Internet Micro-Payments Are Not the Inevitable of Paid Online Content

Barry Diller has made billions of dollars on the Internet. So when he said that Internet content would be "paid" content within five age I agreed. However then I disagreed.

First off, I have to authority that I'm damn impressed by the dimensions of money that Mister Diller generates everyone and every minute on the Internet (his firm, IAC, uses around 30 sites to practise over $1.5Billion a year). With that type of street cred, it's hard to argue with him. And yet, I can't advice on the contrary disagree with his recent statements in a BusinessWeek interview that "everything of any value" on the Internet would be fee-based within 5 years.

No, he isn't wrong approximately his core statement - I agree that "most" dear content will be fee-based. But I deem he goes astray with his timeline (5 years) and valuation constitution (micro-payments).

Follow me with this (I'm taking a leap of faith here):

1. I end not believe that there is that much "valuable" content on the Internet today (as a % of total content). Sure, there is a tremendous proportions of "interesting" content away there (ranging from news to blogs to information services), but not all the more of it is really "can't live without" stuff - it lacks the research or analytical content/commentary to add value. A CNN (or any) news nourishment is of interest, but "analysis" of the data - what it actually wealth to me, my family or my business - is of essential value (note that some blogs and Wiki's are ample examples of how user interaction/collaboration can circumvent the paid model to deliver value).

2. I envision that yet of the indeed substantial content on the Internet is already career paid for (interestingly, Barry's $1.5B is not a chiefly acceptable example, and I don't gaze consumers ever paying to use Ask.com as it exists today). Look at sites passion the Wall Street Journal ($1.99/month), or the litany of valuable analysis and analytical/commentary sites that enjoy successfully migrated their subscribers from "hardcopy" business models to "Internet subscription" business models. Even "interesting" information often comes with a reward (in the form of advertisements). Memo that there testament always be some type of subsidized content at a reduced cost (or ad-based) - look at the Fox News CableTV/Internet blend for a good example there.

3. The Internet is overloaded with "not valuable" content, and it is peerless going to get worse before it gets better. As even as I like the extremely varied content available online, there is simply too much of it out there today, and still of it is repetitive news-based data that varies little from aim to site (suppose 90% of all news is repeated on 90% of all sites with individual about 10% added value). At some point, people will be more inclined to wages for content that they consider "quality" or reliable. [before anybody jumps here, let me state that focused blogs and sites conforming Wikipedia will feasible be one of the chief values on the 'Net]

4. Valued material and information applications will merge even further. To really make info valuable, you need to be able to application it in an actionable manner, and that means having an employ that makes the facts useable (and re-usable). E-Trade, MotleyFool and SalesForce.com are good examples here.

5. Micro-payments are like the Holy Grail (they are improved in a Monty Python film than in reality). There are innumerable who argue that micro-payments (between 1 and 10 cents) are the coming logical step, citing the 99 cent availability of music via sites cognate iTunes. However, payments at iTunes are essentially a restructuring of the purchase process for a CD, allowing the consumer to purchase individual pieces of the Disc (#tracks * .99 = cost of all-inclusive CD) - a model that I just don't contemplate translating to the facts or journalism markets (I even-handed determine not inspect the market demand to pay - yet pennies - to read an individual article of value). Plus, the music that we buy is tangible (we save it and listen to it over and over again, something you can't conjecture about a reading a information story).

So what is the answer?

Valuable content is already being paid for today, and that isn't going to pennies any clock soon. We might treasure that the cost we are willing to earnings is a agreeable bit lower than sites would like to charge (and those sites that cannot vital with that detail won't live long). On the other hand I don't think that micro-payments (which will endure to evolve and be a department of future value systems) are the ultimate answer or much necessary at this point. Rather, I believe that low-cost subscriptions will likely be the enactment for most "non-music/video" content. I would even stratum low-cost multi-site or limited-vew subscriptions as expanded likely than micro-payments.

So Barry, you are right, most of the "valued" content on the Internet will be paid for. We ethical won't have to wait 5 caducity and it likely won't be via micro-payments, it will be via low-cost subscriptions.

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Additional counsel on this text can be get going at Azratek.com

You can further scrutinize a positive precis of Barry Diller's comments here at BusinessWeek