Will 2010 Be The Year of Paid Content?
During the early days of the Internet the widely held perception was online content should be free. Many traditional publishing companies tried to charge subscriptions for their websites, but most failed.
In the late nineties and early noughties there was a surge in paid content trials as website owners realized there was not enough advertising revenues to go around.
The dotcom crash put paid to most of these experiments.
However, over the last ten years, below the radar, thousands of websites have been successfully charging for content. The common characteristics of these sites are they are run by people passionate about their subject, they cover niche subject areas and there are few, if any, free alternatives to what they offer.
In the US, according to research undertaken by Anne Holland, the paid content industry is worth around $14.88bn, of which $4bn is adult content; the remainder is divided between B2B ($5bn) and B2C ($5.2bn).
This may be an underestimation as there are many thousands of niche sites which are impossible to estimate revenues for. However, many are making very significant revenues. In the recent survey of 550 paid content websites undertaken by Anne Holland, 17% claimed they were making over $1m in annual turnover.
Paid Content Outlook for 2010
Are there any reasons why paid content should start to grow more quickly in 2010?
I think there are.
Firstly, thanks to Rupert Murdoch and several other high profile publishers, the paid content debate has entered the main stream and the perception that all content should be free is being replaced by a feeling that some content should be charged for.
The following graph shows the sudden, significant and growing interest in the search term 'paid content'.
Secondly, bloggers, who have driven the online content publishing sector, are starting to become much more interested in how they can make money from their audiences.
Many of the leading bloggers (Problogger, SEOBook, SEOMoz) have now created paid subscription areas on their sites aimed at monetizing their most loyal followers. Where these industry leaders go, others follow. This changing sentiment is reflected in the huge rise in people searching on Google for the phrase 'make money from blogging'.
Thirdly, as perceptions have changed, more people have actually set up paid content sites and more of these sites are succeeding than ever before. Of the 550 successful sites reviewed by Anne Holland, most have been set up over the last three years. Ignore 2009 data as the reasearch was done early in the year.
Fourth, advertising revenues have fallen and it could take a long time before they get back to the levels experienced before the recession. At the same time the economic downturn has driven many more publishers online as they try to reduce costs. More content and less ad revenues mean something has to happen to cover the cost of content creation. There are three alternatives; these publishing businesses could go under, they could find alternative ways of generating income from their content (e.g. run events) or they could start charging for access to their information.
I think there will be a bit of all three . . . but one of the consquences will be an increase in niche paid content sites.
Fifth, iTunes has got the born digital generation use to paying for songs, apps, podcasts, eBooks and audiobooks. This is the group of people who have been brought up in a world where content has always been free. This is the infuential group who had to be persuaded to pay for content if paid content was ever to succeed. Perceptions, sentiment and objections are starting to lessen. Today actions speak louder than words.
2010 is set to be a very interesting year.
Rupert Murdoch has ensured that the paid content debate will remain in the media. Ironically the move of Murdoch's publications to a subscription model could be the most high profile failure of 2010, whilst his paid content campaign has paved the way for the industry to rapidly grow.
The biggest hurdle that the paid content sector faced was overcoming the perception that all content on the web should be free. This perception is no longer pervasive; Internet users are now coming to accept that some content will be paid for. This is a massive and important change which could make 2010 a very interesting year.