southbeachdiet.com and What to Expect Pregnancy Club, www.whattoexpect.com • Save people time e.g. business book summary sites such as www.bookbytes.com, www.redbooks.com and the site that provides preachers with downloadable sermons www.preachingtoday.com What is driving this revolution is the combination of cheap and simple publishing tools, zero cost distribution via the web and the access to a global audience via the search engines. Suddenly individual experts can easily share their knowledge and become global celebrities in their specialist areas of interest. Chris Anderson has researched this phenomenon in his book "The Long Tail: How Endless Choice is Creating Unlimited Demand". He observed that: "When you can dramatically lower the costs of connecting supply and demand, it changes not just the numbers, but the entire nature of the market. This is not just a quantitative change, but also a qualitative one, too. Bringing niches within reach reveals a latent demand for specialist content. Then, as demand shifts towards niches, the economics of providing them improve further, and, so on, creating a positive feedback loop that will transform entire industries – and the culture – for decades to come" Historically the distribution of knowledge and expertise has been restricted by the cost of distributing it via magazines, books and newspapers. Editors, literary agents and publishers were the gatekeepers who decided and controlled what was worth printing. Chris Anderson compares this to islands being visible above an ocean, where the waterline is the economic threshold for what is worth printing. The islands represent the publications that are popular enough to be above that line, and thus profitable enough to be offered through the publishers distribution channels. However islands are just the tips of vast undersea mountains. When the cost of distribution falls, it's like the water level falling in the ocean. All of a sudden things are revealed that were previously hidden. And there is much, much more under the waterline than above it. What we are now starting to see, as online production and distribution costs fall, is the shape of the massive mountains of choice where before there was just a peak. This can illustrated by the fact that there are approximately 75,000 print magazines, newsletter journals and newspapers in the UK and US, yet there are over 15m active blogs and millions of niche content websites. Conclusion The future of internet publishing is in the niches. Subscription and advertising revenues will continue to migrate down the long tail to the niche sites. Specialist publishers who are focused on creating the best site in their subject area in the world are set to prosper. The mass market publications will continue to see their audiences and revenues squeezed.
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