How the Internet Consumer Ends up Paying More For the Internet Every Day [Opinion Pt 2 of 2]

by on March 23, 2011

in consumer

Brusimm Consumer Awareness LogoThis week the New York Times announced an upcoming pay-wall for its readers… it has it’s angles where you can get around some specific perspectives, but in the end regular visitors to the site may very well have to shell out money to access their favorite website. Then again, that’s what they and other business entities are hoping will happen. My guess is this: When Variety implemented a pay-wall, traffic to the site dropped, but income went up a nudge. Variety’s web traffic dropped by 40% but industry analysts guessed that they charged their advertisers more. My idea behind that is if the web surfer had excess cash for a pay-wall, they may have more excess income they probably wouldn’t mind parting with. But that’s just my guesstimate. “I could be wrong.

The New York Times, I’m betting as an amateur marketing disciple, is going to be watched much more closely to see how it fares with this experiment. As far as I can tell, either affiliate ads aren’t paying the bills or greed is stepping in. I’m leaning towards the bills since the newspaper industry has been struggling to redefine itself as the internet becomes the go-to place for consumers of information and product.

But when something like this happens, I worry just how much it will impact you and me, the end-user and when will the pay-walls start showing up in more places that will directly impact us?

Huge Internet Market Test

This new NYT pay-wall feels like a huge market test that inevitably will be a fail for the regular user. What I mean by that is that there will probably be enough people that will sign on with these programs proving that their pay-wall is another effective method of income.

Hulu did this when they tested their pay model [ Hulu Moves Forward w Subscription Services ], and moved forward with Hulu Plus when it proved viable.

Other market tests that make me leery are things like Hulu’s ‘Best in Show brackets, telling them exactly what we like via a voting competition. I didn’t follow up to see what they did with what they learned, but I suspect something was done. ABC’s Lost beat out The Simpson’s in the final and won the Hulu Show Bracket.

Moving forward with more observations, the CW‘s public market test [ Impressive social media statistics for 2010 ] was when they injected commercials into online streaming of episodes, and people still piled in to watch. The industry watched this and hence, it paved the way for other websites to do the same.

Every time an organization tests the waters with a new pay-wall or other income generating stream, the general surfer inevitably gets hosed when the pay-wall test succeeds due to just enough people piling in and making it a viable test.

The First Market Test I Suffered From

I remember (If you’re a long-time reader of Brusimm, you’ve heard this before) back in the late 90’s there were two tiers of channels/programming to sign up for on cable TV. Basic channels and everything else.

Then my cable company surveyed its subscriber base, asking them what channels they liked. I was asking around what people answered and I saw a trend in answers. Within a year of that survey we were paying for multiple tiers of “entertainment” and of course, from what I could tell, the most popular networks found themselves in the slightly more expensive tiers, but then we suddenly had multiple tiers of channels to choose from. Instead of rebelling, we accepted the change and moved forward. It was a small enough change for that to happen. No one noticed. But it led the way to today and how we’re starting to see this same multi-tier experience on the web.

Keep In Mind

Every time we’re hit with a survey, or in these times of quick electronic online tests, new pay wall tests, as a whole we tell the company we’re OK with it. Not a lot of us are, but those with the excess funding tend to prove the providers enough incentive to move forward with pay models. There are almost 2 billion internet users today out there, 266 million of them are from the United States & 58% of them have access to the internet via cable providers, or high-speed access, versus telephone providers. All you need to do is tap a small percentage of the overall available market to make anything worthwhile. What’s the old adage? 20% of a business’s customer base supplies 80% of the business profit? What’s 1% of 266 million? That’s over 2 million. You don’t need to convince many, just enough.

It’s hard enough for some to have to pay to access the medium of the internet that all these services are on, but then to start getting additional fees tacked on as we go makes the internet a tougher sell every day. At some point, I wonder when the breaking point will show up and we say, enough is enough. You need to change this process because we’re going broke paying for our access to the internet and then our extra access!

Devil’s Advocate Perspective

The above is the consumer mind. From the aspect of the newspaper’s side, I understand that they’re losing money and need to recoup it. Newspaper organizations in general have been getting smite by the advent of the internet and the larger corps are trying to figure out how to survive this new era and make more money then they already are with their ads and sponsors that surround their news articles.

I get it. I don’t like it and I’m part of the problem when I go along with it, but at some point, no matter how much you try alternative channels to information, sooner or later, it feels, you will become part of the paying collective.

And there’s nothing you can do about it because we can’t seem to stop the tide and make a stand. At least not yet.

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[ deadline, internetworldstats.com ]

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