More Paid Online Content Bites the Dust

You may have seen the news last week: another bastion of paid online content, Atlantic Monthly, has changed its business model and is offering all of its content online for free. Earlier this week Rupert Murdoch discussed placing more free content on his WSJ.com site, although he's still not ready to follow up on earlier suggestions that he'll reverse the staid Journal's tradition and remove the gates from the entire site.

After initial futile resistance, major newspapers including the New York Times and Los Angeles Times gave up on the paid model some time ago. Is there still anyone who seriously believes paid content is the right approach to an online media site?

Of course there are corner cases where it makes sense--if the content is highly valuable but the audience is small. But these types of businesses aren't optimized for the web, whose high fixed and low variable costs favor a scaling strategy. You also hear analogies with HBO. But bear in mind, paid cable emerged as a segmentation strategy after the broadcast medium was mature. By contrast, the internet as a media platform is in its infancy, with years of strong global growth still ahead.

I think some of the confusion results from the belief that the online medium is "just another" way to distribute content. True, but it's an alternative with a completely different cost and revenue structure. Failing to recognize and adapt to this, you will most certainly leave some money on the table. The fact that paid content worked so well in some other medium, such as print, doesn't predict that the old business model will perform just as favorably in a new environment.

I've laid out my reasons before for being such a strong advocate of most online content being free. Bottom line, to reap the maximum benefit, adapt your business strategy to the specific business environment where it's executed. One size doesn't fit all.