COMMENT: Why has it taken web firms this long to charge for content?

It seemed like a good idea at the time. Set up an internet business, blow wads of cash on building the brand online, lure customers around the world with free information and services - then wait for the ad dollars to flow in. But the hope that such generosity would be supported by advertising proved to be in vain. Instead, the pure-play web companies left standing are frantically re-evaluating their business models. The problem with the internet hasn't been so much a lack of bright ideas, but a lack of bankable ones. Believing that "content is king", the industry pumped it out as fast as it thought consumers wanted information. We've had free music, email, newsletters, art, videos, news, games and so forth. Anything that had a price in the old economy came complimentary courtesy of the world wide web. With dotcoms falling thick and fast, the question is: can the survivors "monetise" information that has always been free? If they succeed, will only be a good thing for the internet's future, especially as the foundation to build sustainable businesses. In China, the portals, including Chinadotcom, have said they will charge for services like email. This will put pressure on smaller portals, holding an excess of ad space inventory, to follow suit. It may even speed up consolidation of the industry. Again, that can only be a good thing. However, whether paid content will save struggling portals, charging for information will require a huge shift in consumers' mindsets. It's not going to be easy to get them to now fork out for something they previously enjoyed for free. We can also expect structural obstacles - China's low credit card penetration rate - to trip up portals as they deal with payment issues. These challenges notwithstanding, charging for content makes strategic sense if you're going to build a sustainable business. A business model based on paid services is transparent and investors appreciate this. Indeed, there are already clear signs that the free rides we've had on the web won't extend to the wireless realm in Asia. For a wireless internet business to give away free content would mean it would have to depend heavily on wireless marketing, portal fees and transactions. But the simple fact is that revenue from marketing - wireless and digital - is limited today, and will remain so for some time to come. The challenge now is to change consumers' mindsets and that is going to require some very creative thinking. No matter how delicately a company tries to introduce fees, it should expect a backlash. Even if users are willing to pay, they should brace themselves for an attrition in customer numbers. Some service providers are rightly offering a combination of paid and free content from the start, charging on usage and subscription; basic content is free, with a charge levied for additional content. This at least puts a price on information, while telling the customer early on that the service is worth paying for. More importantly, it ensures companies earn from the outset.

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