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When does online news cost too much?

By Joe Wilcox, Betanews

My answer is 5. Yesterday, when checking my bank account, I found that Dow Jones had charged  5 for a year’s Wall Street Journal online subscription. I had been expecting the same 9 charge as last year, which already was borderline too high but acceptable (I had a fulltime job 12 months ago). WSJ had gone too far with its pricing. I called customer service, cancelled the account and asked for a refund. The call wasn’t easily made, because of the real and sentimental value received. I do regularly read the Journal online, and I have subscribed since 1996! No longer.

With that introduction, and before continuing with the post, I must ask: What price is too much for you to pay for online content? How much would you pay — haha, if anything? What about digitized content, such as ebooks? What do you consider to be a fair price for new ebook titles, or older ones? Please answer in comments.

The issue of fair value for content isn’t a new topic, but it’s sure to grow as more content companies consider paywalls — charging for some or all of their online content. Earlier this month, the New York Times announced plans to put up a paywall next year. Why the Times needs a year to warn everyone or to build the paywall infrastructure is truly baffling. The Times charged before with its now disbanded Select service.

Actually, the Times already charges for online content. Earlier this month, after seeing five weeks of unopened Sunday Times bundles by the couch, I called to cancel yet again. Every time I call, a representative offers six more months of the Sunday Times for half price — about 15 bucks a month. I’ve been a Times print subscriber — with free online access — since 2000. This last time, the customer service rep offered online access for the same a month. Huh? Isn’t it free? Well, yes, but the online service is for the Times Reader application, which otherwise would be free with a print subscription anyway. No thanks to either choice, I said.

Circling back to the Journal, the pub is charging more and paying less to produce it. Dow Jones is in the process of outsourcing some of its customer service infrastructure (meaning more layoffs coming), and there were recent layoffs at WSJ, including editorial staff. Meanwhile, US salaries haven’t kept pace with rate of inflation (e.g., editorial staff salaries haven’t risen much), and many news organizations rely on freelancers or contractors, which cost less than fulltime employees. So why charge subscribers more — loyalist like me — if costs for producing the content isn’t increasing?

Fourteen years ago, I paid the Journal about a year for online access through a downloadable application that took forever to update over a 9600 baud dial-up connection. WSJ later took the service to the Web browser, which is helluva lot more convenient.

Something else: Given the amount of free content out there, shouldn’t competition keep price for paywall content from going up? Additionally, the Journal’s paywall is full of doors. For all News Corp. Chairman Rupert Murdoch’s talk about charging for all Journal content, Google search still brings up most of it for free. No fee required. I’ve recently posted on this topic of free versus fee online content here at Betanews:

But there are two topics not covered in previous posts: What is reasonable amount to pay for online content and what should people pay for ebooks? I would pay 5 a year for several online publications. Better: 0 a year for three or even four. It’s something publishers should really consider, banding together to offer attractive and affordable online pay bundles. Let the subscriber choose the online publications. That or a year per publication might not immediately appeal to news publishers, but, frak, they’re competing with free content — all easily served up via Google News or search.

The reality: Lots of people won’t pay. You’re reading this post for free. Betanews doesn’t charge, but I wish that it did and you would pay. Betanews editors put a priority on the “news” part of the name and the traditional journalistic standards supporting it. But good content costs to produce, and there is too much content for the amount of advertising space. I’m not the least privy to Betanews business operations — frak, I’m just a freelancer — so the statement is meant to broadly apply to all news sites (and even blogs). It’s supply-and-demand logistics. The more supply, the less the value. The large amount of online content now available — much of it aggregated or pirated from sites that pay real reporters to produce it — creates two advertising problems:

  • There is too much content for the available advertising space
  • The amount of available content reduces ad space’s value (what advertisers are willing to pay)

These two problems are perhaps the top reason more sites want to charge for content. Online advertising can’t pay enough to produce quality content. Still, people won’t pay for it. Why should anyone, when so much is available for free?

So what about something that’s not free today, but which future price is uncertain? I’m talking ebooks. On Wednesday, Apple unveiled the overrhyped iPad, with supporting iBookstore. Meanwhile, Amazon is in a frakus with what customers should pay for ebooks. According to the New York Times, Amazon has pulled Macmillan books over an ebook pricing dispute. Apparently, Macmillan wants to charge for ebooks rather than .99. It’s big business for Amazon, which this week claimed that when the same title is available as ebook and in print, digital versions account for six out of every 10 copies sold. Amazon and even Apple may drive down the cost of ebooks, much as they have for digital music downloads. For me, 10 bucks is about right for an ebook, but really too much when there is onerous DRM.

Once again, I ask: What price are you willing to pay for online content (and by what criteria its value) or for ebooks? I expect that for online content many readers will say nothing. I hope others can explain what they would pay for, which could help news organizations looking to charge in the future. As for ebooks, I’m super curious what Betanews readers see is fair price. Comments are open, please have at it.

Copyright Betanews, Inc. 2010

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