User-generated… revenue???

“At midnight The New York Times stopped charging for its content online. It’s even handing out refunds to any online subscribers who paid for it in advance… strongly repudiating the idea that newspapers can earn big profits by hiding their online content behind a “pay wall” which can only be accessed by web surfers who pay a subscription fee.” (September 17, 2007 – Tech.Blorge)

“The New York Times is … looking at the possibility of charging for some of its online content, whether that would mean the news that most people read or special select content is unclear.” (March 15, 2009 – Tech.Blorge)

Over the past few years, the general consensus has been that a paid content business model is untenable, that advertising dollars are what make the world go round, more eyeballs mean more money, and walled gardens mean fewer eyeballs.

However in an era in which Netflix was the one shining star in the last round of investor reports, Apple’s iTunes maintains a highly profitable electronic-sell-through (EST) model, and overall advertising revenue is expected to fall 13% in 2009 (including a 1.2% decline in display ads and 7.5% drop in auctions and other non-search/lead generation digital advertising), there is renewed interest in the online subscription model.

In recent days, Newsday announced plans to end distribution of free online content, Disney’s Bob Iger discussed a possible subscription-based online video club, and MLB and ESPN entered into a partnership to offer premium web services for $130 per year via a co-branded package. The package includes live streaming of every regular season MLB game and exclusive ESPN text and video content.

In addition, both Time Warner Cable and Comcast, announced plans to create (or recreate) walled gardens (now called user authentication programs), through which television programs will be available via broadband to the cable operators’ respective subscribers.

More commentary to come…

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