The idea that people won't pay for content online has become such a part of the Web orthodoxy that New York Times Executive Editor Bill Keller risked getting lynched earlier this month for merely musing about paid models for the online editions of his paper. Not helping Keller's cogitation was a contemporaneous "secret memo" from Steve Brill and a Time article by Walter Isaacson, both which advocated variations on the micropayment model. Neither advances the topic much beyond what most Web entrepreneurs understood long ago.
Paid content's failures are well-documented. Slate gave up on the subscriber model in early 1999. The New York Times folded its TimesSelect product of columnists and archives in 2007, concluding a two-year run, even though it was taking in $10 million a year. The latimes.com set free its CalendarLive section of arts, reviews, and listings in May 2005 after a 21-month paid experiment. To name another ambitious venture among the many, the 2000 startup Inside.com, which charged several hundred dollars a year, failed to attract its 30,000 desired subscribers and expired.
These failures tell us much about what customers refused to pay for on the Web. But they tell us little about what customers will pay for. Not all successful paid sites are alike, but they all share at least one of these attributes: 1) They are so amazing as to be irreplaceable. 2) They are beautifully designed and executed and extremely easy to use. 3) They are stupendously authoritative.
Wildly unique and immensely useful describes the paid site ConsumerReports.org. If you're in the market for a new sewing machine, want to outfit a home gym, or want tips on buying insurance, there's no more comprehensive place for your queries than ConsumerReports.org. No free site on the Web compares. The site currently has 3.3 million paid subscribers: About 3 million of them pay $26 annually, and the rest pay by the month ($5.95). That's in addition to the 4 million print copies the magazine moves each month to subscribers.
Major League Baseball's MLB.TV succeeds by extending its monopoly over pro baseball to the Web. Baseball fans are insane, which explains why the site attracted about 500,000 fans last year who paid $120 to watch its live broadcast of games. According to a Times article, another 350,000 customers paid $15 to listen to games over the Web. The number of subscribers would be greater still if MLB.TV didn't black out local teams to preserve the exclusivity of the teams' and the league's contracts with TV networks. Miss the game in real time? MLB.TV will let you play it back later if you subscribe. Want to watch the game DVR-style? MLB.TV will let you pause and fast-forward live games if you subscribe to the "premium" variety. Love that madcap game from Up North? MLB.TV markets NHL games, too.
The biggest-grossing paid content site has got to be the Apple iTunes store, which became the top music retailer a year ago, displacing Wal-Mart, according to one study. The store is said to have sold 6 billion songs since it started in 2003. But why do customers flock to iTunes (or Amazon or Rhapsody or the others) to purchase a song or album from, say, U2, one at a time when they could easily download the band's entire discography via Bittorrent for free? Of course, many do. The napkin math provided by Hitsville's Bill Wyman estimates that iTunes sales are microscopic compared with the volumes moved on file-sharing sites. So, again, why do some customers pay for their music? The same question obviously applies to movies and TV shows.
Obviously, some people prefer walking the straight and narrow with iTunes rather than committing wanton copyright infringement with Bittorrent and tempting a fine or a jail sentence. But that's not the complete answer. While it's easy to acquire the entire U2 discography for free on a file-sharing site, it's still easier and faster to use iTunes to search for and purchase the tracks you really want. The iTunes app combines the player and the store inside one skin, and it also allows you to build playlists and to move your music to your iPod deftly.
That iTunes is a free-standing application and not contained inside a browser, as is the Amazon music store, is not accidental, and I reckon that its "outside the browser" design has played some role in its success. Consumers have been conditioned to think that content delivered by a browser is supposed to be free. They get annoyed when they encounter a pay wall on a browser but are more psychologically open to the nonbrowser Web interface.
By thinking outside the browser, Apple answers to nobody but itself when it wants to add features, such as movies and TV show sales and rentals—or when subtracting them. If the browser window is the commons, the iTunes application is Apple's castle, where you're expected to do as you're told.
Another outside-the-browser experiment, nowhere near as successful as the iTunes app, is the New York Times'Times Reader, which delivers a very readable version of the paper. I found the Times Reader good enough to pay for when I reviewed it in September 2006, and I have great hopes for the forthcoming version, built on Adobe's AIR 1.5 platform. A third example of "outside" product and software design for content is Amazon's Kindle, which thinks both outside the browser and outside the personal computer.