For old and new media alike, changing from a free model to a freemium or paid content model requires a refresher course in pricing strategy. For the uninitiated, the freemium model generally provides two versions of the same product, a “lite” version for free, and another, with more features, for a fee. Making the paid version ad-free generally isn’t enough. Sites making the switch to this model should focus on up-selling by charging for popular features that don’t restrict the primary functionality of the site (e.g. customization, storage, productivity).
With respect to paid content, Apple (with itunes and iphone apps) has successfully found a way to charge and capture revenue for what is often pirated or otherwise available for free. The key is simplicity. By tying users’ credit card information to their username, Apple facilitates one-click “impulseware” purchases. Users are comfortable making micropayments provided they don’t have to pull their wallets out.
A variation of the micropayment strategy is to sell content in bulk (think allofmp3.com and Dave & Busters) — load a card and swipe away until you run out, then reload. As applied to traditional media sources: It doesn’t make sense to charge for online content the same way as print content since the cost structure is different. I pay $99 a year for my WSJ print subscription (6 days/wk = 312/yr) and read on average 10 articles a day, which is equivalent to 3 cents per article. Regardless of how many articles I read, they still have to print and deliver my paper, whereas they can control and charge for each article viewed online. As of this post, however, WSJ was charging $2/wk for its online content when they should be charging $30 for 1,000 articles.
With Google now placing ads on Google News they are positioning themselves to capture most of the profits from the online sale of WSJ’s and other traditional media sources content. The recurring-charge (52!) subscription model doesn’t work when there are ample accessible substitutes, especially when people are looking to cut costs wherever possible.
