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

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