Original Post: August 10 2011
I wrote an article over a year ago in response to Ars Technica openly discussing their dilemma regarding generating cashflow. Theirs is the same problem faced by many, if not all, commercial websites providing media content. I am inspired to bump that article again here, as the problems have come to a head today. The Escapist have, up to now, hosted a remarkably successful video series Extra Credits. A very nasty disagreement has erupted quite publicly between the two. From Extra Credits, there are accusations of non-payment and breach of contract, along with unreasonable claims made on charitable donations to cover medical expenses. From the Escapist, various explanations, mitigation, and an admission that they simply didn’t have the money to pay their content providers, such as Extra Credits. (Here’s a post that seems to be tracking and updating the situation.)
Siding with the perceived ‘little guy’ in this situation is all too easy, especially since I really like the content Extra Credits produce. Yet I feel for the Escapist in this situation too, as a representative of a huge slew of online publishers that I’m learning a bit more about lately. Paying creative producers like the EC team is an absolute necessity, I have no doubt about this. But where does that money come from? The standard set all those years ago is that content on the internet should be free, so the money doesn’t come directly from the consumers, that’s for sure. The alternative, up to now, has been to rely on advertising revenue. Is it working? Well I’m not privy to the accounts of enough websites to know for sure, but from what I do know, online games sites aren’t all rolling in cash.
So I ask again, all the same questions that are in the article, one of the first I wrote for this blog. Where to now?
Ads, AdBlocker, and Sustaining Content Providers
Recently Ars Technica presented ‘their side’ of the story regarding free websites and ads. Of course, we all know that creating and hosting a website costs money, and most of us know that money doesn’t grow on trees. Advertising on the website can generate a significant amount of revenue for a high-traffic site like Ars, but when those ads are not viewed, they won’t.
There is an oft-stated misconception that if a user never clicks on ads, then blocking them won’t hurt a site financially. This is wrong. Most sites, at least sites the size of ours, are paid on a per view basis.
I must admit, I was one of those people who thought something along those lines, if I really thought about it at all. The problem is almost as old as the internet itself: how do we get people to exchange money for content in an environment where end users have been trained to expect everything for free? Andrew Zolli over at Newsweek has some ideas on the matter and some speculation.
What I see is not so much a lack of willingness to pay for things, as Zolli points out. We–people like myself who are the second wave of the early adopters–are coming of age. We are online almost constantly. We may never have purchased a newspaper for ourselves (and if we have it was probably for a plane flight where we can’t be online). But the important bit is that we’re growing up and we actually are starting to have the money to buy things. Back when I first started surfing, I didn’t, so I couldn’t have paid for things I wanted, now I can.
What is holding us back, I think, from paying for online content is just how fiddly it would be. Imagine having to register your credit card with every news site or blog you visit. Firstly, many people wouldn’t want to do that for safety’s sake. But forget that for a moment, think instead of having to go through the form that would have to pop up between the link on your friend’s Facebook page, and the content of the article you want to read. Wouldn’t happen. But would you kick in $0.05 to read the article if it just ticked over in an account you maintained with your PayPal information? I think some people would.
If we can add a widget to Firefox that allows us to add links to Facebook, Digg or whatever else we use, surely there is a way to click one button to authorize a tiny exchange of cash directly to the publisher. The key is to create trusted links between the content provider and the plugin we use for our browser, which enables us to authorise the transaction without having to type long numbers, fill in forms, or really break the flow of link-to-story at all.
I name PayPal because its the one transaction system I know of that’s large and trusted enough to support this kind of thing, but there could be others. The service should allocate a set amount of funds for this kind of thing, and warn you when you are approaching your ‘cap’ so you don’t suddenly realise that you have spent $500 browsing through Gamasutra and didn’t realise you were paying for every pageview. Alternative options would be a few dollars for unlimited access a month (pretty standard subscription). Pop $5 into your account, surf away at some reasonably small fee per story, and keep an eye on your balance in the plug-in’s toolbar. Think of it like the E-tag systems modern toll roads use. Get a tag, drive through and it debits your account. Top up the account every so often, and off you go.
Overall, the system has to be EASY. iTunes and Steam prove that people are willing to pay (in significant numbers) for content that is available to be pirated illegally, why not for other kinds of content? The trick is, as especially iTunes demonstrates, make it easy.
Questions for further thought: How much would one user’s read of the story be worth? How much are sites pulling in via the ads? Would the paid version eliminate the ads (keeping in mind there are ads on cable TV)? What about printing, or re-reading the same article?