IS IT better to take a little money from a lot of people, or a lot of money from a few? In Britain the Times and the Sunday Times newspapers are about to take the latter course by asking people to pay for news online. Paywalls are rising across the media landscape as many firms conclude that revenue from online advertising alone is not enough to make ends meet.
Yet there is a strong drift in the opposite direction, too. For every outfit that is trying to build a premium subscription service, another is becoming more convinced of the virtues of giving away free content. This is not merely a difference of opinion over whether to charge for online content. It is a divide between a strategy based on “up-selling” people to premium subscriptions, and a strategy based on scale and market-share. More fundamentally, it reflects different views about the extent to which consumers can be steered towards the most profitable products.
This crack stretches all the way from newspapers to the film business. The hot issue in Hollywood these days is whether the studios should sell DVDs to cheap rental services on the same day they put them on sale to the public. Television is no closer to consensus. The big media firms are not wholly consistent. The two camps are likely to grow further apart. Online advertising is picking up, encouraging firms that have hitched their fortunes to it.
This lack of consensus worries many in the media industry. Those who pursue scale (and their many allies in the blogosphere) claim that premium strategies are doomed. The other side retorts that the practice of giving stuff away undermines the value of all content. But it is likely that winners will emerge on both sides. Some will find a way of profiting from scale, while others will carve out dedicated audiences and lucrative niches. There need not be a single right way to do things.
Read more at The Economist.
