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The Death of Paid Content Has Been Exaggerated!
By Miles Galliford (c) 2007

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.

In the early days of the web, brand was enough to sustain many
of the online sites of the national newspapers, but now brand is
not enough. There are many credible sources creating content and
the internet community is getting pretty good at ensuring
quality floats to the surface and the dross is trampled under
foot.

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

- The timeliness of information. If one website gets access
to information quicker than other sites, people will pay
for that time advantage e.g. the fashion trend prediction
site www.wgsn.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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